Vaarwel Nederlands – Sourcing Lessons

As my three months in the Netherlands is completed, I have reflected on my experience in connecting with over 150 social entrepreneurs and 50 pipeline partners. Mapping the social entrepreneur space in a foreign country from scratch creates a great sense of fulfillment and I would like to share some of the key highlights I have learned in terms of sourcing for pipeline.

1)      The Impact Space is Tight Knit

In the sphere of social enterprises in the Netherlands, everybody seems to know everybody.  Most of the people I have engaged with usually refer back to the same organizations that support and grow social ventures (including the Village Capital partner organizations).  In this sense, there is a very collaborative approach and many individuals I have connected with see that the different organizations are essentially working to achieve the same thing (creating positive impact) in different ways. Communicating this message really helps focus on the positive overlaps between all the organizations and foster a mindset of working together to help each other out.

2)      Partner Up and Down the Supply Chain

In connecting with pipeline partners to refer new social entrepreneurs, I have found that working with partner organizations both up and down the supply chain of sourcing social entrepreneurs has been very useful.  For example, business competitions are a great downstream partner as the ventures who take part in certain competitions are usually at an ideal post-revenue and proof-of-concept stage ready for the next level of scaling.  On the other hand, an upstream partner may be a larger investor who makes Series A investments but also receives proposals from ventures who may be more suitable for seed stage financing and relevant to the Village Capital program.  The great thing about working with partners across the supply chain is that you can easily return the favor to your partners and pass on candidates in your pipeline who are more suitable either up or down the supply chain.

3)      Engage with Partners to Spread the Word

In addition to pipeline partners, partners who could help spread the word through their social media are great ways to gain more traction and reach out to entrepreneurs outside of your network.  These do not necessarily have to be typical PR partners – for example Ethical Property Nederland is currently developing a working space for entrepreneurs (Mundo Den Haag), non-profits and NGOs and has helped post up the call for social entrepreneurs in their blog and Facebook page.  One Penny Entrepreneur (an online platform for startups to help each other and raise social capital) has published an interview on their blog about the Village Capital programs.

4)      Source Unconventional Opportunities

There is no standard protocol of reaching out.  Beyond cold calling and attending events, one of the most enjoyable parts of sourcing is being creative about it.  A great example of this is that many larger scale events and conferences are usually expensive to attend and / or get to.  However, these are great opportunities to meet others with the same interests.  One such event was the SenseCamp Europe, a one day bar camp for social entrepreneurs held in Wiesbaden, Germany.  I was generously supported to attend through a British Council Germany travel grant and wrote about the experience in a blog on their website.  It was a great way to spread the word of Village Capital to entrepreneurs from Germany and across Europe who attended.

SenseCamp Europe: By social entrepreneurs, for social entrepreneurs

SenseCamp Europe: By social entrepreneurs, for social entrepreneurs


SenseCamp Europe: A session with Muhammad Yunus, Nobel Piece Prize recipient

SenseCamp Europe: A session with Muhammad Yunus, Nobel Piece Prize recipient

A Note of Thanks

I would like to extend my gratitude to all those who made this experience in the Netherlands possible:  Village Capital, the Monterey Institute of International Studies and the Frontier Market Scouts program, our local partners in the Netherlands, pipeline partners, conversation facilitators and of course, the social entrepreneurs who are doing so much great work to solve pressing global challenges through innovative solutions.




The New and the Old

Recently, I have visited two very different places: one celebrating the old and another embracing the new in applications of harnessing renewable energy.

Wind Power:  an age old tradition

Windmills have been in The Netherlands for hundreds of years and are a hallmark of Dutch ingenuity in harnessing natural energy to drain out excess water in low-lying areas.  I visited the collection of 19 mills in Kinderdijk, hosted by Peter Robertson, Associate at De Baak for special guest in town Yuwei Shi, Dean of the Graduate School of International Policy and Management at Monterey Institute of International Studies.

