The Spectrum of Social Ventures

<p>As social entrepreneurship and socially responsible investing expand into the mainstream conscious, we're faced with the challenge of determining "what counts?" While many new entrepreneurs are making an effort to be explicitly "green," and an increasing number of traditional investors are looking to add double and triple-bottom-line businesses to their portfolios, leaders in the fields may feel a mix of excitement and apprehension. On one hand, we're thrilled that new businesses and sources of capital are entering the space. After all, we're looking to drive a big shift in our economic system and culture, and that requires wide participation. On the other hand, we may feel a bit nervous that the movement and our standards could become too vague, diffuse and watered down.<br /><br />On a small scale, Investors' Circle has been pondering this issue as it relates to our own membership and network of entrepreneurs. We hope to present a range of deals that appeal to both our early, devoted investors who have been using capital as a tool for activism for decades, as well as our new members who may come from traditional investment institutions but are intrigued by SRI. How do we continue to inspire our founders while at the same time welcoming the newcomers?</p>
<p>While this question is bound to be a big one, we've developed a framework that we think is sending us on our way.</p>
<p>All of the companies that present at Investors' Circle are both socially or environmentally responsible and financially sound. However, some are operating in undeveloped markets, have lower prospective returns, and incur higher levels of risk for the potential to build out a new kind of mission-driven business. These are our "<strong>Activists</strong>." At the same time, "<strong>Influencers</strong>" are working to expand established markets and bring the products and services of double-bottom-line businesses into the mainstream. At the top right are our "<strong>Pioneers</strong>." These are companies with the potential to become the next <a href="">Stoneyfield Farm</a> or <a href="">Evergreen Solar</a>: leaders in the field proving that businesses built around social or environmental missions can also become huge financial successes.</p>
<p>We believe that within these three categories are companies that will appeal to philanthropic investors, principals of venture funds, debt financers, and angel investors with varying expectations of the level of social and financial return on their investments. We also believe that these three categories of companies are mutually reinforcing. Without "Activist" enterprises to "shake out" some of the risk inherent in new business models, there would be no market for "Influencers" to build out and prosper from. Conversely, without "Influencers" to demonstrate the potential profits to be made in these new, scalable markets, "Pioneers" might never receive the faith and capital needed to take off.<br /><br />This our first stab at developing a framework that will provide structure and rationality to the range of deals that will appear at our upcoming venture fair. We believe that each deal within these three categories truly <em>belongs</em> at Investors' Circle as well as part of the broader movement toward a more sustainable economy.</p>