By Jamie Mui
Home to many of the world’s largest high-tech start-ups, Silicon Valley brags its status as the leading hub of innovation and technological development, bringing in what amounts to a third of all venture capital investment in the US. Crowdfunding as a means of finance has also skyrocketed: Pebble Time smartwatch used a month to raise $20.3 million through Kickstarter, breaking records as the most funded project ever on the platform, doubling the $10.3 million that the company raised for the original Pebble smartwatch.
The figures speak for themselves: masses of resource and power are driven into technological advancement, yielding astonishing results in both profits and innovation. What if the same resource and power were diverted into enterprises with the delivery of social impact at its core?
The argument holds that tech corporates’ surpluses could be used to set up foundations and subsequently donated to worthy causes as part of corporate social responsibility programmes. A few millions dollars might take X number of people out of poverty, build Y homes for them to live in and turn Z lives around. Organisations like The Gates Foundation need no introduction.
Though, replicability of this model is an important consideration. There can only be so many Gates Foundations. Social change must come from the grassroots and increasingly, this comes in the form of social enterprise. Gone are the days of reliance on philanthropic, charitable donation. Charities themselves have to find new ways of generating revenue amidst austerity and funding reductions. Entrepreneurs should therefore take matters into their own hands, to develop social businesses with impact at the heart of its existence.
All is well if people have the intent to hop onto the social enterprise bandwagon. However, the issue then revolves around how much impact they have, and whether this impact scales. With the resources available to social enterprises now, scalability is difficult, given their social ethos and financial burdens. Either the framework under which social enterprises operate still has a lot of room for improvement, or social entrepreneurial attitude must change, if people want to start creating substantial impact now.
A lot has been done in the UK to facilitate the growth of social enterprise, including the maturation of the social finance infrastructure. Despite this, it is important for social entrepreneurs to recognise that they are trading alongside commercial entities and that they must think somewhat like businesses. Increased investment in advertising and making sure that there exists sound value propositions, healthy finances and high ROI are all thoughts that should resonate with entrepreneurs, commercial and social alike. Those are all lessons that social enterprises can learn from tech start-ups who have used just those very benchmarks and tools to build track records to access venture capital and get buy-in from the general public. This all ties into the repositioning of the internal culture of social enterprise, in the hope that social investment becomes easier to pursue.
This article has only scratched the surface of deeper issues concerning social investment, financing and the scaling of social enterprise, amongst others. Rather, this is a calling for awareness to be raised and people to educate themselves about the social space. Amidst a government trying to make itself leaner through increased austerity, many are turning to the business world and third sector to deliver the social change that government has no capacity to achieve anymore. The UK is a social enterprise leader and its regulatory framework reflects that: Community Interest Company as a legal form, social investment tax relief, to name a couple. All that remains is for the movement to carry on thriving and to carry on enabling more progress.
Jamie is a Researcher at TSIC. In September 2015, he became the President of Enactus UCL, which establishes student social action programmes. Contact him at [email protected]
Image credits to Patrick Nouhailler.