Windmills at Kinderdijk

Windmills at Kinderdijk

From a distance, the swinging blades (made from a wooden frame with an optional sailcloth to control wind speed) are leisurely rotating, creating very relaxing picturesque countryside scenery.  However, up close, the full power of the towering blades can be felt as they swoop past you and the heavy swish makes you gauge the full potential of mother nature.  Operating a windmill is no easy feat – professionals need to be trained and obtain licenses to do so.  The full extent of complexity in operating a windmill can be fully appreciated from the lens of a visitor:  from the precision of controlling the speed and throttle of the blades given the current climate conditions to the potential danger and exertion in locking or covering the long blades with sailcloth.  Things can also easily go wrong too – from lightening strikes to an exceptionally heavy force having the potential to sieze off the entire frame and top structure of a windmill – and so a windmill operator need to understand and be competent in handling any situation.

Learning about the windmill system has created an appreciation of how smart methodologies from hundred of years before do not necessarily have to be extinct and driven out by new technologies if the system still works.

Solar Power in its modernity

Another event I attended in the same week also harnesses one of the earth’s primary energy providers:  the sun.  The Solar Solutions fair celebrates the cutting edge modern technology of the latest solar panels and their applications.  Over 70 exhibitors were present in the two day fair displaying all sorts of solar panels and equipment for sale.  Having talked to a number of exhibitors who have attended other fairs in recent years, the general feedback was that this one was quite a large scale fair compared to previous ones in other locations.

Most exhibitors are either well established firms or sales distributors but there are a few interesting applications.  Firstly, is a newly launched database of energy projects (in addition to solar) under development in The Netherlands.  They have a number of staff with backgrounds in journalism working full time to track all developments to provide a database of energy projects across the country.

Among the many similar “traditional” solar panel applications, a fun, interactive highlight of the fair was EVC Heemskerk, a full range of solar powered transport options including bicycles, skateboards, foldable tricycles and the solo wheel – a segway-like disc you can stand on, complete with a handle attached to pick up and take with you when it has exhausted its 16km travel range per charge.  Currently a two year venture with a single store in The Netherlands, the EVC Heemskerk products were clearly popular with the crowd at the solar fair given the large bicycle culture here.

The solo wheel in action

The solo wheel in action

One of the many products by EVC Heemskerk

One of the many products by EVC Heemskerk









The Old and the New

It is refreshing to see full appreciation for both old and new in renewable energies.  A plethora of lessons can be drawn from both and it is valuable to remember that in our quest for the new, not to forget that sometimes both can exist at the same time.


Put Your Thinking Caps On

In my time in The Netherlands, I have already seen a number of examples of how different ventures or groups organize co-creation events to pose key questions to their community to physically come together and create solutions as a group.  This usually comes in the early development stages of a product, service or idea to crowdsource input from relevant groups on what they envision as an ideal outcome to the challenge in question.  Below is a re-cap of some of these co-creation events.

Human Growth Exchange

Human Growth Exchange is a platform for experimentation of new models of social investment, jointly organized by Metabolic Lab and The HUB Amsterdam.  They organize bi-monthly meetings to bring together entrepreneurs, investors, innovators and other groups in the realm of social investing.  Started in January 2013, Human Growth Exchange is still at an early stage having framed the key challenges but hope to ultimately create concrete social investment models for pilot and validation.  For example, the issue of share pooling (dilution of ownership with additional funding rounds) was one topic touched upon when considering new models.  For those interested, the third meeting will be held on 15th May in Amsterdam – registration form here.

Brainstorming at Human Growth Exchange

Brainstorming at Human Growth Exchange







Mundo Den Haag

Mundo Den Haag is an office space under development in the center of The Hague which will be a vibrant work space for innovative entrepreneurs, NGOs and NPOs offering affordable and flexible offices, hot desks, incubator space and meeting rooms.  Currently in a bare shell state, the developer Ethical Property Nederland and their designer have engaged future tenants in co-creation events to hear what the future occupants of the space would like to see in their ideal work environment.  In the third co-creation event, the participants used various images to create mood board inspirations and generate new ideas (for example, using food and communal lunches to draw tenants together through fun events such as growing ingredients for their own salad bar in the café area).  In addition to engaging end users from the beginning, Ethical Property Nederlands also will be renovating the space to sustainable and standards to demonstrate their commitment to a truly ethical property space.

