Creating your social enterprise
IMSD
PROFESSOR Daniel Truran
IMSD / Social Entrepreneurship
ebbf.org / Daniel Truran www.eoi.esebbf.org / Daniel Truran www.eoi.es
What can you expect from this course?
An introduction to social entrepreneurship (DT) !Social Entrepreneurship through the lenses of Ashoka 35 years’ experience (MZ) !Social Scaling and Hybrid Value Chains (MZ) !Creating your own social enterprise and social impact (DT) !Inspiring, managing, motivating your team and stakeholders (DT) !Using social media to communicate, learn and co-create (DT)
ebbf.org / Daniel Truran www.eoi.es
A bit of context to stretch our minds
IMSD / Social Entrepreneurship
ebbf.org / Daniel Truran www.eoi.es
ebbf.org / Daniel Truran www.eoi.es
ebbf.org / Daniel Truran www.eoi.es
ebbf.org / Daniel Truran www.eoi.es
ebbf.org / Daniel Truran www.eoi.es
Ten years ago there wereno social networks.
ebbf.org / Daniel Truran www.eoi.es
Ten years before that we didn't have the Web.
ebbf.org / Daniel Truran www.eoi.es
If you work in the web programming, online marketing, or mobile phone industries…
ebbf.org / Daniel Truran www.eoi.es
your job did not exist
twenty years ago.
ebbf.org / Daniel Truran www.eoi.es
Who knows what jobs will existtwenty years from now?
ebbf.org / Daniel Truran www.eoi.es
Why not create your job/s?IMSD / Social Entrepreneurship
Natalija Gnezdova .... three jobs http://361degrees.nu/
“I love my work. All three of them
One earns me my bread and is interesting, challenging and super learning environment which gives me a lot of rhythm and space to do other things.
Second allows me to think about doing "anything is possible projects" and dig deeper in who I want to be, where I want to be and what interests me.
Third one is new and potentially full of "changing the world" projects, but realistically it is a big challenge of non continuos freelance work.
And here I am, on the crossroads of three different companies, one of them is mine, another pays my bills and third just start to evolve in my life as a place to do projects that I think might be awesome.”
ebbf.org / Daniel Truran www.eoi.es
Why not create your job/s?
The easy way The “be foolish stay hungry” way
get experience / contacts in your area of interest
“just do it”
IMSD / Social Entrepreneurship
Why not create your enterprise? Why not create a meaningful, useful to society, social enterprise?
social enterprise social intrapreneur
ebbf.org / Daniel Truran www.eoi.es
IMSD / Social Entrepreneurship
hubmadrid.com
ebbf.org / Daniel Truran www.eoi.esebbf.org / Daniel Truran www.eoi.es
capability
capacity
do “we” have the skills to address the issue?
do “we” have the resources?
passion
urgent need how badly does your target audience need your solution?
the issue / solution you are most passionate about
key ingredients to help you identify your successful “social” enterprise
FINANCE? last, not first, on the list
ebbf.org / Daniel Truran www.eoi.es
First step to creating a social enterprise
Pick the social issue you wish to address !!( the more urgent, the better )
IMSD / Social Entrepreneurship
ebbf.org / Daniel Truran www.eoi.es
Who are you serving? !
Where? !
Global vs Local
IMSD / Social Entrepreneurship
ebbf.org / Daniel Truran www.eoi.esebbf.org / Daniel Truran www.eoi.es
What is urgent / important about this issue for your target audience?
IMSD / Social Entrepreneurship
ebbf.org / Daniel Truran www.eoi.esebbf.org / Daniel Truran www.eoi.es
ebbf.org / Daniel Truran www.eoi.es
IMSD / Social Entrepreneurship
“The bad news is, our customers hate us. The good news is,we have a lot fewer customers than we used to.”
ebbf.org / Daniel Truran www.eoi.esebbf.org / Daniel Truran www.eoi.es
IMSD / Social Entrepreneurship
empathy map - pains and gains
http://innovationgames.com/empathy-map/
ebbf.org / Daniel Truran www.eoi.esebbf.org / Daniel Truran www.eoi.es
make it real !
ebbf.org / Daniel Truran www.eoi.esebbf.org / Daniel Truran www.eoi.es
IMSD / Social Entrepreneurship
empathy map - pains and gains
http://innovationgames.com/empathy-map/
ebbf.org / Daniel Truran www.eoi.es
What is your innovative solution to this social issue?
