The three blind spots of social entrepreneurs

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Suzan Elsayed is a Google Policy Fellow at Wamda and an independent researcher focusing on the Fourth Industrial Revolution and future of jobs in Middle East and North Africa (Mena). She previously worked as a strategy consultant in the GCC and London.

Social entrepreneurship is often misunderstood as "non-profit" or simply as charitable programmes, but while such companies do exit, many are mission driven with a mandate to make profit. According to the World Economic Forum (WEF) social entrepreneurship is the act of an individual or a company starting their own business through the motivation of a social problem that will bring about socio-economic impact for a certain region. Their success is measured through their impact on the society, rather than their profits alone. As they seize an opportunity to meet the supply and demand of the market, they establish a value for themselves within the society. 

Plenty of social enterprises have emerged across the Middle East and North Africa (Mena) region. There are now startups that tackle issues in the healthcare and education sector, enabling better efficiency and accessibility and companies that focus on environmental issues due to the misuse of resources and the arid lands that surround the region.

But social entrepreneurs, especially the ones that are for-profit, face a host of challenges, particularly when it comes to maintaining focus or understanding the business lingo. 

The lack of communication and gaps in understanding the necessity and the needs of social enterprises results in governments, investors, and startups to be ‘lost in translation’. For a starter pack, it would be recommended to focus on those three ‘blind spots’ for social entrepreneurs:

Money Speaks

In a recent panel discussion, one of the investors made a poignant statement. Given the political situations of the region, many of us cannot voice our opinions or vote on challenges facing our societies, so, “private finance can provide a democratic vote”. With investments being the key driver for change, social entrepreneurs need to speak the lingo. Given the limited number of venture capitalists who are open to social enterprises in the region, there needs to be a strategic and quantifiable language with potential investors.

On the other hand, it is crucial to highlight that the social entrepreneurship ecosystem struggles with a lack of pre-seed and Series B funding. However, this gap is substituted with grants and funding from international donors and charities which is considered unsustainable. Donors usually provide their funding as part of a one-off investment and do not drive a business-mindset in social entrepreneurs as they are not expected to showcase return on investment or profits.

Innovative Business Models

Social entrepreneurs are mission-driven individuals who are keen to make a visible impact in their societies. Yet, this can sometimes be difficult to translate into quantifiable and measurable results. Thus, the key is to make the business models ambitious but be humble about your social impact. For instance, if you are adding two to three UN Sustainable Development Goals (SDG), this will draw some scepticism towards the achievability of the business – especially if it is not backed by solid financial figures. It is vital to be strategic and pinpoint the aim of a startup to a primary and secondary key performance indicators (KPI).

It is understandable that social enterprises do not have the traditional business structure and can require a longer time-frame in order to achieve results. Therefore, it is beneficial for social entrepreneurs to consider the investors’ mindset and create a risk profile that can include organisations or entities that are able to withstand such social innovations. This is currently being tested through similar models of social impact bonds. Such innovative and strategic thinking would require entrepreneurs to have access to a pool of mentors that understand the nature of mission-driven businesses and their objectives.

Know Your Audience

Many social entrepreneurs already struggle to define their businesses to people as they can still be considered as ‘non-profit’ or charity organisations. Therefore, social entrepreneurs need to ensure they are innovative with their pitch in a way that can showcase their business mindset and their social impact - a pitch can be done in both ways. For instance, it is not necessary to align your startup with an organisation’s values or with the SDGs just for the sake of showcasing a social impact as long as you already have one.

For many business leaders and investors, it can be difficult to understand the social impact and its measurement. Thus, it is crucial to evaluate and understand the audience before presenting or pitching. In addition, it is vital to step back and create a simple value chain of the service or product – including its social impact. It needs to be quantifiable, financially viable and empathic to the social challenge. Last but not least, do not show up to a pitch riding your Ferrari. Walk the talk!



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