Group presentations at Mundo Den Haag

Group presentations at Mundo Den Haag







World Changing Questions

World Changing Questions is a monthly event organized by Enviu and Rotterdamse Schouwburg.  Each month focuses on a different theme (e.g. water, health care) and the invites entrepreneurs in that sector to explain the development of their ventures and pose a question of a current challenge they are facing to the audience, who then brainstorms in groups and presents their ideas to everyone.  The theme of last month’s event was ‘eco-fashion’ (up-cycling, sustainable materials, slow fashion, etc.) which included a presentation by Rag Bag (bags made from recycled plastic in India) and a fashion show featuring pieces from (a retailer that supports designers for green fashion).  The question posed that evening was how maintain profitability for Green This Season, whilst encouraging slow fashion (i.e. eliminating the idea of spring/summer and fall/winter collections to wean off of the mindset of following trends and always purchasing new pieces of clothing by seasonality instead of need).  Ideas were plentiful – from leasing clothing (similar to the concept of MUD Jeans) to having high street brands to introduce a separate slow fashion brand marketed similar to the concept of the ‘little black dress’, paying a higher price for a classic piece that will never go out of fashion.

Eco-fashion show at World Changing Questions

Eco-fashion show at World Changing Questions







What Idea Can You Share?

The most encouraging element of these events is the level of engagement the community can have in being part of solving a problem.  Often, a sense of ownership of having contributed to an issue, offering an idea or the ‘aha’ moment of cross-collaboration allows individuals to be closer to a cause.  So what ideas do you have to share with the world?

Accelerators and Business Plan Competitions

In my third post on social entrepreneurship in a developed country, I mentioned that there is already an extensive infrastructure in place to support general entrepreneurship in The Netherlands.  This is not too surprising given that The Netherlands was ranked as the most entrepreneurial country in Europe in 2011 according to The Global Entrepreneurship Monitor survey, with 7.2% of those aged 18-64 who already own or are considering starting their own ventures.[1]

New Ventures

I was at round 2 of the 3 round business plan competition organized by New Ventures.  They are the oldest and first business plan competition in The Netherlands, founded in 1998 by The Ministry of Foreign Affairs and McKinsey & Company with a coaching methodology to provide consulting for innovative entrepreneurial ideas.  Round 2 had 20 ventures with 1 minute elevator pitches (each venture had also submitted a more detailed feasibility study in advance), with 10 ventures winning EUR 1000 each.  In the final round, three winners of round 3 will receive EUR 20,000 each.

The round 2 event I attended consisted of ventures across many different sectors (and not restricted to social entrepreneurs):  from a blood test to diagnose heart disorders (Angio Print) to an online music platform that allows you to use visual maps to create playlists (Muzikool).  Of the 20 ventures, there were a number of interesting initiatives with a social or environmental focus:

  • Elemental Water Makers – a desalination system using solar and / or wind energy to transform seawater to drinking water
  • Energy Transformers – using plastic litter to create hybrid solid biofuel
  • One Night’s Tent – a bio-based, compostable two person tent for music festivals available to buy online, pick up on site and leave behind after the event
  • Proov – E-mobility solution allowing electric buses to drive at the cost of a diesel bus
  • Rural Spark – an off-grid energy system in India where a villager rents the renewable energy system and becomes a local entrepreneur by supplying energy at a charge to other villagers.

Of the above, Elemental Water Makers and One Night’s Tent were among the 10 winners of round 2.  Proov won the ANWB Sustainable Mobility Award. A full list of the ventures in round 2 can be found here and press release of the round 2 winners here (both links in Dutch).

Co-existing Competitions

In addition to New Ventures, there are at least 15 other start up competitions / accelerators across the country.  Contrary to what may initially appear as competition among the competitions, it can actually be seen as a positive re-inforcement that there is so much encouragement for entrepreneurs.  In fact, a number of entrepreneurs I have spoken to have already been involved in a number of competitions, which (in addition to the prize money motivation) shows how each competition or accelerator program provides their own unique value.  In terms of Village Capital, two of they key differentiators from other competitions are:

1)      Peer model

Allowing ventures to actively provide real time feedback on each others’ business models and empowering them to sit in the investor’s seat to select who will win investment funding among themselves.

