Is Social Entrepreneurship redefining ‘success’ in a changing world?
In a word, yes. But let me expand a little.
Recently, at Virtually Free we were delighted to have been chosen as finalists for Chivas Regal The Venture UK - a global search and competition for the ‘most promising’ social entrepreneurs. The launch of The Venture is substantiated by a report, commissioned by Chivas Regal, ‘(Redefining) Success in a Changing World’ by Soushiant Zanganehpour, Skoll Centre at Said Business School, Oxford.
Although there are many definitions of entrepreneurship, the traditional definition is closely linked to capitalism: the act of reorganising scarce resources and inefficient processes to create a profit.
Social entrepreneurship is, however more closely aligned with societal impact and views profit as a means to an end - positive social change. As defined in the Skoll Centre Report: Social entrepreneurship is the process of pursuing innovative business solutions to social and environmental problems.
Why is there a rise in Social Entrepreneurship?
While in recent decades there have been huge advancements in communications and technology, travel, healthcare and agriculture, and people generally live longer more prosperous lives, huge challenges still remain, which are on the whole, social. Income inequality is at record levels and governments struggle to cope with evolving societal and environmental challenges with limited fiscal reserves. Among these challenges, health and particularly mental health are key.
Additionally, many in the western world are considering whether capitalism is efficient, against a backdrop of banking and major organisational financial scandals and falling living standards in countries who maintain strong capitalist economic policy, such as the US.
Entrepreneurs, largely motivated from frustration in inefficient processes and systems, are however responding to these challenges and are developing the notion that economic incentives and positive social change can coexist to create a new way forward, or as Richard Brandson calls it, Plan B. ‘The B Team’ is a venture led by global business and society leaders such as: Branson himself, Arianna Huffington (Huffington Post), Ratan Tata (Tata Group), Paul Polman (CEO Unilever) and Xhang Yue (Broad Group China). The B Team are hugely ambitious as you might expect and aim to encourage world leaders to move from Plan A - where companies are driven by profit alone, to Plan B - which ensures business becomes a driving force for social, environmental and economic benefit.
Does Social Enterpreneurship deliver results?
Surprisingly, in terms of investment capital, returns for social funds are outperforming traditional funds. This shift was illustrated by a recent attempt by Kleiner Perkins, one of Silicon Valleys largest and most well established Venture Capital firms to purchase the four year old social venture capital firm, Social + Capital Partnership - a firm which is the most active investor in digital health (including mental health) in the US.
The reason for this attempt is simple: Social + Capital’s portfolio has a 68% growth rate. Kleiner Perkins, however, has a 40% growth rate.
Additionally, another of the largest venture capital firms in the US, BlackRock is launching a new initiative, ‘BlackRock Impact’ a new fund with a range of societal and environmental goals. Social investing has also entered the mainstream in the UK too. Companies such as Threadneedle Investments have recently launched a Social Bond Fund, which offers an above average return while investing in eight social outcome areas: housing, education, employment, health and social care, financial inclusion, transport and comms and environment. While these financiers have capitalism at their heart, they are adapting their approach to merge profit and return and social / environmental good.
This brings us to the question that Chivas Regal themselves have asked: Is Social Entrepreneurship redefining ‘success’ in a changing world? The answer it would appear is yes, and Virtually Free too have these new principles of ‘success’ at the very heart of their strategic objectives.