Opinion

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Can entrepreneurs save the world?

7 Mins

From Waterless toilets in Madagascar to off-grid electricity for the developing world.

An iPad solution to help British children overcome serious communication and learning difficulties to an online platform to help fund your local playground or community project.

An enterprise that successfully trains and hires new apprentices from disadvantaged backgrounds to one that is proven to help young offenders stop offending.

Welcome to the world of social enterprise! It promises to change the way we all interact with, and feel about, entrepreneurs and business.

Social enterprise is not new. Victorian philanthropists, appalled by the inequalities of everyday life, set about creating entrepreneurial charities, mutuals, co-operatives, industrial and provident organisations.

The seeds of modern-day social enterprise were sown in groundbreaking initiatives, such as The Big Issue or commercial organisations such as The Body Shop, which proved there was room for a mainstream business with a social conscience.

The Eden Project, Jamie Oliver’s restaurant Fifteen, Café Direct and Fairtrade chocolate company Divine Chocolate, co-owned by Ghanaian cocoa farmers, are the poster children of the current social enterprise sector.

Authoritative government data from 2010 suggests there are about 68,000 social enterprises in the UK, contributing £24bn to the economy and employing about 800,000 people.

A social enterprise revolution is well underway. A new breed of entrepreneurs are turning their backs on traditional careers to put something back into society. From health and education to tackling waste and poverty – new technology, practices and solutions are creating a new way of doing things.

Take pioneering programmes like the Big Venture Challenge, for example. The charity was created by UnLtd to back and support social entrepreneurs. It promises to change the social enterprise landscape in the UK. Following a successful pilot, UnLtd secured a ground breaking partnership with the Big Lottery Fund. The new programme will provide expert support for 100 of the best and brightest social enterprises – projects that create a scalable and sustainable difference to lives in the UK. A fund of £5m is available to match against new investment for those selected. The call-out for ambitious and aspiring social enterprises is now open and closes in early February.

The new Impact Investments fund from Nesta is also a defining initiative that backs businesses trying to solve some of our most serious social problems – examples being, a rapidly ageing population, chronic youth unemployment and fuel poverty.

Then there is the “big daddy” of the social investment world – Big Society Capital. Launched last year, it is a financial institution tasked with developing a sustainable social investment market in the UK. Backed by up to £400m worth of deposits transferred from dormant bank accounts, it backs financial intermediaries in the social sector – organisations that are supporting those aiming to tackle important social problems.

The roots of the new social enterprise revolution have been sown by savage cutbacks in public spending and grants, hitting public services and charities alike. This has created a new breed of social enterprises that know they have to stand on their own two feet and have to create a sustainable business model to survive.

This has created plenty of controversy and, in many ways, could prove to be the defining debate of this decade. Should social entrepreneurs be able to make money for themselves and for shareholders and backers, or should it be ploughed back into society?

On a bigger scale, should larger public services be outsourced to a new breed of private operators, ranging from Virgin to O2?

So, let me enter the fray and probably get some flack for doing so. From an entrepreneur’s perspective, I still see a sector starved of capital. Growing inequality of wealth means the world’s social problems are getting worse rather than better. There is a crying need to attract support from everywhere – from angel investors, to the wider investment community and, yes, from corporates too. The social enterprise sector needs to adopt a grown-up business attitude if it is to mature. It needs impact investors to make a real impact.

So far, many social entrepreneurs and enterprises that I see do a sterling job at a community level – but haven’t created meaningful impact at scale.

If entrepreneurs can clearly prove they are creating a meaningful and measurable social impact – creating real cost savings or inventing new and better ways of doing things – I don’t see why they cannot share in society’s gain.

The bottom line is, we now need bigger and better social enterprise success stories in the UK, or a new dawn will turn out to be another false start.

I, personally, don’t mind if these are done through not-for-profit or for-profit vehicles, as long as they produce the backing, innovation, impact and measurable change that is desperately needed.

To succeed, the social enterprise sector needs to do all it can to attract the best entrepreneurial talent, which is why initiatives like the Big Venture Challenge are so important and why I want to do all I can to help the social enterprise sector become that much more enterprising.

Andy Yates is an entrepreneur and director of Huddlebuy.co.uk, Europe’s largest business money saving site.

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