Collaboration And Crowd-Funding Are Keys to Raising Capital For Local-focused, Small Businesses with Social Missions

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New approaches to raising start-up business capital – including local collaboration and web-based solicitation of many small investors – are gaining steam among social investors who want to support sustainable, community-focused small businesses. That’s the message being delivered to investors and savvy business people by a California-based non-profit.

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There’s a growing network of resources for people who want to start businesses that have a sustainable mission in addition to making a profit.

New approaches to raising start-up business capital – including local collaboration and web-based solicitation of many small investors – are gaining steam among social investors who want to support sustainable, community-focused small businesses.

That’s the message being delivered to investors and savvy business people by a California-based non-profit.

“There’s a growing network of resources for people who want to start businesses that have a sustainable mission in addition to making a profit,” says Betsy Densmore, director of the Academies for Social Entrepreneurship (ASE). “The challenge is making the connections. It’s starting to happen.”

Dozens of entrepreneurs, investors, lawyers and consultants gathered at the Wells Fargo Conference Center in Los Angeles at a symposium organized by Densmore’s group along with seven collaborating partners. “Increasing Access to Community Capital: New Strategies for Funding Social Entrepreneurs and Social Enterprises.” The conference focused on accessing local capital, double bottom line “impact investing,” crowd funding and other financing mechanisms for social entrepreneurs. It featured economist Michael Shuman, author of the new book, “Local Dollars, Local Sense.”

“Collaboration creates prosperity,” Shuman told the symposium participants. "Local companies can trump market returns . . . legalized crowd-funding could do more for job creation than throwing money at big corporations."

The term “crowd funding” refers to use of new Internet-based tools to rapidly solicit and pool small donations to underwrite for-profit or not-for-profit projects. “I think this [crowd funding] is a game changer,” said Chance Barnett, cofounder and CEO of CrowdFunder.com. “In fact, I see this as a complete revolution in small business finance.”

Shuman suggested three new-economics success principles: Boost the number of jobs connected with locally owned businesses; promote self-reliance within your community; and identify and support the best performing socially responsible businesses.

Other topics discussed at the June 25 symposium included new legal structures that facilitate hybrid entities and allow for the creation of businesses that mix for-profit and non-profit elements. “It’s a new interesting, exciting, and growing area”, said Cecily Jackson, an attorney and Board Chair at the Social Enterprise Alliance LA.

During the following panel discussion, local activists shared expertise and personal insights about accessing capital to fund social ventures in the Los Angeles area. The overall take-away of the panel discussion was a shared interest in making more money work for more people and to move towards the goal of overall sustainability in business and social endeavors alike.

Speakers, panelists and attendees gained an increased understanding of the landscape of social enterprise financing in addition to expanding the reach and strength of their network of professionals working in this increasingly significant field.

The event was hosted by California Community Economic Development Association (CCEDA), the Social Enterprise Alliance/Los Angeles and TheHubLA, a shared-workspace provider. It was sponsored by ASE, in partnership with the REDF (Roberts Educational Development Fund) of San Francisco, The California Endowment, and The Sustainable Law Group, of Santa Monica, Calif. Wells Fargo donated facilities.

ABOUT ACADEMIES FOR SOCIAL ENTREPRENEURSHIP

Academies for Social Entrepreneurship (ASE) helps develop innovative solutions to social problems by providing training and mentoring for social entrepreneurs. Our goal is to enable charitable organizations to attract growth capital so that they can expand their programming and increase their revenue from earned, rather than donated income. ASE’s programs focus on equipping not-for-profit executives with the skills they need to build high performing, earned income ventures. Since 2006, ASE’s programs have expanded capacity in hundreds of non-profit organizations, catalyzing tens of thousands of dollars in new revenue. Learn more about their workshops and Academy programs at http://www.academies-se.org.

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Betsy Densmore

Heidi Pickman
CAMEO
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