DISQUS

Luis · 1 year ago

The term being used to describe these businesses is "mission-based" business.

WSJ and other publishers have covered the trend in the last couple of years.

Here is an example: http://online.wsj.com/article/SB119553078105898...

Chris Morrison · 1 year ago

This is just my own opinion, but I wasn't considering businesses that have a regular business plan (e.g. brewing beer) but just give a good deal of money away to causes to be part of this particular group of companies. That seems to be much of what the WSJ is talking about.

Take D.light for example. They're not giving away any of their profits. Their actual product is the charity -- just a cheap light designed for people in the developing world.

Then again, I'm not the one writing the definitions. Thanks for the note ;)

Scott · 1 year ago

Twitter now has a new competitor

Niche market MicroBlogg. It's been called the Twitter for VC's and entrepreneurs. A microblog with a purpose: http://www.venturedig.com

bhalchander · 1 year ago

Good article . If we analyze the organizations you mentioned, I think there is great potential for new kinds of businesses to emerge. I think all these organizations will have a primary mission to do good with financial returns being secondary.
Types of businesses which might emerge : Triple bottom line, double bottom line, social businesses ( i.e. no dividend to shareholders).
Capital source options: funded like traditional business, social venture funding, patient capital, crowd funding, grants,etc..

A matrix on the 'business goals' and 'capital sources' might give all possible combinations of new types of organizations.

Grunche · 1 year ago

Capitalism is the longer and harder road, but necessary, towards a classless society and without State: communism.

mdangear · 1 year ago

Grunche:
As Muhammad Yunus mentions in his book "Creating a world without poverty", and I believe he is right, Capitalism a half developped structure because it assumes that people are one dimensional beings only concerned about maximizing profit for themselves. And the theory behind free markets is that the best way you can contribute to society and to the world is by doing just that, getting the most for yourself.
However it is not working, and this is probably what we are seeing the current crisis in Wall Street, because of this "conceptual failure" as he calls it, because people are not one-dimensional beings, they have many other interests beyond maximizing profit, and they have many other needs. So Capitalism is the way to go, but it needs to evolve.

Chris:
Going back to Blended Capital as discussed in the post, there is one big issue that has not been resolved yet is what is it exactly? While everybody understand at a high level the concept, or what some other people call double or triple bottom line, it is very hard from the investor prospective to figure out what you can expect from it. You know you will get less return, but how much and how do you figure out good deals and bad deals? There is an issue of estimation and measurement of success that still needs to be resolved.

One way to deal with this is what we are doing with Entrepreneur Commons (www.entrepreneurcommons.org), using debt instead of equity. Because equity creates tension between the investor and the entrepreneur, for example by forcing the issue of exit: the investor needs his money back at some point, but who do you sell too, and should you really? (the Ben& Jerry things)
With debt, everything becomes a lot easier: you know exactly when you will get your money back and how much you will get, and you can benchmark this against the market to decide whether you are comfortable with a given rate for a given "mission".

In addition to clarifying the issue, debt is a good thing because we have historical data on what can be done. Microfinance is for a big part about helping entrepreneurs in developing countries. This is debt to finance small businesses.
And "Social Capital" in the US can be done the same way, with the difference that you need more than a few dollars to help an entrepreneur here. And the good news here is that you do not need huge amounts of money in the US either: according to Inc Magazine, and looking at their Top 5000 fastest growing companies, the average capital to get started for companies in the list is $25K, and if you look at their top 500 it is $75K.
The default rates from Grammen Bank (microfinance) are 1 to 5%, so very manageable, and there is no reason why we could not do as good in developped countries.

So there is an opportunity to make a big impact, and I am convinced that Social Capital is the next big thing because we have no other choice if we want to world to become a better place...

Michael Cayley · 1 year ago

Here is my take on SoCap08 and the integration of social capital at the heart of capitalism.

It is due to the emergence of social media networks.

http://socialcapitalvalueadd.com/2008/10/20/soc...

Sean · 1 year ago

Great Article! The only point that i would contend with is the idea that these Social and Environmentally Responsible Venture Capital opportunities will inherently generate a subpar ROI. There is no reason that these innovative companies cannot meet or exceed market returns. We can have our cake and eat it too. I am a part of a team that is proving this point; www.funkventures.com.

Sean · 1 year ago

Interested in Socially Responsible Investing? Check out this Facebook group dedicated to it;

http://www.facebook.com/inbox/readmessage.php?t...

ventureblogalist · 7 months ago

Great article Chris. I hope you are doing well. I think there are more models to be explored here to get higher IRRs for traditional VCs and to effectively link pension funds, endowments to foundations.

Openworld · 6 months ago

Challenge offers from digital philanthropies -- such as microscholarships for new learning options, and microjobs to build track records in online markets -- can spur creation of social capital at the base of pyramid . See Seeds of Change at http://www.openworld.com and strategies for human capital formation at www.entrepreneurialschools.com .

Best,
Mark Frazier
@openworld (twitter)

edhardy622 · 1 month ago

British law student sues Abercrombie-Fitch for disability discrimination.
http://www.abercrombieshop.us