Will Social Capital Replace Venture Capital?

Written by Rolfe Larson | Edited by ian
Sections of this topic
    business-team-planning-marketing-strategy

    I don’t know about that, but it’s definitely making waves in the social change world. Social capital — and by that we mean investors and lenders who are focused on providing funds not for (or at least not only for) their own profit, but also for the greater social or environmental good — is on the rise. These kinds of financing sources are often called “patient capital” in that they are often willing to accept lower interest rates and longer term repayment plans, relative to conventional financing, essentially in exchange for high social impact.

    There are now a growing number of funds that focus in this area, such as Root Capital, Acumen Fund and Bridges Ventures. Many more will be formed in the years to come as this new sector continues its rapid growth. Some estimates are that there may be a $120 billion untapped market of individual investors who are willing to invest in companies that create substantial social or environment impact, once the structures are created to attract those investors. Here’s my blog about these investors and structures.

    Now we can at least imagine a time when social enterprises have the access to capital they need to grow their ventures and impact.

    A recent article in the Harvard Business Review address this topic. See “Social Impact Investing Will Be the New Venture Capital.”

    Good luck!

    Rolfe Larson