Social Entrepreneurship | Summary and Q&A

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March 23, 2010
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Stanford Graduate School of Business
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Social Entrepreneurship

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Summary

This panel discussion on social entrepreneurship explores the unique challenges and opportunities of running a for-profit enterprise with a social mission. The panelists, including social entrepreneurs and investors, discuss how social enterprises create social value at various stages of the value chain. They also share their experiences with funding and the importance of balancing profitability and mission in their ventures.

Questions & Answers

Q: What is the definition of a social entrepreneur?

Social entrepreneurs are individuals who create for-profit enterprises with a social mission, seeking to create additional social or environmental value somewhere in the value chain.

Q: How do social enterprises create social value in the employment stage?

Social value can be created in the employment stage by employing individuals who might otherwise struggle to find jobs, such as the disabled or incarcerated. An example of this is the YMCA, which employs many disabled people.

Q: Can social value be created in the design part of a company?

Yes, social value can be created in the design part of a company. For example, a company called Delight has created an affordable light specifically designed for people in remote rural areas without electricity.

Q: How does social value get created in the production or delivery stage?

Social value can be created in the production or delivery stage by providing locally grown food, which reduces the carbon footprint, or by producing products in a more environmentally friendly way, such as minimizing waste and transportation costs.

Q: What is an example of social value created by serving an underserved market?

An example is microfinance, which provides banking for the poor and serves as a bridge to previously underserved markets.

Q: How can social enterprises fund their ventures?

Social enterprises can secure funding through various channels, such as angel investments, strategic partnerships, and foundations. Friends and family can also play a significant role in the early stages of funding.

Q: Does having a social mission scare off investors?

It depends on the investor. Some investors are primarily focused on financial returns and might be hesitant to invest in ventures with a social mission. However, many investors are interested in both the financial opportunity and the social impact of a venture.

Q: Is there a trade-off between profitability and social impact in social entrepreneurship?

While there can be tensions between profitability and social impact, many social entrepreneurs have found ways to balance both. By integrating their social mission into the core of their business models, they can often achieve financial success while creating social value.

Q: Do social entrepreneurs have to choose between nonprofit and for-profit status?

Not necessarily. Social entrepreneurs can operate as for-profit entities with a social mission, blurring the line between nonprofit and for-profit. This allows them to access different types of capital and tap into a broader range of funding sources.

Q: Can all problems be solved through profit maximization?

While profit maximization can solve many problems, there are still some social challenges that might require a nonprofit approach. The emerging landscape of social entrepreneurship offers a spectrum of approaches and solutions.

Takeaways

This panel discussion emphasizes the wide spectrum of social entrepreneurship and the need for both financial viability and social impact in these ventures. Social entrepreneurs are creating value throughout the value chain, addressing various social challenges in unique ways. Funding for social ventures primarily comes from foundations and angel investors, with a growing interest in mission-related investing. Balancing financial returns and social impact is possible, but social entrepreneurs must have a strong business strategy and operational excellence. As the field continues to evolve, there is potential for greater innovation and collaboration between profit-driven and mission-driven entities.

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