IMSD / Social Entrepreneurship
ebbf.org / Daniel Truran www.eoi.es
IDEA GENERATION generating ideas is NOT the problem (100) - worthy of being funded (10) not necessarily the best ideas but the most likely to be able to implemented. Capability Capacity to implement. - launched (4) - dead (1) - “living dead” (1) (making just enough that we cannot kill it but we should) - marginal (1) - star (1) pays for everything hundred-fold
IMSD / Social Entrepreneurship
Generating Solutions
Don’t stop at the first idea, continue creating new ideas!
BRAINSTORMING
ebbf.org / Daniel Truran www.eoi.es
Balancing Solutions
Idea Generation
Implementability
Capability
Capacity
Do we have the skills?
Do we have the resources?
ebbf.org / Daniel Truran www.eoi.esebbf.org / Daniel Truran www.eoi.es
ebbf.org / Daniel Truran www.eoi.esebbf.org / Daniel Truran www.eoi.es
capability
capacity
do “we” have the skills to address the issue?
do “we” have the resources?
passion
urgent need how badly does your target audience need your solution?
the issue / solution you are most passionate about
key ingredients to help you identify your successful “social” enterprise
ebbf.org / Daniel Truran www.eoi.esebbf.org / Daniel Truran www.eoi.es
IMSD / Social Entrepreneurship
WELCOME to the era of collaboration
ebbf.org / Daniel Truran www.eoi.esebbf.org / Daniel Truran www.eoi.es
how can you make the most of this new co-llaborative era?
IMSD / Social Entrepreneurship
crowd-sourcing
crowd-funding
co-working
http://opinionator.blogs.nytimes.com/2011/03/28/crowdsourcing-a-better-world/
http://www.openideo.com/how-it-works/full.html
ebbf.org / Daniel Truran www.eoi.es
co-creating solutions
IMSD / Social Entrepreneurship
ebbf.org / Daniel Truran www.eoi.es
involving your stakeholders in - dreaming - and then implementing the ideal experience
who would you involve in co-creating?
co-creating an experience
ebbf.org / Daniel Truran www.eoi.esebbf.org / Daniel Truran www.eoi.es
Find the right people in the team and supporting your enterprise
Fit with mission, with values, with you!
People that will make the project work: combination of experience / talent (give credibility to investors)
people
“the two key success factors that a venture capitalist will analyse are: 1. the individuals in your team 2. the fact that you are operating in a sector with potential” !(Luis Blench)
ebbf.org / Daniel Truran www.eoi.es
Circle of Investors
external thinkers, innovators not involved in day by day operations, with time to look at the broader picture, at what is happening in the world around you and less in the day to day urgencies / fire fighting
Wisdom Council
Careholders
people
ebbf.org / Daniel Truran www.eoi.es
http://www.guykawasaki.com/
The “evangelists”
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The “evangelists”
http://www.garage.com/resources/
ebbf.org / Daniel Truran www.eoi.es
http://www.youtube.com/watch?v=K511ZttUjTA
Selling the dream to / through evangelists
ebbf.org / Daniel Truran www.eoi.es
who are you best “evangelists” ?
IMSD / Social Entrepreneurship
people you are serving
people who share you same passion
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IMSD / Social Entrepreneurship
Team Founders Hub Madrid
gender balance for better results
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passion, alignment of values, experience (but we are building the kind of enterprise that does not exist yet so ....)
the kind of people you’d enjoy sharing over a cup of tea or coffee ... or something else
IMSD / Social Entrepreneurship
People
ebbf.org / Daniel Truran www.eoi.es
where would you go to find them?
People - where are they?
ebbf.org / Daniel Truran www.eoi.es
ebbf.org / Daniel Truran www.eoi.es
where would you go to find them?
People - where are they?
“Hub” or other like minded organizations, related events,
Facebook Forums
ebbf.org / Daniel Truran www.eoi.esebbf.org / Daniel Truran www.eoi.es
Peoplewhere would you go to find them?how Victor met The Student Ranking
http://www.thestudentranking.com
Through a chance facebook connection
ebbf.org / Daniel Truran www.eoi.esebbf.org / Daniel Truran www.eoi.es
Scarce resources - who does the work?
Interns !
Talented unemployed wanting to learn new skills or offering their existing skills whilst they are seeking employment
!
Outsourcing !