2)      Serving the middle ground

Many business plan competitions take ventures from idea stage to business plan.  Village Capital participants have already established their business plans and are typically post-revenue or at least with a pilot or proof of concept.  The program content and investment funding targets enterprises who want to scale up their ventures and serves as a middle ground between business plan completion and series A funding.

It was very interesting to experience a glimpse of the oldest and largest business plan competition in The Netherlands.  Given that the different competitions and accelerators are all working for the same end goal of fostering entrepreneurship and innovation through a business, it would be very welcome to see more collaboration among a space which is already so active.






Startups for startups

An interesting phenomenon and testimony to the growth of the entrepreneurial sector in the Netherlands is an increasing number of Dutch startups that are creating services for other startups.  These include fundraising, valuation and social measurement services introduced below.

Symbid – A crowdfunding platform

An alternative way for startups to gain investments from the traditional fundraising options is through crowdfunding:  an online investment platform where investors can invest as little as 20EUR for an equity stake into a venture.  Symbid offers this platform for Dutch legal entities to seek equity financing from investors both locally and internationally (except US citizens) where investments can be easily made online.  This dramatically increases the investor pool to any individual who sees potential in the different business models of the entrepreneurs on the Symbid platform.  For the investors, this opens up easily accessible investment options that were previously not as readily available.  For entrepreneurs, they are able to gain equity funding which is generally in an expedited and more flexible format compared to traditional means.  In addition to financing, crowdfunding offers a new marketing tool to promote their venture operations to a new class of investors and the wider community.  Examples of recent ventures that are fundraising through Symbid include: JAC (a compact, foldable electric scooter), ANTECY (a solar fuel pilot plant) and Entologics (transformation of organic waste into insectmeal), each seeking between 60,000EUR to 200,000EUR.

Equidam – Valuation services for startups

Equidam offers an online service for the equity valuation of Small and Medium Enterprises (SMEs) from seed level upwards.  Entrepreneurs seeking valuation provide relevant information about their ventures and Equidam produces a standardized report which includes a summary of the key components of the business plan, a rating score and a number of valuations based on different valuation methodologies.   Crowdfunding platforms are ideal users of the Equidam service given their service provision as a platform for ventures seeking equity funding.  Other users of Equidam services include individual entrepreneurs and other investors such as venture capital funds.  Convergence towards standardized valuation techniques as well as standardized formats may be welcome given the scattered sphere of social enterprises and impact investments where there are a number of both entrepreneurs and investors who exist, but without enough of a formal marketplace and infrastructure given the infantry of this space.  However, standardized reporting formats do not eliminate the critical due diligence process – entrepreneurs provide their venture information and the reports provide a summary and valuation according to its algorithm. Investors still must evaluate the legitimacy behind the numbers and question the assumptions that the models are built on, which may very well result in a large divergence away from such standardized models.

Social E-valuator – Social Return on Investment Measurement (SROI)

The first two services above are applicable to all startup ventures – Social E-valuator is applicable to startup ventures as well as more mature organizations.  They provide a service to measure the somewhat elusive and constantly debated aspect of social enterprises:  SROI and social impact.  Below is a definition of SROI provided in a whitepaper by Social E-valuator:

The SROI (Social Return on Investment) is a principles-based method that provides a consistent  approach to understanding and managing an organization’s impact. In brief, it guides the process by which an entity identifies different stakeholders, asks for their perceptions of important outcomes, develops indicators for those outcomes, adjusts the outcomes for an assessment of what would have happened in absence of the organization’s work, and values the impact to arrive at a better understanding of the impact of an organization. The aim of SROI is to account for the social, environmental, and economic value of an organization’s outcomes.[1]

Social E-valuator is a software tool that measures impact with the following items:  scope & theory of change, stakeholders & impact map, verification & dialogue, valuation & monetization, monitoring & evaluation.  For social entrepreneurs, the issue of how to measure impact, what impact is being made and how to establish impact goals are common challenges which may be addressed through tools such as this one.

Beyond The Netherlands?

There are additional service based ventures providing services for startups which aren’t covered and the above are examples of the large market of startups that is only growing as the entrepreneurial space develops here.   It would be interesting to see if and how these ventures expand beyond the Netherlands in the future to help encourage the further development of the startup space in other countries.


