Social entrepreneurship in a landscape dominated by technology ventures

The way society thinks of business has changed a lot over the past few decades.

In the past, businesses were thought of as existing for the sole purpose of maximizing returns for the investors. However, when one examines how society has responded to things like the BP oil spill, the health effects of fast food, and the environmental damage caused by natural resource companies, it is clear that society expects a lot more from businesses than just profit maximization.

Businesses are, arguably, the most powerful engine of change in society, and we are starting to demand that that engine be driven towards social good in the long run and not just for the wealthy few in the short run.

However, if you look at the entrepreneurs that are on the forefront of these new demands of business — social entrepreneurs — you will find that society is not structured in a way that encourages this shift. In fact, there are many systemic issues facing social entrepreneurs that, until they are addressed, pose a barrier to these entrepreneurs’ development and the associated evolution of the way we do business.

I had the opportunity to meet a panel of four social entrepreneurs to discuss their successes and the challenges they are facing in a space dominated by technological ventures. The panel consisted of:

Emily Peat, EcoPlace Organics: assists small-scale, sustainable and organic farms through marketing, selling and distributing their produce to customers at home or work.

Stephen Amoah, MyCareerCity: connects students and recent graduates to start-ups looking for talent, combatting youth unemployment by providing their users with work opportunities and allowing them to develop their resumes.

Mark Kryshtalskyj, The RockStar Café: the student hub gone social and sustainable; a place where students can openly connect to one another in an inclusive setting, discover their passions, and express themselves.

Hannah Furlong, EverBloom Smart Design: integrates environmental science principles into urban garden and urban lawn space to make them more environmentally sustainable and teaches people better ways to garden through hands-on workshops.

I learned quickly that, contrary to popular belief, a social venture does  not place profitability lower on its list of strategic priorities. Rather, it builds social purpose into the foundations of its business model.

“Profit has needlessly become a dirty word. We want to be profitable so that we can give back more to the community, employ more people, and take on bigger/better projects,” Peat said.

There is an inherent strategic belief among this group that doing social good can drive profits because people want to support good causes.

Kryshtalskyj said, “Having worked in a non-profit setting for eight months, there is a different atmosphere than in a business. In a non-profit you are entirely focused on the cause and lose that business framework in a lot of senses. Social ventures are somewhere in the middle. You have the purpose drive of the non-profit, but the rigor of a business.”

Though they are similar in their drive for profit, social entrepreneurs face the challenge of not having access to the same opportunities as technology ventures.

An example of this is the exclusion that social ventures receive in funding opportunities and start-up resources, as one panelist  who wanted to remain anonymous shared.

“Velocity is a prime example of an excellent program with awesome resources and a lot of visibility on campus. The Velocity venture fund has $25,000 only open to tech businesses. I was very fortunate that I was able to find the funding in a different way, but I applied and was not eligible.”

Even when competitions are focused on social ventures, they ask for an element of technology, as another panelist, who also wished to remain anonymous, shared.

“I have seen a social enterprise competition that was exclusively for tech-based companies out of Communitech. They will ask for something tech-based to accompany your social enterprise. I have been tempted towards tech-based social start-ups because there are much more competitions and much more funding and have had to keep pulling back and remember where my original path was.”

The result of this exclusion is, in the mind of some panelists, suboptimal competition.  Their reasoning is that passion-driven social entrepreneurs have often spent years developing skills relating to their cause. They know the issues, they know their customers, and they are bona fide experts in their field.

This depth of expertise makes social entrepreneurs tough competitors in terms of understanding and serving their customers, especially in the early stages when tech-based ventures may not be developed or may be opportunistic.

Another challenge specific to social ventures is that social products and services typically have an associated price premium and, as Peat said, clearly communicating the value of that premium to consumers can be challenging.

The message needs to be framed in a way that is not overbearing or forceful, but emphasizes the products’ ability to create positive change.

Related to this is the challenge many social entrepreneurs also face of establishing metrics that allow them to sell their idea to investors. “Measuring how much impact you have on the economy is a challenge. One measure I use is how many jobs we have created, but going beyond, and having a more rigorous analysis in terms of how much impact you have is difficult to quantify,” Amoah said.

Despite these challenges, social ventures are gaining popularity. The panel expressed excitement for the recent increase in people who are engaging in social entrepreneurship, the growth in social organizations like Enactus, the increase in resources UW is beginning to offer, and ultimately for the growth in their own businesses.

In order to move forward, however, people need to be more willing to get involved with social ventures, schools need to offer more support, and investors need to be willing to endure slightly lower monetary returns for greater social ones. Ultimately, increasing the number of success stories is what will inspire other people break into this field and make an impact on their communities.

“Being an entrepreneur, it is kind of a scary path, but it is an exciting one as well. I am excited to hear more successful stories about social entrepreneurship,” Kryshtalskyj said.