Expert Round Table and Resulting Report Point to Fresh Financing Approaches for Social Entrepreneurs
Within the social development sphere, it is common knowledge that social entrepreneurs, who avoid relying on grants or donations, often struggle to scale their business. In a lot of cases, this is because of difficulties accessing tailor-made capital and in finding the “right” investors. It is an experience that we share through our work with the entrepreneurs in our empowering people. Network. With that in mind, and in order to move the needle on this aspect of impact development, we at Siemens Stiftung (the Foundation), along with one of our non-profit partners, enpact e.V., decided to initiate and host an international expert round table on this crucial challenge. This round table took place in Cairo in conjunction with the 2019 empowering people. Award ceremony on July 11. Thanks to the expertise and fresh insights of our round table participants, we have released a new report, ‘Innovative Financing for Social Entrepreneurs’, which shines a spotlight on smart solutions for social development’s biggest hurdle: financing.
For the round table sessions, we were thrilled to have social entrepreneurs from around the globe, leading experts from the fields of social finance, development politics, philanthropy, and technologies for development coming together to collaborate. Around 40 participants discussed four specific aspects of financing at four tables in parallel. The Eish & Malh restaurant in downtown Cairo provided the perfect backdrop for the expert exchange in a highly vibrant and productive atmosphere. We were pleased to see the promising approaches and ideas that came from these discussions, including two recurrent themes having potential to impact social entrepreneurs: collecting relevant data for financing by using partially-automated data generation systems as well as improving tailored matchmaking by pooling different sources and types of capital.
Recurrent themes to help support SocEnts with financing
While there were several important discussion points at the four tables, these two themes stood out as having the biggest likelihood of improving and scaling the currently-existing ecosystem for social entrepreneurs. Partly-automated data generation mechanisms would allow for urgently-needed smaller ticket sizes (financial requests/investment) that fill the finance gap for early-stage social entrepreneurs. Here, solutions would not only support social entrepreneurs in finding the right funding partners and vice versa, but also make the due diligence process for investors more cost-efficient and effective.
Additionally, financing vehicles that pool different sources of capital could enable more foundations and philanthropic organizations to become direct funders of social enterprises. Often, one-size-fits-all financing approaches fail to meet the individual needs of social entrepreneurs, while the combination of different types of money and repayment mechanisms could provide more flexibility and tailored solutions. It is clear that these alternative funding models now require further examination, in particular with respect to necessary standardizations.
We invite all players to join forces to continue building better, more sustainable financing methods for social development projects. Day in and day out, we are impressed by the noticeable impact social entrepreneurs’ work has on improving living conditions, creating new jobs and income opportunities, and offering new perspectives for many people around the world. But they need the financial means to get stable and grow their businesses. Accessible finance is one the most important preconditions for them. Therefore we look forward to work on next steps with our partners as we build upon innovative ideas from the round table and beyond.
We invite you to explore the report on the round table and to get back to us (or comment below) with your impressions, thoughts, and feedback.