Impact Within and Beyond the Netherlands

I have previously alluded to the differences in sectors unique to a developed country as I begin to map the impact space in the Netherlands.  In this blog post, I will share some of the social enterprises I have come across with impact both within the Netherlands and beyond the Netherlands.

Impact in the Netherlands

There are a number of entrepreneurs who have launched ventures whose impact potential is not limited to the Netherlands, but whose concept was clearly developed with certain attributes popular in the Netherlands.  As mentioned in a previous post, Vrachtfiets is a biking transportation system for small scale cargo.  Another startup that addresses the biking culture in the Netherlands is Bike Dispenser, a tower full of bikes placed at train stations where you can “pull a bike out of the wall”.  A startup that is clearly applicable to the windy climate in the Netherlands is WindChallenge BV is a small, 10 pound wind turbine for installation on building roofs or in the built environment.  Whilst the origins of these concepts were developed to meet needs that are relevant in the Netherlands, these are concepts that also could be applicable to other countries that already do or could utilize a bicycle culture or has a windy climate.  Of course, the relevant infrastructure (e.g. bicycle lanes) needs to be in place to support these concepts.

Impact beyond the Netherlands

Interestingly, a few social enterprises in my research with impact beyond national borders operate with the model of donations to developing countries based off of sales of their product nationally.   Fairmail is a company which produces fair trade greeting cards with photos originating from teenagers in Peru and India who keep 50% of the proceeds to finance their housing and education.  In a different sector but with a similar model, Waka Waka Lights sells mobile lights and chargers from 55 Euros upwards, with two Waka Waka Lights sent to Haiti for every Waka Waka Light sold in the Netherlands.  Their distinction from other similar products is a longer battery life of 7-8 hours of bright light followed by 2 more hours of light at lower lux levels – details and comparison with other solar lamps here.

The arguments for cross-subsidy or profit donation models have been widely contested for various reasons:  creating monetary reliance instead of self-generating demand, offering standard product features that may not be the same for different uses in a developed vs developing country, the concept of “giving fish” rather than “teaching people how to fish for themselves”, distraction by focusing on revenue generation from developing countries, etc.  Despite this, many enterprises worldwide operate on this model and the concept of Waka Waka Lights was proved popular enough in a crowdfunding effort raising EUR75,000 from 320 investors globally through crowdfunding platform Symbid.

Of course, social enterprises based in the Netherlands but with global impact are not only restricted to the profit / product subsidy model.   There are a number of enterprises that are for-profit and have impact beyond a subsidy model.  For example, the solar industry is one where there already a number of Dutch startups: FlexSol Solutions, SUNURU and Solar Swing to name a few.  An interesting point however is that these enterprises do not heavily market themselves as social enterprises, rather are startups whose business is in the renewable energy sector.

Social Entrepreneurship in a Developed Country

The Impact Space in a Developed Country

As one of the few Frontier Market Scouts who is currently in a developed country, I was curious about the differences in the impact space and the types of social enterprises in a developed versus a developing country.  JP Morgan and Global Impact Investor Network conducted an Impact Investor Survey[1] which summarized 99 organizations in the impact space and their investment patterns in 2012.  Some key contrasts between Developed Markets (DM) and Emerging Markets (EM) are listed below.

i)                    Geography

Sub-Sahara Africa and Latin America & Carribean were the top two regions where impact investments were made.  Of the DM, US & Canada was the third most focused region of investments.  In contrast, Western, Northern & Southern Europe was the third lowest category.

SE - Geography



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ii)                  Sector

The top three sectors of DM were Healthcare, Education and Food & Agriculture.  The two least focused sectors for DM were Microfinance and Information & Communication Technologies.  This compares to the top three sectors for EM which were Food & Agriculture, Financial Services and Microfinance.

SE - Sector




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iii)                Impact and Financial Expectations

In DM, both impact and financial portfolio performance exceeded expectations at a higher percentage compared to EM.  DM financial performance was notably higher with over one-third of portfolio performance outperforming expectations.  This compares to an average of 21% financial expectation outperformance when pooling DM and EM together.  Interestingly, both DM and EM experienced the same level of financial expectation underperformance relative to expectation at 12%.

