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Nisha Khetan on Capital for Innovative Social Businesses
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Q: In association with Development Gateway Foundation, Intellecap is starting an online portal to connect investors and investees with a multiple bottom line approach. It will play an active role in attracting capital from both donors and investors to innovative social businesses. For supporting business development, it will also create an on-line network of service providers like investment, legal advisory, marketing, etc.
1) What are some of the services that could be a value-add for either investors or social businesses?
2) What are the value-added services that can be provided for investors?
Patrick O'Heffernan responds:
This is an excellent idea --one that is needed and one that will be well used. Similar ventures exist in the political realm to connect donors with non-profits or 527 organizations.
In the cases I am familiar with, the donors and investors remain unnamed to prevent the site from becoming a search engine for development officers looking for more leads and sending unsolicited proposals to investors who do not want them.
More importantly, keep in mind that it is very likely you will be visited by many more social entrepreneurs than investors or donors. If this occurs and is not anticipated, criticism and cynicism from the social entrepreneurs will begin to show up on the site and on other sites in discussion boards, undercutting what you are trying to do. I would strongly suggest that:
- you consider lining up your investors first and be sure you have a strong critical mass of investors before launch
- you find a fair and equitable way to limit the number of entrepreneurs chasing your limited number of investors at any given time
- when investment is made, your site posts a case study or news note, not naming the investor, but naming the NPO or entrepreneur so other entrepreneurs can see that your site really does result in successes
I don't know if you were thinking of charging a fee to service providers for listing or advertising on the site, but if so, I discourage it. Some of them might get business as a result of appearing on the site, but most entrepreneurs who visit the site will not have the need for or resources for accountants, lawyers, PR, etc - they are looking for cash. They also likely have some of those relationships in place.
Having said all of that, you might consider working with the donors/investors to offer entrepreneurs not only cash, but a package of services that the donor feels they need to succeed.
Those could include:
- Legal and tax consulting
- Market research
- Banking and investment advice
- PR
- Accounting
- Management consulting
- IT consulting
- Human Resources/benefits
- Insurance
- Staff development/employment agency
If you have a pool of pre-qualified, highly competent, ethical and dedicated service providers, the donors can offer packages of cash and services, using this pool.
Good luck!
1) What are some of the services that could be a value-add for either investors or social businesses?
2) What are the value-added services that can be provided for investors?
Patrick O'Heffernan responds:
This is an excellent idea --one that is needed and one that will be well used. Similar ventures exist in the political realm to connect donors with non-profits or 527 organizations.
In the cases I am familiar with, the donors and investors remain unnamed to prevent the site from becoming a search engine for development officers looking for more leads and sending unsolicited proposals to investors who do not want them.
More importantly, keep in mind that it is very likely you will be visited by many more social entrepreneurs than investors or donors. If this occurs and is not anticipated, criticism and cynicism from the social entrepreneurs will begin to show up on the site and on other sites in discussion boards, undercutting what you are trying to do. I would strongly suggest that:
- you consider lining up your investors first and be sure you have a strong critical mass of investors before launch
- you find a fair and equitable way to limit the number of entrepreneurs chasing your limited number of investors at any given time
- when investment is made, your site posts a case study or news note, not naming the investor, but naming the NPO or entrepreneur so other entrepreneurs can see that your site really does result in successes
I don't know if you were thinking of charging a fee to service providers for listing or advertising on the site, but if so, I discourage it. Some of them might get business as a result of appearing on the site, but most entrepreneurs who visit the site will not have the need for or resources for accountants, lawyers, PR, etc - they are looking for cash. They also likely have some of those relationships in place.
Having said all of that, you might consider working with the donors/investors to offer entrepreneurs not only cash, but a package of services that the donor feels they need to succeed.
Those could include:
- Legal and tax consulting
- Market research
- Banking and investment advice
- PR
- Accounting
- Management consulting
- IT consulting
- Human Resources/benefits
- Insurance
- Staff development/employment agency
If you have a pool of pre-qualified, highly competent, ethical and dedicated service providers, the donors can offer packages of cash and services, using this pool.
Good luck!
