Why We’re Excited About Social Entrepreneurship & Impact Investing
Social entrepreneurship & impact investing in academia
Over the past decade there has been a growing interest in the field of social entrepreneurship. Fortunately, academic institutions have embraced this phenomenon — institutions such as my own home, the University of Virginia.
In 2012, Social Entrepreneurship at the University of Virginia (SE@UVA) was founded in response to growing student interest in developing sustainable solutions to the world’s greatest challenges. Last year, the program launched an interdisciplinary Minor in Social Entrepreneurship, which I am proud to have declared. The program includes courses on design thinking, public policy, business, international development, and impact investing.
I began my journey during my second year at UVA in ENTP 1010 — Startup Operations for Entrepreneurs with Professor David Touve — where I became exposed to the brand-new Entrepreneurship minor. When I learned about SE@UVA, something really “clicked” for me. As an Eagle Scout, I love the outdoors and as a result I am passionate about preserving the environment. I became interested in this idea that the force of entrepreneurship could be used to create sustainable solutions to environmental problems.
As I dove into the SE@UVA courses I learned from experienced and notable professors within the field, such as Professor Bala Mulloth. My understanding of social entrepreneurship continued to expand as I discovered applications to many social causes such as agriculture, financial inclusion, energy, healthcare, and education in addition to environmental causes. I soon found myself entering a growing field that I never knew existed when I went into my first year of college.
SE@UVA provided me with a valuable perspective on addressing social problems. I remember Professor Mulloth describing the unique need for social entrepreneurship during our Intro to Social Entrepreneurship class. He described the mainstream methods of tackling social problems: finding a problem and creating a charity organization to provide relief. Charity is necessary and good at solving unexpected short-term problems (i.e. relief charities that support flood victims). Where charity falls short is in the sustainability of the solution.
A social venture is a financially sustainable non-profit, or an impactful for-profit that is committed to delivering innovative and sustainable solutions to the world’s challenges. This is the precise need for social entrepreneurship in our world and the key distinction between charity and social entrepreneurship. This realization that both address a different, specific need has been a valuable perspective I’ve learned within SE@UVA.
The world continues to become more connected, but social problems still continue to exist. It’s time to seek new approaches to these problems that expand outside the bounds of a single country. Tackling these problems requires a movement of collective action between the public and private sectors. Social entrepreneurs are leading this movement.
So, who can be a social entrepreneur? Anyone. Innovative solutions come from everywhere. A social entrepreneur is someone who seeks the right direction, resources, and leadership to solve problems. They are someone who acts on their ideas to be a part of this movement.
Translating impact investing in academia to impact investing in the professional world
After learning about social entrepreneurship within academia, I felt like I understood the concept. But I began wondering about the issues this movement faced in the “real world.” I noticed the need for innovative financing that could support and scale these great ideas. However, not many students around UVA knew about this need. And if they did, not many of them thought about diverging from typical investing methods to satisfying this need.
That’s where Profit With Purpose (PWP) came into the equation. As an impact investing group at the University of Virginia, PWP educates, connects, and empowers students to think differently about investing. We educate students by developing workshops on different topics within impact investing. We connect students to impact investing in the professional realm through external guest speakers, practitioners, and mentors. These connections establish a community that bridges the gap between learning about impact investing in academia to practicing impact investing in the professional world. We empower students by partnering with professional organizations such as 118 Capital to gain hands-on experience with impact investing.
During my time as a Due Diligence Fellow for 118 Capital, I’ve had the opportunity to speak directly with entrepreneurs, learn about their challenges, and help them figure out where their ventures are lacking in terms of investment readiness. Real-world learning experiences like these have helped me understand how my interest in social impact can translate into a career outside of academia.
Combining these takeaways from academia with the professional frameworks of investors cultivate advancement in this movement of social entrepreneurship. Profit With Purpose’s mission — to educate, connect, and empower students to explore impact investing — is central to the growth of this collective movement. In pursuing its mission, Profit With Purpose provides the essential direction, resources, and leadership student social entrepreneurs need to contribute to the movement in the professional world.
What impact investing means to me and how it differs from conventional investing methods
Before I joined PWP I only had a vague understanding of impact investing. Mostly, I knew it as a buzzword that floated around the social entrepreneurship community. After a buddy of mine, Mohammad Malik from Profit With Purpose, explained impact investing to me I began to understand the importance. The more I learned, the more I realized that impact investing has significant potential in enabling innovators to enact change.
Social entrepreneurs, like all entrepreneurs, need financial support to launch and scale their ideas. Impact investing provides capital through innovative approaches under flexible terms and conditions that are based on the needs of the social enterprise. Impact investors are incorporating impact considerations to their deals, requiring the company to report on a predetermined set of impact indicators to measure impact goals. Check out this piece on Innovative Deal Structures for Impact Investments by impact investors Diana Propper de Callejon & Bruce Campbell, with Gabi Blumberg for more information on how impact investors are challenging conventional investment structures and refitting them for social investments.
Summing it all up
Social entrepreneurs are leading a movement of cooperative action between governments, civil society, and the private sector to solve the world’s greatest problems. They face several challenges along the way. One of the greatest challenges I see for social entrepreneurs is financing. Impact investing is a relatively new and growing method that connects social entrepreneurs with the capital they need to launch and scale their ideas. This method of investing challenges conventional methods to create a more effective solution of financing for these social entrepreneurs. Organizations such as Profit With Purpose serve to spread this idea and encourage others to see investing in this way. They create a bridge that helps students translate learning about impact investing in academia to doing impact investing in the professional world. More impact investors means more opportunity for those entrepreneurs who want to change the world. More opportunity and support behind social entrepreneurs means these innovators can more effectively reach their goals in solving the world’s greatest challenges. Effectively solving these challenges means creating a better world.
Sources:[1]https://static1.squarespace.com/static/54fda192e4b00126ca6b9246/t/598870aec534a5778bf56907/1502113972678/SE%40UVA+2017+Annual+Report.pdf; [2]Innovative Deal Structures for Impact Investments by impact investors Diana Propper de Callejon & Bruce Campbell, with Gabi Blumberg; [3]http://pwpatuva.com; [4]http://magazine.batten.virginia.edu/spring-2015/featured/ideas-for-policy/i/garrettHall@960.jpg; [5]https://static1.squarespace.com/static/54fda192e4b00126ca6b9246/t/561ea1a0e4b05b29ace44dfd/1444848033103/SE%2BLogos-11.png?format=1500w; [6]https://cdn-images-1.medium.com/max/2000/1*INjE5C2hkXjg-UmH2FAVXA.jpeg
