Social enterprises’ startups: possibilities and barriers

Abstract

Purpose - In capital markets, the primary interest of all parties involved is to build a profitable entity and to earn a high return on investments. Meanwhile, social enterprises’ primary goal is to solve topical social and economic issues of society. Thus, the capacity to attract funding is tied to the specific social problem or need that is being addressed. Consequently, social enterprises dispose of fewer channels for accessing unrestricted sources of risk seed capital than traditional ones. The purpose of this paper is to investigate the possibilities and barriers with regard to social enterprises becoming startups.

Design/methodology/approach – Qualitative research methods including individual semi-structured interviews with experts and desk research were undertaken.

Findings – As startups, social enterprises possess the ability to attract investments, especially impact and angel investments.

Research limitations/implications – Due to the limited time, validity and generalisation, further research with additional data is needed to verify social enterprises’ envisaged possibilities of being startups. Also, continued efforts are required to adjust risk capital markets to some extent, making them more accessible to social entrepreneurs’ needs.

Originality/value – The article suggests that there are certain expectations to receive social and financial returns on investments and this balance could benefit both investees (social enterprises) and investors, as well as society on the whole.