1. Social entrepreneurship + Financing

2. Assignment
• Financing opportunities in USA, Asia, Europe
• The untold story behind crowdfunding
http://www.appsblogger.com/behindkickstarter-crowdfunding-stats/

3. FUNDING

4. Determine how much you really need
http://www.devisscher.com/articles/FIBMatching_sources.pdf

5. http://ecorner.stanford.edu/authorMaterialInfo.
html?mid=1182

6. Funding
Most people are reluctant to open their own business the main
reason is the absence of fund.
Surely funding is not barrier to make business, the problem is:
“are you dare to open a business and can you calculate your
business finance?”
Idea
• Opportunity
• Innovation
Research
Market
• Marketing
Plan
• Marketing
Strategy
Financial
Courage
• Financial
Projections
• BEP
• Action
• Risk Taking

7. External: conventional finance
EQUITY
(selling part of your business, can be sold through financial structures, donations or joint ventures
with private firms)
FAMILY/FRIENDS
BANKS OR CREDIT UNIONS
formal institutions will not provide volumes of affordable capital right away. These
relationships are built on trust and track record. May be expensive at the beginning
CREDIT CARDS
MICROFINANCE INSTITUTIONS
(serving under-banked people)
COMMUNITY BANKS
(focus on community, know the people they lend to)
SUSTAINABLE BANKS
(ethical/civic banks, loaning to businesses that share their vision, ex: New Resource Bank,
Permaculture credit union)

8. Bank loans
• Banks are like the supermarket of debt financing. They
provide short-, mid- or long-term financing, and they
finance all asset needs, including working capital,
equipment and real estate. This assumes, of course, that
you can generate enough cash flow to cover the interest
payments (which are tax deductible) and return the
principal.
• Banks want assurance of repayment by requiring personal
guarantees and even a secured interest (such as a
mortgage) on personal assets. Unlike other financing
relationships, banks offer some flexibility: You can pay off
your loan early and terminate the agreement. VCs and
other institutional investors may not be so amenable.

9. Local and state economic
development organizations
•
•
•
Economic-development organizations can charge tantalizingly low interest rates
when lending alongside a bank.
Say you need to raise $200,000 for a building. A bank may offer $150,000 on a first
mortgage at a variable interest rate of prime, now 3.25%, plus 200 basis points, for
a total of 5.25%. The local development entity might lend you another $30,000 on
a second mortgage at a fixed-interest rate of 4%, without seeking equity shares or
warrants. (Without the development corporation's contributions, you would have
to scare up $50,000 in equity--expensive.) If you don't have the cash flow to cover
the interest, the development organization may offer extended terms. Some loans
are interest-only for the first year or two, and even the interest payments can be
accrued for a certain time period.
Development groups may not agree to finance an entire operation, but they make
snagging the remainder from other private sources a lot easier. Talk to your local
chamber of commerce to find these programs. (Also
checkwww.infinancing.com for a list of the types of development finance
organizations).

10. External: non-conventional
•
•
•
•
•
•
•
•
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Social investors
Angel investors
Customers
Small Business Innovation Research (SBIR) grants
Philanthropic grants
Government and Donor Capital
Crowdfunding
Bootstrapping
Lean startup

11. social investors
SOCIALLY RESPONSIBLE INVESTING, “PATIENT CAPITAL”,
“IMPACT INVESTING” OR “SLOW MONEY”
CONSIDER FINANCIAL RETURN WITH OTHER VALUE CREATION.
TRY TO AVOID CERTAIN “BADS” (WEAPONS, ALCOHOL,
TOBACCO, GAMBLING, OR NUCLEAR ENERGY) – AND
ENCOURAGES INVESTMENT FOR POSITIVE CHANGE,
ENVIRONMENTAL STEWARDSHIP, CONSUMER PROTECTION,
HUMAN RIGHTS, AND/OR FAIR TRADE
Grassroots Business Fund, Root Capital, Bamboo Finance, Oikocredit, and Calvert Foundation.
Lists are available at Aspen Network of Development Entrepreneurs (ANDE) and Cause
Capitalism. There are 100s of U.S. investors, listings at SocialFunds.com and Forum for
Sustainable & Responsible Investing.