Crowdsourcing
ebbf.org / Daniel Truran www.eoi.esebbf.org / Daniel Truran www.eoi.es
https://www.odesk.com
ebbf.org / Daniel Truran www.eoi.es
IMSD / Social Entrepreneurship
identified social issue
target location / people’s real needs (pains gains …)
innovative solution/s
evangelists
your operational team
… now let’s make some money
ebbf.org / Daniel Truran www.eoi.es
What are the revenue streams?
IMSD / Social Entrepreneurship
look for as many and as diverse streams of revenue as possible
think about ALL the stakeholders who are benefitting from and could contribute financially
to your social enterprise
ebbf.org / Daniel Truran www.eoi.es
Profit vs Non-Profit?
IMSD / Social Entrepreneurship
difficulty in generating revenues in some areas: e.g. education, health
in the UK Community Interest Companies (CIC)
http://www.bis.gov.uk/cicregulator/
ebbf.org / Daniel Truran www.eoi.es
Who should we re-distribute profit to?
IMSD / Social Entrepreneurship
To partners To investors To other social entrepreneurs To society Concept of re-distribution of wealth 19%
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What to do with the profit?
IMSD / Social Entrepreneurship
$ €
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Enterprise Value
Social Impact
Blended Value
+
=
EVALUATING an enterprise
ebbf.org / Daniel Truran www.eoi.es
How is the SOCIAL impact measured?
IMSD / Social Entrepreneurship
ebbf.org / Daniel Truran www.eoi.es
Social Return on Investment (SROI)
Today, use of SROI is becoming "a way of thinking" for a wide and growing variety of enterprise, investment-oriented and socially-driven organisations. !The concept of "blended value" is the idea of creating value through social, environmental and financial means. !New Economics Foundation (NEF) www.neweconomics.org
IMSD / Social Entrepreneurship
ebbf.org / Daniel Truran www.eoi.es
50,625 cups of tea 325,000 emails sent from the hub 10,120 meetings 8,300 visitors 450 members 1350 projects supported
13.2 million minutes of membership time utilized 255 emails from people wanting to start hubs around the world 65% of waste recycled 54 tonnes of salvaged sawdust used to heat the hub 75% of CO2 emissions saved using biofuel rather than gass 95% of members say the hub has made a significant impact on their wellbeing 71% of members have collaborated together on projects £442,121 revenue from membership £105 hub revenue per sq ft £25 Ethical Property Company revenue per sq ft 45 square feet per person working at the hub 150 square feet per person working in a conventional office 100% of electricity used provided by renewables 3690 kwh of energy generated by on-site solar
IMSD / Social Entrepreneurship
ebbf.org / Daniel Truran www.eoi.es
how to measure social impact (SROI)
IMSD / Social Entrepreneurship
NUMBERS !
That show how well you have addressed the social issue you aim to solve
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IMSD / Social Entrepreneurship
http://www.acumenfund.org/ten/
ebbf.org / Daniel Truran www.eoi.esebbf.org / Daniel Truran www.eoi.es
IMSD / Social Entrepreneurship
http://www.acumenfund.org/ten/
ebbf.org / Daniel Truran www.eoi.es
Presenting your social enterprise
ebbf.org / Daniel Truran www.eoi.es
http://www.youtube.com/watch?v=l-8EQPpA4DM
Making the “pitch”
ebbf.org / Daniel Truran www.eoi.es
Making a pitch / Elevator Pitch
take greed out!
ebbf.org / Daniel Truran www.eoi.es
the last slide … … it really SHOULD NOT be a wasted
message such as the common one below
thank you for listening !
ebbf.org / Daniel Truran www.eoi.es
What are you going to do with your one and only life?
Do something you’ll love and that matters
Make it Meaningful !
… a better last slide could be a quote
that will impact and engage emotionally
ebbf.org / Daniel Truran www.eoi.esebbf.org / Daniel Truran www.eoi.es
What’s next?
