Lack of Finance as a Barrier to Entry for Social Entrepreneurship

Barriers to entry are an important facet of business which help to ensure the sustainability of an enterprise as competitors find it more difficult to enter the particular market.

Intellectual Property Protections Can Help Spark New Social Innovations

Yesterday, I talked about how barriers to entry (such as patents and other intellectual property protections) can help budding entrepreneurs to protect their ideas. A benefit of having such barriers for inventive ideas is that it induces inventors to come up with more innovative products. If it were too easy for others to copy, it may be a disincentive for inventors to be creative, take risks and try new things in the market.

Not Enough Start Up Capital Can Be Frustrating for New Social Enterprises

While barriers to entry can be helpful once you’ve already started your venture and you want to keep competitors from entering the market, barriers to entry can be problematic if you’re just starting out.

One particular barrier to entry that many social entrepreneurs face when trying to start up is the barrier of a lack of finance and capital. I’ve actually been receiving quite a few emails from visitors of this site, including emails from social entrepreneurs in Africa and South America.

The Need for More Finance for Start Up Social Enterprises in Developing Countries

Interestingly, social entrepreneurship is much needed in developing countries in these regions. Yet I am finding that that’s where many of the capital shortages for new social enterprises are coming from.

Muhammad Yunus identified that micro enterprises in developing countries need seed capital to help support the livelihoods to micro entrepreneurs.

I would suggest that social enterprises started up by social entrepreneurs in developing countries also need seed capital to help support innovative ideas that could positively impact communities on a larger scale.