12. Angel Investors
•
wealthy individuals
Angel investors are often retired entrepreneurs or executives, who may be interested
in angel investing for reasons that go beyond pure monetary return. These include
wanting to keep abreast of current developments in a particular business arena,
mentoring another generation of entrepreneurs, and making use of their experience
and networks on a less than full-time basis.
Finding angel investor: not easy, cluster, personal network, referrals (attorneys,
accountants, bankers), local associations
Where you can find them? Venture capital clubs, regional-based groups of investors,
matching networks
Angels typically invest their own funds, unlike venture capitalists who manage the
pooled money of others in a professionally-managed fund.

15. Customers
Advance payments from customers--assuming
the terms aren't too onerous--can give you the
cash you need, at a relatively low cost, to keep
your business growing. Advances also
demonstrate a level of commitment by that
customer to your operation.

16. Small Business Innovation Research
(SBIR) grants
Getting past the paper-intensive application
process and SBIR grants can be a great way to
turn your intellectual property into mailbox
money. For more on these grants, check out
How To Get Uncle Sam To Fund Your Start-Up.

17. philanthropic grants
• Grants are typically approached as a gift from
a foundation or wealthy individual.
• In the U.S. and the U.K., there are tax benefits
to providing money to legally registered NGOs
• Examples: Gates, Rockefeller, Skoll, and
Omidyar
• Small and very competitive source, should not
be a focus of entrepreneur

18. Government and Donor Capital
• Public sector
• Government contracts
• Requires extensive documentation to win
contracts and long periods of time too
• This option is often financially cheap but far
from free, as there are obligations like
information tracking which takes staff time

19. Crowdfunding
Crowd funding describes collective cooperation,
attention and trust by people who network and
pool money and other resources, usually via the
Internet, to support efforts initiated by other
people or organizations.
Kickstrater.com
Prosper.com - largest peer-to-peer lending
market

22. 33needs for social entrepreneurs

23. Peer-to-peer lending
www.prosper.com

24. Some success stories
FORM1: Researchers from the MIT Media Lab have taken on the
FORM1 project to create an affordable, professional 3D printer
for the masses, and the masses responded with resounding
interest. With more than 2,000 backers and nearly 3 million
pledged (breaking through the project’s $100,000 goal), it’s clear
that there’s major support for FORM1 and consumer-level 3D
printing.

25. Some success stories
The
Oatmeal’s
Nikola
Tesla
museum: Crowdfunding has been good
to the arts and sciences, too, as Web
comic The Oatmeal has raised over a
million dollars on Indiegogo for a
project to build a Nikola Tesla museum.
Originally created to save the site of
Telsa’s incomplete Wardenclyffe Tower,
the project moved on to a museum
after the tower was demolished,
turning its former site into a science
center honoring the inventor. The
project raised more than $1 million in
just 9 days, and ultimately received
$1.3 million from Indiegogo. But the
project benefited from outside success
as well, maxing out their matching
grant of $850,000 from New York state
for over two million in funds going to
create a “Goddamn Tesla Museum.”

26. Bootstrapping
• A situation in which an entrepreneur starts a
company with little capital. An individual is said
to be boot strapping when he or she attempts to
found and build a company from personal
finances or from the operating revenues of the
new company.
• Many billion-dollar entrepreneurs find a way to
grow without external financing so that financiers
don't control their destinies or grab a
disproportionate slice of the wealth pie.

27. Core elements of bootstrapping
• Importance of cashflow vs revenues
• You have to pay bills
• Short payment cycles, short sales cycles (It means
passing up the big sale that take twelve months to
close, deliver, and collect)
• Focusing on function and not the look and form of the
product
• The optimal number of mouths (or hands) between a
bootstrapper and her/his customer is zero.
• Understaff
http://blog.guykawasaki.com/2006/01/the_art_of_boot.html

28. Schutterstock created by
Jon Oringer with $800
camera.
http://www.inc.com/christine-lagorio/bootstrappers-bible-shutterstock-founder-success-story.html

29. http://www.inc.com/richard-branson/200-funded-virgin.html

30. The capital lifecycle for entrepreneurs

31. SOCIAL ENTREPRENEURSHIP

32. some examples

33. some examples

34. some examples

36. • Entrepreneurship is usually discussed in a
business context. Creative pursuit of private
profit and gain underpins entrepreneurship.
Since 1990s it was recognized that business
can operate for non private gain.
• Mobilisation of enrepreneurial principles - not
just philanthropy or basic altruism
• Targeted at long-term sustainable change

38. Key social entrepreneurship drivers
• Social issues inadequately addressed by
government
• Need to raise funds for charities
• Changing public sector (budget cuts require
new revenue streams)
• Growing demand for corporate social
responsibility and ethical entrepreneurship