An introduction to social entrepreneurship (DT) !Social Entrepreneurship through the lenses of Ashoka 35 years’ experience (MZ) !Social Scaling and Hybrid Value Chains (MZ) !Creating your own social enterprise and social impact (DT) !Inspiring, managing, motivating your team and stakeholders (DT) !Using social media to communicate, learn and co-create (DT)
ebbf.org / Daniel Truran www.eoi.esebbf.org / Daniel Truran www.eoi.es
Identify a social enterprise (from “your” world area) !describe stakeholders it positively influenced !describe the social impact it has achieved !highlight measurable indicators of this impact !2 A4 pages maximum - 3 min presentation - website links
IMSD / Social Entrepreneurship
one (or more) blog entries with highlights from the course20%
email to : [email protected]
70%
Your assignment for Friday 28th March 23:59
ebbf.org / Daniel Truran www.eoi.es
Structures, Shares, Venture Capitalists and Angel Investors
Financing your social enterprise
ebbf.org / Daniel Truran www.eoi.es
Value of company Social Venture Capitalists
Assets (tangibles and intangibles) worth 1 mill.
stakeholders equity
divide into 5 groups of shares = 200,000 shares each = 20% of the company each
e.g. 1 mil shares
seek funding from venture capitalist
angel investors early stage investors
how to get 1st 1 million dollars before you even start?
no cash flow no way to get money from bank
ebbf.org / Daniel Truran www.eoi.es
who will invest if you don’t invest? = you don’t believe in the project?Assets (tangibles and intangibles) worth 1 mill.
stakeholders equity
divide into 5 groups of shares = 200,000 shares each = 20% of the company each
e.g. 1 mil shares
seek funding from venture capitalist
angel investors early stage investors
how to get 1st 1 million dollars before you even start?
no cash flow no way to get money from bank
ebbf.org / Daniel Truran www.eoi.es
pre/post money valuation
you do a valuation of the “pre-money” worth of the company
e.g. worth 1 million euros
value of company now “post money” valuation equity = 2 million euros
angel investor puts investment 1 million euros
ebbf.org / Daniel Truran www.eoi.es
Sharing the sharesWhat happens to my shares?
5 groups of shares = 200,000 shares each
pre-money value 1 mil euros
we issue another million shares as a board of the company
investment 1 mil euros
so do we now have only 10% of total 2 million shares?
but I had 20% of 1 mill euros and now 10% of 2 mill euros = 200,000 euros
ebbf.org / Daniel Truran www.eoi.es
What happens to my shares?
5 groups of shares = 200,000 shares each
pre-money value 1 mil euros
we issue another -5 - million shares as a board of the company
investment 5 mil euros
200,000 shares = 0,03% of company value of 6 million = 200,000 euros
Sharing the shares
before it was: 1 million shares of 1 million euros = 1 euro per share
now: 1 million shares of 6 million euros = 6 euros per share
ebbf.org / Daniel Truran www.eoi.es
let’s say the investor puts 1 million only and that we have a 50 / 50 share in the company
5 groups of shares = 200,000 shares each
pre-money value 1 mil euros
1 million shares belong to angel investor
investment 1 mil euros
now is no longer the time to go to angel investors. We now go to the venture capitalists !seed investors
we have now started the business and want to raise money to continue marketing, cash flow to buy more inventory, more etc etc.
harder bargainer for value of company better look at business plan ...
second round investment
ebbf.org / Daniel Truran www.eoi.es
what does the social venture capitalist get for their investment?
pre-money value 1 mil euros
investment 1 mil euros
what is the value of the company?
first round - seed financing
assets spent “invested”
increased value of company
now worth 3 million “pre-money” evaluation
so 2 million shares of total value of 3 million euros = 1.5 euro per share
ebbf.org / Daniel Truran www.eoi.es
first round - seed financing
now worth 3 million euros “pre-money” evaluation
venture capitalist investment 1.5 million euros
at 1.5 per share the SVC should get 1 million shares
33.3 % ownership
33.3 % ownership
33.3 % ownership
post money evaluation: company now worth 4.5 million
ebbf.org / Daniel Truran www.eoi.es
second round - financing
Cash Burn ratio will need sooner or later more investment
Cash flow is a key item that causes many successful companies to fail
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2nd round financing
total of 3 million shares
post money evaluation of last round: company now worth 4.5 million
pre money evaluation of this next round: company now worth 6 million
value per share was 1.5 euros
value per share is now 6 mil / 3 mil = 2 euros
ebbf.org / Daniel Truran www.eoi.es
FinanceEthical Banks e.g. Triodos
Foundations (Spain - regional differences)
Angel Investors
Social Venture Capitalists (careful at 5 year exit strategy)
Ashoka.org
Worldwide Hubs
Show you trust your success, show you invested
A good big project is more likely to be funded - aim high
ebbf.org / Daniel Truran www.eoi.es
Social Investment Manual: A Guide for Social Entrepreneurs http://www.schwabfound.org/pdf/schwabfound/SocialInvestmentManual.pdf
ebbf.org / Daniel Truran www.eoi.es