Knowledge and networks
There’s a growing movement around the world aiming to help social enterprises to grow and to succeed. But what kind of support do they really need?
Euclid Network member the Social Entrepreneurship Center at Vienna University led the research for Impact Hub and authored a chapter looking at social entrepreneurs’ needs. We spoke to Peter Vandor, Senior Researcher and Manager at Vienna University and co-author of the report.
What was the main thing you learned from this research — was there anything unexpected to come out of it?
One of the findings which I find surprising is how important knowledge and networks are to people compared to access to funding. When we look at the types of resources sought by Impact Hub members, building up social capital seems to be much more important than traditional resources. This stands in sharp contrast to the popular emphasis of funding as the main, unmet need of social entrepreneurs. Many ventures seek and get funding, but most social enterprises are still nascent — and what they really want is things like access to lawyers, learning about licensing, understanding the industry.
Secondly, the story you often hear is that the need for support diminishes as organisations grow. But what we see here is that they keep seeking support — the kind of thing they need changes, but still they need something. So if we are trying to build ecosystem, we shouldn’t just focus on early stage support. It’s a long way to building a company!
The research looked at social enterprises around the world. What did you discover about support structures in different locations?
What’s very interesting is the influence of culture. Support organisations and funders tend to go with what they know — market-oriented funders are more likely to support those based on a market-oriented theory of change, governments will more likely support organisations that are mission-oriented, working directly with beneficiaries.
But that’s not the same everywhere. In countries where there’s a culture of lower uncertainty avoidance, people don’t stick to that logic as much. For example in countries like the UK, Sweden or the US where people are more comfortable with uncertain situations (compared to say, Austria, Greece or Japan) supporters are more ‘daring’. So culture can influence who will support you as an social enterprise, and what fields will develop as a result.
It also suggests that in the long run, social entrepreneurship is much more likely to emerge as a distinct field with its own rules and ecosystem in countries in which supporters can deal with uncertainty.
What’s the key message coming out of this research for support organisations (and for those funding them?)
Invest more in community-building and network-building for the ventures you want to support. Conversations about social enterprise always tend to go to money, but what we see — at least among this sample — is: yes, money is important but so are things like contact with peers, with advisors, and ‘weak ties’ that provide connections into other disciplines and fields of expertise.
Also, as educators and supporters, I think we tend to exaggerate the role of institutional investors. Big institutional funders and investors are the ones capable of investing large amounts, but in our sample (and other comparable research) they invest quite rarely. For most social enterprises informal support is more likely to play a role: peers, family, customers, financial advisers and so on.
Peers seem to play a particularly important role in support systems. And actually what’s striking is that we found that among those surveyed 400,000 hours of peer networking went on, for free, over the year – that means each Impact Hub member contributed an average of three hours per month for free in the year.
What other research have you done that tells us more about the support needs of social businesses?
Last year we did research on social innovation in the health sector in Austria and we saw that there’s really a support gap for the post-pilot phase. There’s some support for early stages — philanthropic prizes, awards and so on — but what they call the “valley of death” in the US is happening much earlier here. There is always excitement about early-stage ideas, and it doesn’t take that much money to start a prize fund. Then when a business model is robust, it’s ok.
But it’s the stages in between, one or two years after launching, that are challenging: the willingness of the founder and their staff to make personal sacrifices decreases, while the business model is not sustainable enough yet to build stable organisational structures. At the same time, start-ups often find that scaling an innovation in large, complex systems such as health or education can be an incredibly slow and frustrating experience.
Since then we’ve been trying to advocate for more support and even started our own accelerator, together with Unicredit Foundation, called NEXT. It aims to support Austrian social ventures in this particular ‘post-pilot’ phase trough mentoring and funding, but also specialised training in leadership and organisational development. We have just started to work with the first batch and, so far, results are very promising.
What further research would help us to understand how best to support social enterprise?
One approach I’d like to see is around using RCTs [randomised control trials] for certain interventions, to get a real understanding of what works and what doesn’t. I haven’t seen much entrepreneurship research published based on RCTs yet, though the Kauffman Foundation has launched a fund in this area, and there’s been one very interesting RCT in West Africa recently [World Bank Study: Entrepreneur Training Focused on Mindset Proves More Effective Than Traditional Business Skills in West Africa].
A topic I’m excited about is wellbeing among social entrepreneurs… many are really passionate about their mission but this passion can easily turn into self-exploitation and then there’s a danger of burnout. This is also something where supporters can and should play a role.
Euclid Network is partnering with Impact Hub on the MedUP! project, which aims to help develop social entrepreneurship in Morocco, Tunisia, Egypt, Lebanon, Jordan and
“The key message for support organisations? Invest more in community-building and network-building”
“The research shows that in order to thrive, social entrepreneurs need to be surrounded by a community of support and have access to networks and a strong entrepreneurial ecosystem. Around the world, Impact Hub helps social enterprises grow their ventures from intention to scale. In the MENA region (Palestine, Jordan, Morocco, Tunisia, Lebanon and Egypt) we will work together with Euclid on the MedUp project, lead by Oxfam, to build effective ecosystems for social entrepreneurs. Impact Hub will design and deliver capacity building workshops to inspire, connect, and enable the hidden potential of young entrepreneurs in MENA”.
“Money is important, but so are things like contact with peers, with advisors, and ‘weak ties’ that provide connections into other disciplines and fields of expertise”
Find out more
To find out more about Euclid Network’s work to support social enterprise development around Europe, contact Alexandra.