In this course we will take the social business opportunity that you have identified in the first course to a higher level. Specifically, you will develop a business model using the Business Model Canvas. Gradually you will also start writing your business plan. Moreover, you will be able to assess different organizational forms and select the one that is appropriate for your developed business model. By the end of the course you will be able to compare different social impact investment methods and choose the right funding strategy for your social venture. Note: It is highly recommended to have completed Course 1: 'Identifying Social Entrepreneurship Opportunities' before you start with this Course!
Interview with CEO of "Den Sociale Kapital Fond" | Lars Jannick Johansen
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From the course by Copenhagen Business School
Social Business Model and Planning for Social Innovation
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From the lesson
Selecting an Organizational Form
In Module 4 you will intensify your knowledge about various organizational forms. In particular new organizational forms, tailor-made for social enterprises, in the US and the UK will be presented and you will be encouraged to scan the legal framework in your own country. Once you have identified a form that matches your expectations you will continue your business plan process by starting to think about funding options in the next Module of this Course.
Meet the Instructors
Kai Hockerts
Centre for Corporate Social Responsibility
Well, if you look at the field of finance for social or
socially oriented enterprises, I mean, internationally, quite a lot is available.
I, I think by now, you probably have the same spectrum of
finance opportunities available for, you know, for
social enterprises, as you would have for other strictly commercial enterprises.
The challenge is, I guess, the opportunities are not
necessarily evenly distributed, and do not necessarily match
the needs of social enterprises in, say, the UK or Denmark.
So, even though in Europe you both have, you know, grants available.
There are several accelerators around Europe for social enterprises.
You have venture or venture like capital.
You have banks interested in social enterprises.
You know, you even, you, you also have more investors for more mature companies.
And at least for the, at least for the profitable, social enterprises,
I would say there also is some form of, of an exit market, and so on.
So even though you have like the, the you know,
you basically have various opportunities readily available around Europe,
they're not necessarily coherent on a national level in an ecosystem and
that ecosystem doesn't necessarily match the needs.
So, if you talk to social entrepreneurs, they quite often, say,
complain about the, the need for very risk-oriented, or
capital for early stage companies, or even grants for early stage companies,
where you really need, you know, risk-friendly capital, so to say.
And if you look, and then if you talk to social investors,
you often hear them complain about, you know, a lack of deal flow, so
to say, a lack of, you know, good investment opportunities.
Because they, of course, well, not necessarily of course, but often look for,
you know, less risky, more mature but still high-potential social enterprises.
So I think that the point is that, that if you look at the European eh,
international, but also if you look at the, the European,
kind of like a capital market or ecosystem for social enterprises, you might have
all the elements there, spread out among some countries and in countries where it's
very developed like in the UK you, you, you have the whole ecosystem.
But it's not necessarily distributed or available to the scale,
the amount and the timing where the companies need it and
that's something that's, you know, still leaves work to do.
Den Sociale Kapital Fond, or The Social Capital Fund, as we are called in English,
we are an investor of capital and competence in companies
that have the potential to be both social and competitive.
The form of social that we focus on is inclusiveness, especially labor market
inclusiveness, so we are focused on companies that either employ
marginalized or, or formally marginalized groups, or people in
risk of becoming marginalized within the company.
Or in other ways, typically through traineeships and
maybe some forms of education enable them to gain employment elsewhere.
What we do then is, we have a, small, small or
part of sort of an ecosystem for these kind of companies,
whereby we can help startups, social startups with this purpose and
good commercial potential also, which we find very important to gain a strong,
a good foot hole on the market, through our
social startup accelerator that we offer in cooperation with VELUX Foundations.
We then have an accelerator for more established companies that need to
optimize their business, which is called Det Sociale Vækstprogram, or the Social Growth
program, that we offer in cooperation with the Danish Ministry of Employment.
And finally we can then invest in the best cases, through our social venture fund
that we have established, that has been established by TrygFonden,
also one of the leading Danish charity foundations, charity actors.
And, and what we aim to do is basically to develop a new generation of role models,
for how you can be both social, in our case socially inclusive, and
also a competitive growth company at the same time.
Hopefully as a means of inspiration for other Danish companies,
especially Danish SMEs, that we see as a, as a necessary force for
inclusion in the Danish labor market in the future.
Well, what we look for, when we look at potential participants or investments in
our programs and in our investment portfolio is, is several different things.
But typically, we say it's, there are three dimensions that
are really worth considering.
One is the commercial potential of the idea, so the business model.
What do you want to produce, what kind of services do you want to offer?
And how, you know, what's your, what's the platform?
What's the model, the payment?
All the characteristics of a business model and a market and a product, and
the commercial potential in that, that's, that's, that's one thing we look at.
The second thing we look at is the social model, which basically means, you know,
what's your means of inclusion?
How does that tie together with your, with your business model,
your commercial model?
Is it, are they, you know, contradictory or do they, are they aligned?
Do they strengthen each other? And so on.
So, and how do you work not only with inclusion, but
also with something that's equally important to us namely, progression,
meaning, you know, you are able to both include people, but also to help their
personal development, their professional development when they are employed or
engaged with your company. So that's the second dimension.
