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an general level, findings show that moral hazard issues, which typically characterize the venture capital model, are superseded by a stewardship view of the relationship between the philanthropic venture capital investor and the backed social entrepreneu
