Today, social enterprises find it difficult to get funding to develop and scale their business. Three organizations within the Innovation System in Gothenburg want to change that. By identifying the obstacles and biases that these companies face, they want to develop a method to increase the investment potential and conditions for social enterprises that contribute to the global goals and increase gender equality.
Most incubators today focus on financial scalability, while social enterprises apply profit distribution limitation and instead focus on scaling their societal benefit. This means that social enterprises do not fit into the prevailing system. Several studies have shown that these companies are also more financially excluded than other forms of business. For example, the European Social Enterprise Monitor 2020-2021 showed that 88 percent of social enterprises in Sweden want to grow, but more than half state that access to capital is the biggest obstacle. Those companies in particular do not get the chance to present their ideas to potential investors.
- We hope that the accelerator process we are developing will lead to the social enterprises attracting and reaching a higher level of investment potential. The reason this does not exist today is because social and cooperative enterprises use different concepts and business models than investors are used to. We want to support both sides to learn to use key figures that everyone can analyze, says Ylva Lundkvist Fridh, CEO of Mikrofonden
- That by understanding which biases and obstacles social enterprises face with financiers, we can understand and develop knowledge about how these should be met. It will create a more equal system and more companies that have the opportunity to grow, says Jessica Oldborn, business advisor and head of sustainability, Founders Loft.
Founders Loft, Mikrofonden and Coompanion are behind the venture, which is being carried out in a pilot study with funding from Vinnova. They must develop, test and evaluate a method based on cooperation between existing incubators and other actors within the ecosystem for social entrepreneurship. The result is validated through a reference group during the preliminary study consisting of companies, promoters and investors. The companies targeted by the method must become more sustainable in all three dimensions: economic, social and ecological.
- Companies whose core is to create results in the form of social benefit, contribute to the global goals and increased gender equality do not today have the same conditions to scale up their business models and maximize their results. To change this, increased integration is needed between the promotion system for traditional companies and the promotion system for social companies, says Joachim Keim, business developer at Coompanion Gothenburg Region.
By identifying competitors, uniqueness, scalability and international potential of the companies, their investment maturity becomes greater and the possibility of sustainable economic development increases over time. In this way, one should be able to identify obstacles to investment in social enterprises and also see how these obstacles can be minimized. Social enterprises and cooperatives are the primary target group, but with Founders Loft as an arena, these will meet traditional companies to exchange knowledge and experience.
- The social enterprises and cooperatives must be able to share knowledge in areas such as digitization, commercialization and investment. The hope is also that other incubators and the business promotion ecosystem will be able to take part in the method and implement it in their operations, says Jessica Oldborn, Founders Loft.
The incubators must have a broader and deeper offer for their participating companies. This, in turn, should lead to them bringing in more companies with a main focus on sustainability. The feasibility study runs until March 2023. About the project's partners Founders Loft is an incubator with great commitment to sustainability and gender equality, with experience in running the incubator in association form. Coompanion is a business advisor with expertise in social and cooperative entrepreneurship, and experience in running accelerator programs. Mikrofonden is Sweden's only social investor with risk capital for cooperative and social startups. Together, the parties want to develop a method to increase investment maturity in social and cooperative enterprises.
Press contact: Moa Nilsson, communicator Coompanion Göteborg Tel: 0731 430 574 Mail: moa.nilsson@coompanion.se Jessica Oldborn, Founders Loft Tel: +46739 834373 Mail: jessica@foundersloft.se Ylva Lundkvist Fridh, Mikrofonden Sweden Tel: +46-73-17 599 59 Mail: ylva.lundkvistfridh@mikrofonden.se Joachim Keim, Coompanion The Gothenburg region Tel: 0703-023365 Mail: joachim.keim@coompanion.se
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