SE - Financial and Impact Expectations







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Scouting in Practice

At relatively early stage of scouting in the Netherlands, I have already noticed interesting issues unique to searching for social enterprises in a developed economy that has quite a thriving entrepreneurial sector.  Firstly, there are many supportive mechanisms in place to support entrepreneurship in general – in my early research there are already over 40 incubators, hubs, support centers and platforms providing some combination of acceleration programs, capacity building, investment opportunities, work space and other assistance to start ups across different sectors.  In addition, many annual business plan competitions and start up competitions also exist. This is clearly a positive reinforcement to the growth and development of the entrepreneurial sphere, however also acts as competition when you offer an accelerator program alongside the many that are already available, despite operating with an inherently different model.

When looking at entrepreneurs with a social or environmental focus in any country, the issues that such entrepreneurs strive to solve are usually unique to challenges relevant to their country or region.  So whilst microfinance is a key issue in EM as we have seen above, enterprises in the Netherlands I have engaged with so far are more active in other sectors such as energy, clean tech and livelihoods.  Some are much more country-specific than others, such as Vrachtfiets which taps into the biking culture of the Netherlands and offers environmental friendly mobility solutions with the help of the newest bicycle technologies – one such product is a 2 person bike with a small cargo hold to transport IKEA purchases back home.  In contrast, a recent event I attended focusing on water issues garnered some reactions which essentially raised the question of how imminent of an issue water was when you can have easy access to clean drinking water by turning on a tap here.  When water and sanitation was already the second lowest sector focus in EM as we have seen above, it is understandably much harder to garner a large amount of mass public sympathy in a DM.

In many ways, the nature, presence and motivations of social enterprises in a developed country is uniquely different to those in developing countries.  Learning and understanding the dynamics of the ecosystem of the impact space in the Netherlands is a key part of continuing the search those social enterprises that do exist here.


Enviu and Village Capital

Starting World Changing Companies

Village Capital has two local partners in the Netherlands: Enviu and Kirkman Company.  I have been in the Netherlands for one week and working at Enviu’s office in Rotterdam.  Enviu starts world changing companies aimed to solve social and ecological issues under three core areas:  business development, building impact-driven communities and social corporate venturing.  They work across a range of sectors and have currently started five companies addressing issues ranging from sustainable livelihoods in the Netherlands to creating financial solutions for tuk tuk (auto-rickshaw) drivers in India to collectively purchase and own tuk tuks.  The five companies are:  Sustainable Dance Club, Three Wheels UnitedYUNOINURBA and ImpactCrowd.

The Power of the Crowd

One of the unique aspects of Enviu is that they harness the power of the crowd to co-create ideas.  This is done by posing online “crowd challenges” to allow everyone from experts in the field to anyone in the wider community to contribute their ideas of how to address a critical issue.  For example, INURBA (affordable housing in Ghana and Nicaragua) was born out of the crowd challenge Open Source House where over 3,000 architects from 45 countries submitted over 250 designs online.  After the crowdsourcing phase, development was taken offline to translate the initial promising ideas to a concrete business model.  With this type of crowd challenge, creating solutions for a better world invites professionals in their respective fields and also opens up the creative spectrum for new ideas from individuals across the world.

Open Health Community

The latest online challenge launched by Enviu is the Open Health Community, a joint project with Achmea, the largest insurance group in the Netherlands.  The Open Health Community invites submissions for new business models and sharing the best practices of health care globally to improve the quality, affordability accessibility and of health care across the world.  The best business idea will win a prize of 10,000 Euros and the most inspiring best practice will win a journey to India with other health experts.  In addition, best practices will be documented and published into a book.  Watch the video and sign up to submit your ideas here!

Calling for Entrepreneurs!

Village Capital, Enviu and Kirkman company are are inviting promising entrepreneurs to take part in a potential program in the Netherlands where participants have the opportunity to benefit from peer support, inspirational mentors and speakers, connections with funders and strategic partners and a potential investment of EUR 50,000 based on peer voting.  For those who aren’t familiar with Village Capital, a brief description is provided below:

Village Capital

Village Capital provides opportunity to entrepreneurs across the globe building solutions for a better world.  We run 3-month programs (typically one evening per week) for cohorts of 10-20 early stage social enterprises though a process that includes:

  • Intensive peer review and support, culminating in pre-committed investment selected by one’s peers;
  • A structured program involving mentorship and educational sessions led by highly successful entrepreneurs and the investor community;
  • Access to a global network of investors and strategic partners.

