Social Enterprise's roots and the emerging new economy

by Garrett Melby • September 18th, 2015
  • Rethink

 

 

For-profit and non-profit classifications will become a thing of the past. The new economy is eclipsing this old, bifurcated way of thinking, and this is why.

 

 

The term “social enterprise” conflates the concepts of non-profit social mission and profit-maximizing business enterprise that, by accident of our nation’s tax code, had developed in the 20th century as antithetical fields, each with their own culture, practices and tools.  

 

 

In the first decade of this century, the distinction between these fields began to blur, in large part due to disruptions from the technology venture capital community.  

 

 

On the non-profit side, newly minted tech billionaires such as Gates, Skoll and Omidyar wanted to reinvent philanthropy in a more entrepreneurial and efficient model.  On the for-profit side, young entrepreneurs – founders of Facebook, Twitter, for example – were pursuing business models in which revenues and profits were understood to be derivatives of value creation, in the form of user experience and network expansion, rather than the defining mission of the enterprise.   

 

 

At GoodCompany, we prefer the term “Impact Venture.” The businesses we work with create value in the application of new technologies to address significant social problems, and entrepreneurial strategies to disrupt dysfunctional systems. Our program is designed to develop business models and capital strategies for maximum impact, understood to be the whole of the value brought into being by the birth of a new model.  The ability to monetize some portion of the value created is essential to attract the capital required to deliver impact at scale, but our entrepreneurs are motivated by more complex and compelling ambitions: reducing recidivism by changing behavior with text messaging, creating fabric out of trash in Haiti, bringing lighting to children in Kenya.

 

 

Our goal is to draw on the expertise and best practices of both the non-profit and for-profit sectors to develop analytical tools and curriculum for the new economy.

 

 

Our mission is aptly summarized by Sir Reginald Cohen, founder of Apax Partners and current Chair of the G8 Social Investment Task Force: “We see the future, and we have to provide the tools for it.”  That future, defined in financial and human terms, is upon us.  Spurred by JP Morgan and the Rockefeller Foundation’s projection of a $1 trillion impact investing sector by the year 2020, all of the leading investment and commercial banks have established social or impact investment practices and funds in the past two years.   

 

 

In a study of 5,000 Millennials across 18 countries conducted by Deloitte for the World Economic Forum, respondents ranked “to improve society” as the number one priority of business.  The next generation of consumers, investors and entrepreneurs has rejected the “either/or” mentality that views “social enterprise” as an oxymoron. We’re here to make their aspirations the new mainstream reality.

 

 
 
  • Sir Reginald Cohen Quote

Garrett Melby is co-founder and Executive Director of GoodCompany Ventures, a nonprofit accelerator for social entrepreneurs that has mobilized over $40mm in private capital to scale their impact. Garrett is also the founder of Iolite Impact Capital...

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