Social entrepreneurship gained great recognition when Mohammad Yunis won the Nobel Prize in 2006 for his ground breaking micro-finance work in Bangladesh. Despite increasing levels of awareness, social entrepreneurship is a term which is difficult to define or, more precisely, reach a consensus on the definition. If we define social entrepreneurship as "the application of entrepreneurial principles to address the deprivation of social rights", as I did in this post, everybody agrees on the "entrepreneurship" but the "social" part has many interpretations. In other words what is the inter-relationship between the creation of "economic value" and "social value". Are they in fact inter-related, independent activities or a causal relationship. Much new thought by academics is going into this question and we may have a consensus in 5 years. In fairness, social entrepreneurship is a relatively new field.
Nonplussed by the definition issue, venture capital firms have started to invest in social entrepreneurship companies. I know of three examples:
Recognition by the VCs that sufficient economic returns can be generated to warrant investment is encouraging. Now, if a social entrepreneurship company did an IPO, maybe investors would be less concerned by the notion that not all economic benefit needs to go to the shareholders/investors. Of course, the real issue is just whether risk-return is adequate. Directing a portion of cash flow to create "social value" is really no different than any other cash outflow. It just needs to be factored into risk-return.
If you know of more examples of VC-backed social entrepreneurship companies, please add them in the comments.
