Social enterprise | Applied Creativity

Inventive two-stage Accelerator for creating social enterprises and services in the field of public services

Under their three-year contract with the Cabinet Office to run Accelerators for developing social enterprises, Hub Launchpad has developed an unusual two-stage approach. Rather than promoting ideas for new businesses, it aims to help participants to identify issues in public services and to form teams; and then to work together to develop solutions as social enterprises or new service models within the public sector that will be able to take root and grow.

Hub Launchpad has started its Accelerator programme – which is focusing on public services – under its contract with the Cabinet Office for social enterprises, with a pre-accelerator 16-week programme (dubbed ‘Scholarship’). A hundred and twenty people were selected (out of around 250 applicants) – to meet about once a week, to discuss their personal missions around public services, to hear lectures and make visits, to share ideas – about possible objectives, to form teams, and to talk about possible learning journeys.

Out of this process around sixty people (some independent, some intrapreneurs, and not all of them from the pre-accelerator) are to participate in a 14-week Accelerator programme whose aim is to help the 15 or so teams (each of up to four people) to tackle an issue of their choosing in specific organisations (local authorities, housing associations, charities etc.)

Meeting regularly each week, the Accelerator is an intensive programme (‘close to full time’), though some participants may have to square this with their job. The regime is based on techniques such as the Lean Startup and the Business Model Canvass, and anticipates the developing of hypotheses in their journeys to deliver solutions to the issue they aim to tackle. The programme is focused round weekly meetings at which teams present their progress etc to each other and get feed-back.

Collaboration between the teams is a big part of the process. The regular contribution from Hub Launchpad is through two facilitators attached to the programme, plus some co-optees (there are no assigned mentors), who may offer a degree of direction to what are otherwise self-managed team journeys. The facilitators will encourage participants to go out and meet end-users and will help identify and introduce participants to them. A parallel strand in the programme is about enhancing participants’ related knowledge and skills eg about leadership, business ethics, accountability etc.

Participants each receive £9,400, and the teams compete for one of several different size prizes from a Prize Pot of £45k, the largest of which is £25k. The hope is that teams will generate scaleable organisations or services that will be able to attract investments from other social investors.

Hub Launchpad hopes to recycle its investment (which is funded under its contract with the Cabinet Office) from loans to these enterprises and/or revenue sharing. And it is aiming to enable the government’s contribution to continue the development of social enterprise for as long as possible. Its second programme will tackle community businesses and will take place in Birmingham. It third will tackle open, alternative models in financial services and the fourth programme will be around the theme of open manufacturing.

The Centre for Leadership in Creativity

January 2014

US non-profit ‘Village Capital’ has a different perspective on social enterprise: objectives first, resources next

Village Capital sees capital as a resource in the service of its mission rather than as a determinant of new businesses; and puts projects and teams together on the basis of what will best achieve the social objectives it espouses.

Village Capital (‘VC’) is a US based non-profit organisation whose business is social enterprise. Founded in 2009, it has raised $1mn, now almost all invested* – in 350 ventures through 22 programmes in 7 different countries, in what is probably best described as mission-oriented projects, as opposed to product- or business-focused projects (eg enhancing private educational facilities in Indian schools).

Concerned that the relationship between investors and entrepreneurs was too strong a determinant of the kinds of things that new enterprises could achieve, VC has sought to put the achievement of objectives as the over-riding determinant of the processes of innovation in which it invests.

Entrepreneurs cannot exist without funding – from angels or venture capital organisations, so entrepreneurs’ projects have tended to focus on the particular areas that are of interest to those funders and on the returns which they require. In practice most of these have been IT based and ‘quick wins’. VC seeks to combat this destructive relationship by sourcing its own funding, and so having funds readily available – on an unconditional basis – for the projects it chooses (though still subject to due diligence).

Projects tend to start with a vision – a vision of how things might be, and then move on to issues about how realistic and how realisable such a vision might be.

VC describes itself as peer-driven and transparent. Investments are decided upon by investment committees made up of peers – committees whose composition reflects the project in question

(if it is about women in India, it needs to have some among its investment committee); and its members tend to look for real evidence of customer acceptability and demand. VC claims that the selection of projects by peers tends to make them less ready to invest, but to make for more successful investments.

Projects tend to be niche rather than general, and to be framed in terms of the problem in question rather than the obstacles or the specific approaches to the problem eg enabling home workers in India and the US to earn a living wage. And this means that broader approaches to the problem, like forming a consortium or bidding for contracts or grants are not excluded; and the duration of projects may be significantly longer that to-day’s accelerators.

VC spends an unusual amount of time in searching for its entrepreneurs. It looks for entrepreneurial talent in people who are already working in the field in question who are likely to be acquainted already with the problems and the people concerned; and it seeks to form the leanest possible core teams – that will not be disrupted or diverted.

Candidates are evaluated primarily on their ability to deliver solutions, and the criteria for deliverability will be different for different kinds of projects. But liquidity is of the essence – reputation and progress are vital for VC, so the mitigation of risk is also a very important consideration.

Each programme is 12 weeks long, and cohorts in each programme tend to be of 10-15 teams, and made up of teams with different but relateable issues – building the necessary community is important.

VC’s investments may take various forms including grants, loans and equity, and on returns that are appropriate to the project, which may take the form of royalties, revenue sharing, dividends or sale of equity.

What is traditionally termed mentoring often takes the form of enlisting deep expertise in the issue in question – as it is needed and as it is relevant. (The project mentioned above – in India – opened with a workshop on pedagogy led by people from Pearson – educational book publishers.)

In all aspects of its operation, Village Capital’s focus (see http://www.vilcap.com/) is on making a difference – on issues that can transform lives (like Kickboard – which aims to catalyse education reform with its web-based software that enables teachers to collect and analyze classroom data in realtime) rather than on creating businesses that will return profits to investors.

* VC is currently raising a further $15mn.

John Whatmore The Centre for Leadership in Creativity London, November 2013

http://johnwhatmore.com