To date, Village Capital has launched programs with over 250 ventures from more than 30 countries.  Program content addresses different aspects of the business model and sessions typically include:  Value Proposition, Customer Validation, Marketing for startups, Building a Team to reach Scale, Investor Panel for Investment Criteria, Measuring your Impact, and more.

Early stage, for-profit enterprises with an identifiable social or environmental impact and based in the Netherlands are invited for further discussion.  If you are interested in this program or have any further questions, please contact me at


Putting a Price on Social Good

The Challenge Today – Who is Doing What?

When we look at how critical problems in our world are being addressed today, it is clear that priority issues affecting humanity are not being solved as quickly or effectively as we would hope.  There is no shortage of challenges to tackle: education, gender equality, energy access, clean water access, etc. Take the environmental sector as an example.  From non-profit public awareness campaigns, academic pilot studies, corporations buying carbon credits and governments politicking over emission “rights”, each respective institution is separately undertaking their interpretation of how to approach this issue.  But despite all the efforts, the world’s current environmental state is still an immense challenge.

Impact Investing

Governments and non-profit organizations have traditionally been at the forefront of addressing our global development challenges.  But an approach to utilize for-profit business models to create social benefit has also emerged.  According to the Global Impact Investing Network (GIIN), Impact Investing is defined as:

Impact investments aim to solve social or environmental challenges while generating financial profit.[1]

The mindset is that by harnessing corporate efficiency and innovation, development problems will be framed and addressed with smart and financially viable solutions.  As the sphere of impact investing evolves, what are the implications of how profit and purpose will drive investments?

Is it Profit Driven Purpose?

A broad question when evaluating a for-profit model to create social benefit is how much investment motivation is driven by profit versus purpose? As a for-profit model, it is fair to assume that financial return is a substantial component on the decision of how to invest.  This then leads to the issue of how market dynamics drive where investment dollars go.  Certain sectors (e.g. clean energy) could be expected to have a larger potential financial upside compared to other sectors (e.g. panda conservation).  Similarly, creating x amount of energy is a more definitive and concrete social measurement compared to potentially preventing y pandas from extinction.  If certain sectors emerge over others given the benefit of their profit and attractiveness  of their purpose measurement, then should there be a concern that those sectors are in the limelight receiving the majority of investment dollars and divert attention and money away from less profitable or socially concrete (but still important) sectors?  Is there a concern of equity in a market based approach of allocating resources for social good?

Or Purpose Driven Profit?

Whilst financial return is certainly critical to investors, impact is also a concurrent factor in impact investing and it is reasonable to assume that investors also strive to create the maximum social impact they can with their investment dollars.  Maximizing impact per dollar usually means that impact investors ideally would invest in funding an enterprise at its early stage, rather than invest in later stages of its development. Research has indicated that follow-on investments are related to lower returns. [2]  But if all investors choose to invest only at the seed-stage, where will funding come from for investments to support other important (but less “sexy”) parts of the enterprise, e.g. growing the staff base?  If everyone wants the glory of building ventures instead of seeking to keep and sustain them, social enterprises will face a huge challenge in scaling their operations to affect a larger audience and thus, are restricted in their social effect.

The Way Forward?

We have yet to see social enterprises reach the scale of creating a market to the extent of traditional corporations.  But this hasn’t stopped entrepreneurs from building their ventures despite the risks including but not limited to: raising capital needs, operating on tight overheads, addressing a low income market, lack of impact measurement consistency, foreign geographies, restrictive regulatory issues, currency risk, distribution challenges and much more.  Yet, it is often because of the nature of entrepreneurs as serial problem solvers that motivates meeting those challenges. As the sphere of social enterprises and impact investing develops, their financial and impact results will begin to shed light on whether using a for-profit business model could address our global challenges in a more effective way than is currently served by traditional non-profits, governments, academic institutions and corporations.


[2] Angel Investors in Groups, Kauffman; Social Investment Manual, SI Task Force