Like in traditional business, social entrepreneurs thrive in a supportive ecosystem, but have different needs. The ecosystem must provide them a powerful toolkit to make real and lasting change in their communities.
Our strategy is to finance organizations that support every aspect of the social entrepreneurs value chain.
After decades of hyperinflation, borrowing is considered risky business, so interest rates remain high and long-term loans are scarce. Entrepreneurs pay over 30%/year to borrow money if they have a good credit score.
Venture Capital investing is fraction of capital invested in the United States, at less than $1B USD.
Philanthropic giving totals approximately $10M USD, 1/18th of annual giving the US. Though the government does not provide tax incentives for giving, a philanthropic and social finance culture is emerging and developing slowly.
To tackle these challenges we fund organizations that provide social entrepreneurs subsidized capital and train them in financial literacy to support their growth.
Social entrepreneurs facing a high cost of capital must stay lean and nimble as they scale. Access to affordable technological solutions and open platform structure can provide critical support. Incubators, FabLabs, and accelerators with support from the private sector (such as cloud space and hosting services) serve the dual purpose of being low-cost network and technology providers, and network facilitators. We have a pipeline of technology and network providers offering tools to social entrepreneurs in Brazil.
Defining the challenge an entrepreneur wants to tackle is only the first step to making a difference. Establishing a theory of change and actionable steps to achieve long term goals will help entrepreneurs develop a strategy.
Defining key performance indicators (outcomes) that track impact and keep a social business on task is also key. However, in Brazil many social businesses have limited budgets to hire M&E staff. We plan to fund nonprofit M&E consultants and knowledge platforms.
