When you ask business owners about the biggest barrier to starting a business and growing it, the answer is usually “raising capital.” For entrepreneurs in the “for-benefit” economy, where companies look to make money while impacting social or environmental problems, the capital picture is much the same.
Recently in Los Angeles, CA Fwd, via the California Economic Summit, co-hosted an event covering the impact economy (VIDEO), including brainstorming ideas about how to help for-benefit companies startup and grow in California and also discussing the benefits of using the innovative “Pay for Success” model to fund government programs and projects.
It’s not that there isn’t enough capital out there, but often the structures and regulations aren’t aligned with the goals of social entrepreneurs and capital providers.
“There is a supply in terms of the number of entrepreneurs and and leaders who would like to do those things and there is the capital out there that is prepared to invest if things are structured right to do it,” said Lenny Mendonca, co-chair of California Forward’s Leadership Council. “The most important thing that California can do to help unleash this potential for innovation is to make it a priority. There is a demand for it. We have the need in terms of big issues facing the state.”
We talked to people in the sector, including Kari Brizius, president of Relan, a venture that helps other companies “go green” by recycling their marketing materials (banners, billboards, etc.) and turning them into bags other promotional items out of them.
Here’s what they said about the capital situation in the for-benefit and impact investing sectors.