10 reasons why should you invest in social impact ventures!

I have been working with Social Entrepreneurs for a year now and conducted a Startup Bootcamp for 30 of them. Now we are evaluating another batch of 100+ and while reading, interacting, and understanding their ventures, I realise that social impact ventures are 1) definite investment opportunity, 2) carry lower risk and 3) need lesser capital to get going. Hence, I decided to share my learning here as why -you (angel & seed investors) should invest in them.

1.????They Solve Real Problem: entrepreneurship is all about solving real problems Social entrepreneurship is possibly the best form of entrepreneurship as it focuses on real problems surrounding humanity. Social Entrepreneurs bring up social issues that need to be solved for sure and on an urgent basis. It may be related to education, health, livelihood, environment etc., and hence there is an urgent need for related issues to be either solved or reformed or evolve. Hence, any investment made to solve any social problem is bound to build a sustainable business as there is willingness to pay by the end users and any sustainable business is a good investment opportunity.

2.????Generates Social Capital: Social problems have some very important factor in their favour; one of them being empathy due to potential significant impact. It makes their venture socially very important and hence they can mobilise large amounts of social capital. There are three elements to social capital - bonding, bridging, and linking. Social capital can make or break businesses. Once they acquire it, their initial journey gets a lot of support as lots of resources get mobilised by the social capital. Hence unlike other startups, social ventures have a better starting point and lower risk for early-stage investors.??

3.????Definitely Scalable: Most of the Social problems are universal and they affect large section of society. Therefore, an innovative solution will always be embraced by majority of affected people. Social entrepreneurs too are driven by the fact that most of the problem are very large and if they can innovatively solve it, there will be lot of takers. This will ensure scale for the investors.??

4.????Technology Is a Driver: Like any problem, social problems can be solved better by technology. Most social entrepreneurs used to depend more on social capital. However, nowadays, by use of technology, they are increasing their efficiency, reach, user experience and even margins. Increased efficiency, improved user experience, higher margins and better reach would make any socially relevant business more attractive to the investor.???

5.????Entrepreneurs’ Passion: There is no doubt that a passionate entrepreneur has higher chances of success as they feel deeply about the problem at hand. Social entrepreneurs are even more passionate as they want to change the status quo and be the change agents. Their passion is very visible as they take on some of the social problems which normally are either left alone due to societal issues or the commercial success is not very apparent. Hence more commercially motivated startups choose to ignore such social problems whereas the social entrepreneurs not only embrace them but dedicate their time and effort to solve it. I am sure all investors shall find this compelling.

6.????Attractive Entry Point for Investors: Since social entrepreneurs are more focused on Social Capital, they may need less of real capital and are reasonable in their demands as they believe that they can do more in less. That also makes them capital efficient and more valuable as they evolve. Their need for capital is there and they do raise it at some point early in their journey to the investors delight.

7.????Experienced and Passionate Mentors: Social entrepreneurs are able to attract very high-quality mentors who are as passionate as the entrepreneurs themselves. The individuals who commit to mentor them are equally forthcoming with their help as far as it syncs with entrepreneur's cause. These mentors also come with a lot of social capital having a wide range of connections, credibility, respect, and knowledge. They genuinely believe in the cause and their association is a huge bonus for investors.

8.????Collaboration Not Competition: A good social venture is more driven by social capital to solve problems. Social capital drives more cooperation/collaboration than competition. Multiple social entrepreneurs coming together to solve a particular problem is very common. This reduces the competition while increasing the reach for creating a greater impact for building a sustainable scalable venture, an attractive investment opportunity.

9.????Global Possibilities: Since most social startups address and solve very critical societal issues, their solutions can be applicable globally wherever the problem exists in whatever form. So a social enterprise can be a global venture impacting hundreds of thousands while being efficient, user friendly, higher margins and scalable.?And yes an exit is a true possibility!

10.??Shows You Care: Shows You Care: Social entrepreneurship and social enterprise have proved the world that These two notions are positive ones and creating social change in all of its manifestations. Many innovations address social problems or meet social needs, by distribution of financial and social value tilted toward society as a whole. better vehicle for doing this. The world needs a lot of help in solving lots of problems and it needs everyone supporting every cause as all social sectors are of equal importance. By supporting social entrepreneurs, investors can show that they care about the world and an investment in social enterprise is can make investors changemaker too as it helps solve some real problems with innovative solutions that can build sustainable scalable business. It also explains why most boundaries separating responsible investors and why you should care.?????

While I state my learning, there may be more reasons to invest in Social Impact ventures as they can create a large impact in society while being sustainable and scalable business.