What are the ingredients of an innovative approach to increase the impact of a business that is solving critical social problems?
Being an entrepreneur is like cooking. At first glance, we all could try. All we need is access to a great recipe, the ingredients and tools (such as financing, an entrepreneurial spirit, or an online community of mentors) to guarantee a delicious dish in the end.
At first sight, yes, it’s easy!
But, what if we don’t have the necessary money or the ingredients? What if we don’t have an oven or a very well equipped kitchen? What if we don’t have food in our house? What if we don’t have the internet to research for good recipes?
In addition, what if besides the basic ingredients and recipes, we could access spices which we have never heard of before that could greatly enrich our end results?
What if we can have access to experienced and engaged mentors to learn the secret of these ingredients and recipes and, moreover, the details that are not in the books or videos that we know?
What if, in addition to mentors, we can have access to extra resources, financial and technical, that we had no idea we needed?
What if these mentors could also give us feedback on our performance?
In the kitchen world, this combination of resources, investment, time, training and passion could turn a home cook into a great Chef-restaurant owner, as those on TV shows.
Some may say the distinction between the home cook and the world-renowned chef is cooking for necessity versus cooking with a plan, envisioning a better result for a greater number of people, not leaving aside personal satisfaction.
In the case of social entrepreneurs, in the last 30 years, non-profit organizations have been a common model to raise resources — financial, human and technical — to achieve social goals such as ending hunger, poverty reduction, access to health, employment, sustainable income, access to housing, access to quality education, environmental protection, and sanitation. In our metaphor, the social entrepreneur would be a guy who is moved by his passion of helping others. He accomplishes his mission by securing grants and tax-free sources, to produce almost professional quality free food to the hungry in his community.
More recently, in the last 5 to 8 years, we have been presented with a new model capable of solving critical social problems of a country: the hybrid model of social business or social enterprise. These entrepreneurs care about the social return beyond the financial, seeking both the longevity of their achievements and the expansion of their impact to help a growing number of beneficiaries.
Back to our story, he could be a restaurant owner who has chosen to train and hire particularly low income people or people with disabilities, who usually don’t have access to good job opportunities or professional stability. Different from the first example (the restaurant that feeds the hungry), this one would have a traditional business model, that survives from its sales and pays its suppliers normally, as well as its employees. Because of his choice of hiring marginalized people, he will need to invest in capacity building to his employees much more than his competitors. It is called social costs. To succeed, this entrepreneur needs to be as good as the best Chefs who inspired him, because otherwise his business will not survive facing the competition. And, in other hand, he will not grow or scale its impact if he decides to survive only on grants.
How to find then the tailored support to turn the home cook (usually without resources but plenty of passion) into a renowned cuisine Chef with dozens of successful and profitable ventures, also benefiting marginalized communities? How to turn the beneficiaries of the first example into protagonists through innovative models? How to turn the restaurant that employs primarily marginalized groups into a large franchise, scaling its impact without letting them fail because of their social costs? We are talking about a complex model that seeks both profit and social impact. And complex models require complex solutions.
We need solutions that transform marginalized communities into protagonists and not into social project beneficiaries.
We need to join patient and flexible financial capital, to add technical resources like management tools and trainings and finally add a pinch of professional mentoring. Mix it and let it rest. Place it in the oven and observe for 1 or 2 years. The result will be impressive.
And that is what NESsT Partners is about, an innovative approach that envisions to increase the access to financial, technical and social resources to early stage social enterprises. Our initiative, which is a finalist of Premio Viva , is based on the Engaged Philanthropy model, also called Venture Philanthropy, that leverages resources and skills to solve social problems. Being a model that proposes the engagement of the investors in the social business, it builds long-term relationships while teaches management issues for social entrepreneurs and social issues to investors.
In nearly 20 years of experience, we have learned that neither pure market-based nor pure public sector approaches have effectively confronted the most critical social problems. We developed then this new way of investing which is also a new way of doing philanthropy. Social enterprises have a different timing if compared to regular business. They may take more time to break-even and to scale (see the “oven time” in our recipe above). And because of their unique characteristic they need hybrid resources (grant, recoverable grants, loans, equity) that properly combined and applied in the right stage will contribute to their development.
NESsT Partners seeks to bring to the social business field more spices, knowledge, experience, condiments, skills, tools, recipes and paths in order for our protagonists’ choices to become more targeted towards a significant social impact on the society.
We believe with the right combination of these ingredients, in the right quantity and in the appropriate time, will bring an exceptional result that will please the most demanding palates of the market!
PS: If you liked, please click in the heart below and recommend this article. You can also vote for this initiative by clicking at Premio Viva and help us to raise more USD 5,000 to be invested in Brazilian Social Enterprises. Thanks!