Social entrepreneurs are on a mission to solve problems plaguing society, but such altruistic efforts do not force these ventures into becoming profitless charities by default.
New investment regulations put in place by the recently passed Jumpstart Our Business Startups (JOBS) act coupled with a shake-up in the traditional venture capitalist model could make it easier for social entrepreneurs to attract initial funding.
Two years ago, the 2010 winner of New York University’s Social Venture Competition, Chirag Sadana, struggled to attract funding for his for-profit social startup America Smiles, which aimed to bring affordable dental care to low-income children. He’ll tell you that making money as a social entrepreneur can be done, but it’s not easy.
“We were sort of in this middle ground of social entrepreneurship where we can’t really go to the nonprofits because they’re like, ‘well, you’re not a nonprofit, we’re not going to give you any money,’ and investors were like ‘well, you’re practically a nonprofit.’ So it’s a really odd position,” Sadana said.
But his new venture called SmartMoney Entrepreneurs, an equity-based crowdfunding platform, aims to solve that problem for other social entrepreneurs who want to change society for the better, but turn a profit at the same time. It will allow entrepreneurs to bypass accredited investors and charities and find funding from other sources, like people willing to invest $100 or $200 for equity.
Social entrepreneurship is not a new concept and many have found success operating as a for-profit businesses. In August, Inc. Magazine profiled five companies that make money while doing good including Jack’s Soap which donates one bar to a child in need for every two purchased. Indosole is a for-profit shoe company that creates sandals from re-purposed Indonesian motorcycle tires, decreasing the number of tires hitting the landfills.
Social entrepreneurs are encouraged to enter the NYU Entrepreneurs Challenge. Its social venture category offers a $50,000 award for first place. The deadline to enter is this week and some prospective contestants are also looking to solve a societal problem and simultaneously turn a profit.
Caitlin Kelly, a graduate student at NYU’s Wagner School of Public Service, plans to enter the contest…
Read more: Katie Lobosco, Forbes