Think Bigger: Social Entrepreneurship's Critical Need for Accelerators

Despite immense needs, impact investing can make a real difference across the globe.

learn more about Benjamin Geyerhahn

By Benjamin Geyerhahn

Opinions expressed by Entrepreneur contributors are their own.

Prossy Sebunya has a passion for clean cook stoves -- a technology that's critical in third-world countries, where fuel is an expensive commodity, wood fires lead to deforestation and unhealthy conditions prevent sanitary food preparation.

But it's not just her passion. It's her business.

She's a social entrepreneur with the goal of spreading these stoves throughout Uganda. Through Boost, a training program for clean cook stove entrepreneurs that's run by the Global Social Benefit Institute Accelerator, she's fortified her business model.

Startup accelerators play a critical role in helping social entrepreneurs like Sebunya attract investors. Of course, accelerators are important in the for-profit world, but players in the expanding realm of "business with a mission" could use some help, too.

These idealistic but inexperienced entrepreneurs need more organizations willing to work with them until they're ready to accept multimillion-dollar investments to scale their impactful projects.

Related: 4 Ways Your Company Benefits From Giving Back

The maturation of later-stage social investing

There's been an influx of infrastructure to make it easier for large investment funds to move into social investing at later stages.

Traditional money managers such as Goldman Sachs can now create funds aggregating millions of dollars for investments in large social ventures. Using third-party rating systems that function similarly to generally accepted accounting principles, as well as new legal structures, they can hold these ventures legally accountable for the first time.

This has allowed these funds to be more accountable to their investors and make sure the companies they invest in are doing good while doing well.

The challenge

Despite all this progress, there's a lot of need for improvement in helping small startups scale up to the point that larger funds will consider them. Luckily, the startup world provides guidance.

Two traditional accelerators can show us what's possible. Y Combinator is probably the biggest and most famous, but AngelPad has a slightly more hands-on approach. These accelerators bring entrepreneurs in-house for months at a time to help them refine their business plans and demonstration projects -- often ending with a "demo day" in which participants present their businesses to investors.

Related: Adrian Grenier: To Succeed, Entrepreneurs Must Have a Social Mission

Those who survive maintain a close relationship with the accelerator, which takes an equity stake in the company.

Because the traditional accelerators have skin in the game, they put more into the companies and stick with them longer. Social-impact accelerators are experimenting with this model. For example, Significance Labs had a three-month in-house cohort of five fellows in 2014 to make mobile apps targeting low-income populations.

This is a great start, but the main problem is that most social accelerators don't support entrepreneurs long enough to get them to a stage where they can win significant capital. Too often, they offer mentoring and connections to networks but insufficient hands-on support.

This leaves us with social entrepreneurs who have good ideas and the passion to do good, but who lack the skills needed to launch and scale up a business. Instead of being seasoned businesspeople or top-flight MBAs, social entrepreneurs are often recent graduates or professionals in another field (e.g., health care or education).

Without the support of experienced professionals, learning on the job is particularly difficult in these high-impact organizations.

Revamp accelerators for social good

To combat this issue, investors must launch accelerators that extend beyond the current model of mentoring, providing tiny amounts of capital and offering access to networks. Rather, they need to physically bring social entrepreneurs in-house and support all aspects of their business, offering expertise in strategy, market research, product development, legal and accounting.

Social entrepreneurs must do their part by giving up some equity in exchange for help. Success would breed success, and this would become the model for social enterprises to get started, reach sustainability and scale up.

The needs are immense, but impact investing can make a real difference in the lives of people across the globe. However, to make any difference (and any profit), these social entrepreneurs need more than money.

They need guidance from accelerators interested in growing sustainable companies.

Related: Do Good or Make Money? Why It's Not Even a Question

This article was co-written by Andrew Greenblatt, founder of Pride Diamonds and a real estate company that buys properties and rents them to charities.

Benjamin Geyerhahn

CEO and Founder of BeneStream

Benjamin Geyerhahn is the founder and CEO of BeneStream, a New York City-based company that uses a combination of technology and a multilingual call center to guide employers and employees through the Medicaid enrollment process.

Related Topics

Editor's Pick

Everyone Wants to Get Close to Their Favorite Artist. Here's the Technology Making It a Reality — But Better.
The Highest-Paid, Highest-Profile People in Every Field Know This Communication Strategy
After Early Rejection From Publishers, This Author Self-Published Her Book and Sold More Than 500,000 Copies. Here's How She Did It.
Having Trouble Speaking Up in Meetings? Try This Strategy.
He Names Brands for Amazon, Meta and Forever 21, and Says This Is the Big Blank Space in the Naming Game
Business News

These Are the Most and Least Affordable Places to Retire in The U.S.

The Northeast and West Coast are the least affordable, while areas in the Mountain State region tend to be ideal for retirees on a budget.

Business News

I Live on a Cruise Ship for Half of the Year. Look Inside My 336-Square-Foot Cabin with Wraparound Balcony.

I live on a cruise ship with my husband, who works on it, for six months out of the year. Life at "home" can be tight. Here's what it's really like living on a cruise ship.

Business News

American Airlines Sued After Teen Dies of Heart Attack Onboard Flight to Miami

Kevin Greenridge was traveling from Honduras to Miami on June 4, 2022, on AA Flight 614 when he went into cardiac arrest and became unconscious mid-flight.

Leadership

Are You Being Too Soft as a Leader? You Might Need to Try a Different Approach

At the core of leadership, we must provide purpose, direction and motivation to our employees — but not everyone is using the right leadership style to offer these things. Here's why you might need to consider a more rigid approach.

Starting a Business

Free Event | March 30: Solopreneur Office Hours with Terry Rice

Running a one person business is challenging, but we're here to help you. Tune in as our expert, Terry Rice, answers your most pressing questions.