The third dimension we look at is the people potential, the team potential.
Basically when you say, when you make an investment,
you say that at least 75% of the investment is about the people.
You know, 75% of the chance of success or
failure, rests with the, the leaders and the team of the company.
So we're very interested in trying to find out, you know,
what are the kind of people behind?
Have they worked in this field before?
If not, what are the characteristics we can find out about them,
the way they work when we follow them.
How do they attack problems, so to say?
How do they, how, are they effective?
Are they committed?
And so on and so on.
So you know, you can say we typically both have a, a when,
when it comes to investments, we typically both have a commercial, a social, but
also you can say a human due diligence.
When we look into both startups, but also more established companies,
depending on whether it's the social startup program, a social growth program,
or when it's for investments in our venture fund that we're aiming at.
One of the companies that we work with in our portfolio is Specialisterne, that has
been part of our investment portfolio for approximately two and a half years.
And what we focus on,
especially with them, is optimizing their business model and business performance.
They have a very interesting and, you know, very inspiring
social model which has become a role model all the way around the world.
You can say, utilize specific characteristics of of people and you know,
turn, what's often seen as a disadvantage into an opportunity or an advantage.
And first it's interesting that they both, not only do they hire people with autism,
but they also train young people with autism to,
become, valuable employees at teams in other companies.
So what we've been working with Specialisterne on is very much about,
how they can optimize their business performance, their team and so on.
In order to turn this really good social model, which also, as,
part of it being a good social model is that it has, you know, a kind of like,
you could say, a commercial model built into it.
But how can you then make it into,
a more sustainable, profitable, scalable business.
And that's what we've been working with Specialisterne on,
and still work with them on.
With the financial investment but also with the engagement, both, on a board level.
And also with our competence partners. We work with,
Accura, a leading Danish, commercial law company.
We work with EY, Ernst and Young, a leading global,
advisory company and we work with Accenture, also a leading global
consulting company who all provide support for the companies we work with.
And in the case of Specialisterne for instance they have also besides us
in the management team, helped in various ways, you know, analyze and
identify opportunities for improvement and
so on when it comes to financials, legal, and commercial perspectives.
So that's, some of the ways we work with Specialisterne.
Another case which is less known, but not less interesting, that
we're working with is a company called Gamle Mursten, or Old Bricks,
a very interesting case of a triple bottom line company.
They are based on a patented semi-automatic process whereby they
can recycle old bricks from buildings
under demolishment and, or demolition, and reuse them for
new buildings in a way that is very cost-effective and very competitive,
which saves tons of CO2, for each 2000 bricks, you save a lot of CO2.
And which also provides the new buildings not only with a, you know, very
strong energy account so to say, but also, I think many of us find them very beautiful
with a lot of patina which means that they're very popular with architects.
In that process, they also employ formerly marginalized people, because the kind of
work they have, is very suited for people to enter the labor market.
So more than half the employees at Old Bricks, or Gammel Mursten,
are formerly marginalized people, refugees with traumas, et cetera.
Not only do they employ them, but they also have, they also work a lot
with social progression, develop the competence of people so
you can start in one end of the company, but you gain both formal and
informal competences and work your way up there.
So we've invested in them to strengthen, you can say all bottom lines, but
not least also the social work and the commercial work
they have and so we are investing in helping them scale,
their model, throughout Denmark and
maybe one day prepare them for more international expansion as well.
If you are an entrepreneur, seeking funding or capital for your company,
I mean, giving one advice is very difficult because the key is,
it depends so much on context.
You know, what kind of company do you have?
What's your commercial model?
What's your social model?
Who are you yourself, what kind of team do you have behind?
All these factors,
all three dimensions are very important to what kind of funding you can seek.
If I should give one advice,
it is to take, you know, be systematic and be professional.
Systematic is all about, you know, um,um, you know, do your research.
Find out, you know, are we, if it's an early stage company, for
instance, are we then eligible for, for say, grants?
Charity money that might be available from private or public foundations?
Could we go to banks?
Or, could we be eligible for
commercial investors, because we have a strong commercial model?
Or, could we, you know, be interesting for
social investors, like Den Sociale Kapital Fond or others?
So, you know, I would be quite systematic in looking for opportunities, and
matching opportunities with the model I have.
And when I say being professional,
it means, you know, if you want people to take you seriously as an entrepreneur,
You also have take the others seriously, so, you know,
once you approach potential investors or funders, do it in a professional way.
Be prepared, know what they look for.
Talk to people around them, look at their home page and so on to find out:
What are they searching for and, and, and,
why do you tink there's a match between what you can deliver.
And make sure that when you do presentations, whether it's in writing or
verbally, you know, you are prepared.
You work through it so that you are, you know, proud to present it.
Those are kind of, you know, the, the general tricks or advices that
I think, you know, a lot of people would benefit from thinking about, you know.
Have we been systematic?
Have we, have we looked through all opportunities, that we are aware of or
that we can be aware of if we do good research?
And, and is this professional?
You know, are we, are we approaching people in a professional way?
I would, that, that would, that would be my advice.
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