What are Social Venture Capital Firms?

Many social entrepreneurs and aspiring people from around the world have been asking me about funding sources for their ideas and business development. Having a good idea is a start, but you will need capital to make is sustainable and scalable. So what are social venture capital firms and how can they help you get funding?

HIGH ALERT [Photo by Andy Welsh] (CC BY-SA 3.0)

Social venture capital firms are a new breed of venture capitalists who specialize in providing funding to social enterprises which are dedicated to a mission of addressing a given social or environmental cause. These VC firms fill an important gap in the market, as social enterprises have typically found it difficult to acquire funding for cause based business models where profit is secondary to the social mission.

Unfortunately, traditional venture capital investors see the company’s social mission as cutting into their ROI. Also, many social enterprises which are operated as for profit businesses are often excluded from donation and foundation based sources of funding intended for non profits and charities.

Social venture capital firms evaluate their investment decisions based on both financial profitability, business development and mission success. Examples of social venture capital firms include the Acumen Fund and Big Issue Investment.