Philanthropic Venture Capitalists’ Post-Investment Involvement with Portfolio Social Enterprises: What Do They Actually Do?

This chapter presents results from an empirical study concerning post-investment value-added services provided by philanthropic venture capitalists to their backed social enterprises. Results show that the most important activity consists in the provision of strategic advice for organizational development. Philanthropic venture capitalists act as advisors and mentors of social entrepreneurs. Also, findings show how important is facilitating access to future potential funders on the side of the social enterprise

An empirical investigation of the interplay between microcredit, institutional context, and entrepreneurial capabilities

Understanding under which conditions microcredit is used by new, growing ventures is becoming increasingly pertinent to scholars. This paper investigates the interplay of the use of microcredit with entrepreneurial capabilities and the moderating role of institutional development in sub-Saharan Africa. Our findings show that higher constraints to entrepreneurial capabilities are associated with higher use of microcredit. In addition, we find that new, growing ventures use microcredit more where either economic or political institutions are less developed. Our findings suggest the importance of the existence of some type of institutional strength that must be in place to form the basis for microcredit activity. This allows for speculation as to whether microcredit works as the literature currently assumes.</p

Capital riesgo filantrópico: generación de deal-flow y selección de proyectos

El capital riesgo fi lantrópico es un nuevo modelo de fi nanciación similar al capital riesgo pero que invierte en empresas sociales, es decir, aquellas empresas cuyo primer objetivo es la maximización del retorno social. Este artículo describe el proceso de generación de deal fl ow y las variables usadas en el proceso de selección de los fondos de capital riesgo. El análisis llevado a cabo, basado en el estudio empírico de una muestra representativa, indica que estos inversores utilizan mayoritariamente métodos proactivos en la búsqueda de inversiones, apoyándose en su red de contactos. Respecto al proceso de selección, el factor clave en la decisión es el perfi l del emprendedor social. Palabras clave: Capital riesgo filantrópico; deal flo

Philanthropic venture capital: a new model of financing for social entrepreneurs

Part I of this book begins with a review of alternative forms of venture capital. Part II of this book highlights the structure of venture capital investments

Deal structuring in philanthropic venture capital investments

The philanthropic venture capital investment model is a financing option available for social enterprises. Its value proposition combines the maximization of social impact with the ability of backed organizations to become sustainable, accomplished through the provision of capital and non-financial services. This paper examines how the financing of the deal is structured and which contractual provisions are included in the financing agreement. By content analyzing a set of semi-structured interviews and thereafter surveying the entire population of philanthropic venture capital funds active in Europe and in the United States, results suggest a high use of grants as financing instrument both on aggregate level and across all staged of development of backed organizations. If the deal is financed through grants, the philanthropic venture capitalists’ deal structuring appears to differ from that characterizing traditional venture capital in that no valuation is performed and no formal contractual provisions are retained by the investor. On the contrary, trust plays a key role while shaping the relationship between investor and investees, whose importance decreases when equity is used. On an general level, findings show that moral hazard issues, which typically characterize the venture capital model, are superseded by a stewardship view of the relationship between the philanthropic venture capital investor and the backed social entrepreneu

Philanthropic venture capital: can the key elements of venture capital be applied successfully to the financing of social enterprises?

This paper examines how the venture capital (VC) model is applied to philanthropic venture capital (PhVC). The key aims of the paper are a) to define PhVC and, by transposing its key elements, i.e., "capital" and "advice and engagement", to provide a clear and precise definition of philanthropic venture capitalists (PhVCs); b) to formulate four main hypotheses aiming to test whether, how, and to what extent the typical for-profit VC model, as described by Gompers and Lerner (2001), can be considered as applied to PhVC as well. By analyzing secondary sources we report preliminary results which show that in the screening phase of PhVC investments and during monitoring activities, PhVCs behave like their for-profit counterparts, i.e., the venture capitalists