SANTA CLARA, Calif., July 18, 2011 — A new study by researchers at Santa Clara University's Center for Science, Technology, and Society sheds light on the current investment methods and profit expectations of 45 "impact investors," who invest in social-entrepreneur ventures around the world. The study aims to be a first step toward creating a more coordinated, venture-capital-style system for such social-venture startups.
The study, Coordinating Impact Capital, A New Approach to Investing in Small and Growing Businesses, will be unveiled at an event July 26 from 4 to 6:30 p.m. at Santa Clara University's Arts & Sciences Building, Wiegand Room, 500 El Camino Real, Santa Clara, Calif. 95053.
To view the full report: http://www.scu.edu/socialbenefit/resources/loader.cfm?csModule=security/getfile&pageid=9991301
Here in the U.S., any first-year business student can tell you how the venture-capital process works for business startups: Seed or "angel" money is followed by early-stage VC investors who percolate successful ventures, followed by up-round VC investors and possibly "mezzanine" financiers. It's a very "vertical" process that's capped off, if one is lucky, by an initial public stock offering or an acquisition by a deep-pocketed company.
But that's not how it works for social-entrepreneur startups – those businesses around the world that are trying to solve stubborn social problems like food security or energy access and maybe one day make a profit as well.
There, the flow of investment capital is much more disconnected, inconsistent, and lacking in clear metrics to get the next phase. In other words, it's very "horizontal," notes John Kohler, a retired venture capitalist now working as a fellow with Santa Clara University's Center for Science, Technology, and Society. Kohler and a team headed by Jessica Sawhney, a recent Clinton Fellow, have now completed the first-of-its-kind report.
"Wouldn't it be great if, when a socially beneficial business received its first grant, it already knew where the next round would likely come from, and what benchmarks would be required to secure follow-on capital?" asked Kohler. "Currently, it's all over the map."
For the study, Kohler, Sawhney and a team of student researchers interviewed more than 45 funds, examining where they invested, size and type of investment vehicle used, time horizon preferred and outcomes that were expected for each of several classes of capital: grants, "soft" loans, debt, quasi-equity and equity investors.
Among the findings of the study:
"This study gets us one step closer to identifying a business life-cycle for social ventures," said Kohler, "as well as to gather ready-made pools of capital into a syndication structure that accelerates social enterprise development more efficiently."
The authors plan to implement a pilot program in the near future to put into practice some of the suggestions from the study.
About the Center for Science, Technology, and Society
The mission of the Center for Science, Technology, and Society (CSTS) is to promote the use of science and technology to benefit underserved communities worldwide, primarily by working with socially minded entrepreneurs. The CSTS implements its mission through its signature program, the Global Social Benefit Incubator™, its partnership with The Tech Museum in The Tech Awards program, Frugal Innovation, social capital services, and its numerous educational and public engagement activities. Through these programs, the Center has worked with nearly 1,000 social enterprises affording the Center unique insights into leading business models and innovations for the developing world and emerging markets. More information can be found at www.scu.edu/socialbenefit.
About Santa Clara University
Santa Clara University, a comprehensive Jesuit, Catholic university located 40 miles south of San Francisco in California's Silicon Valley, offers its more than 8,800 students rigorous undergraduate curricula in arts and sciences, business, theology, and engineering, plus master's and law degrees and engineering Ph.D.s. Distinguished nationally by one of the highest graduation rates among all U.S. master's universities, California's oldest operating higher-education institution demonstrates faith-inspired values of ethics and social justice. For more information, see www.scu.edu.
Deborah Lohse | SCU Media Relations | firstname.lastname@example.org | 408-554-5121
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