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Jan 19, 2018

Generational Gap is Major Challenge Facing Social Entrepreneurs

Two recent studies highlight the generational gap which social entrepreneurs face.  Norwich University in the United Kingdom released a study on the role of social responsibility (CSR) in corporate and consumer decision-making.  The Angel Capital Association (ACA) released a study describing who are the people who are investing in start up businesses (angel investors). 

Demand for social enterprises’ goods and services is concentrated in the millennial generation while the capital to build their businesses is concentrated in the baby boom generation.  Conversely, the former lacks capital while the latter do not place emphasis on the social impact of their investments.  These attitudes and capabilities need to merge if this sector is to become a significant creator of social impact.  

The ACA study makes it clear that startup investment comes from baby boomers and that the consideration of social impact is not yet common in their investment decisions.  Forty-three percent of investors are older than 60 years, while 75% are older than 50.  They are more locally-oriented than the venture capital investors with 63% of angels located outside of the San Francisco, New York, and Boston investment centers.  

Women angel investors place more emphasis than men on the social impact of their investments, but women account for less than one-third of angel investors and the proportion of women investors who emphasize social impact is still low at 30%.  Men are even less interested; only 16% “extensively use” social mission as a decision criterion. The benefit to all social entrepreneurs of women’s more favorable orientation is tempered by their strong preference toward female entrepreneurs (51%) compared with general indifference of male investors to gender and by the fact that women investors invest (“write checks”) that are 30% smaller than the average investment made by male investors.

In sharp contrast is the Norwich University finding that millennials place social mission or social responsibility in the forefront of their employment and consumption decisions.  While the study focused on social responsibility, a focus on the “goodness” of a company will especially extend to a social enterprise.   Over 75% consider a company’s social and environmental commitments before deciding where to work.  The Norwich study cites other studies that confirm the business benefits of the precepts of Conscious Capitalism.  An orientation to social responsibility contributes to employee loyalty, operational efficiency, and public image.  

Social enterprises are corporate social responsibility on steroids.  This attitude attracts better and more committed employees.  It also attracts loyal and passionate customers.  The challenges of a social enterprise business model makes operational efficiency of prime importance.  

Now all we need to do is to get the baby boomer investors to feel the same way.

We have a new Facebook page due to our name change.  Please friend and share our new page  It is a great source of information on the latest developments in Central Ohio social enterprise.  

Allen Proctor, President &  CEO | SocialVentures


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