2of4 dtruran ebbf - imsd - creating your social enterprise

Creating your social enterprise

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

Ten years ago there wereno social networks.

Ten years before that we didn't have the Web.

If you work in the web programming, online marketing, or mobile phone industries…

your job did not exist

twenty years ago.

Who knows what jobs will existtwenty years from now?

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.”

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”

Why not create your enterprise? Why not create a meaningful, useful to society, social enterprise?

social enterprise social intrapreneur

hubmadrid.com

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

First step to creating a social enterprise

Pick the social issue you wish to address !!( the more urgent, the better )

Who are you serving? !

Where? !

Global vs Local

What is urgent / important about this issue for your target audience?

“The bad news is, our customers hate us. The good news is,we have a lot fewer customers than we used to.”

empathy map - pains and gains

http://innovationgames.com/empathy-map/

make it real !

empathy map - pains and gains

http://innovationgames.com/empathy-map/

What is your innovative solution to this social issue?

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

Generating Solutions

Don’t stop at the first idea, continue creating new ideas!

BRAINSTORMING

Balancing Solutions

Idea Generation

Implementability

Capability

Capacity

Do we have the skills?

Do we have the resources?

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

WELCOME to the era of collaboration

how can you make the most of this new co-llaborative era?

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

co-creating solutions

involving your stakeholders in - dreaming - and then implementing the ideal experience

who would you involve in co-creating?

co-creating an experience

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)

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

http://www.guykawasaki.com/

The “evangelists”

http://www.garage.com/resources/

http://www.youtube.com/watch?v=K511ZttUjTA

Selling the dream to / through evangelists

who are you best “evangelists” ?

people you are serving

people who share you same passion

Team Founders Hub Madrid

gender balance for better results

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

People

where would you go to find them?

People - where are they?

where would you go to find them?

People - where are they?

“Hub” or other like minded organizations, related events,

Facebook Forums

Peoplewhere would you go to find them?how Victor met The Student Ranking

http://www.thestudentranking.com

Through a chance facebook connection

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

https://www.odesk.com

identified social issue

target location / people’s real needs (pains gains …)

innovative solution/s

evangelists

your operational team

… now let’s make some money

What are the revenue streams?

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

Profit vs Non-Profit?

difficulty in generating revenues in some areas: e.g. education, health

in the UK Community Interest Companies (CIC)

http://www.bis.gov.uk/cicregulator/

Who should we re-distribute profit to?

To partners To investors To other social entrepreneurs To society Concept of re-distribution of wealth 19%

What to do with the profit?

Enterprise Value

Social Impact

Blended Value

EVALUATING an enterprise

How is the SOCIAL impact measured?

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

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

how to measure social impact (SROI)

NUMBERS !

That show how well you have addressed the social issue you aim to solve

http://www.acumenfund.org/ten/

Presenting your social enterprise

http://www.youtube.com/watch?v=l-8EQPpA4DM

Making the “pitch”

Making a pitch / Elevator Pitch

take greed out!

the last slide … … it really SHOULD NOT be a wasted

message such as the common one below

thank you for listening !

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

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)

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

one (or more) blog entries with highlights from the course20%

email to : daniel.truran@ebbf.org

Your assignment for Friday 28th March 23:59

Structures, Shares, Venture Capitalists and Angel Investors

Financing your social enterprise

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

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

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

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

What happens to my shares?

we issue another -5 - million shares as a board of the company

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

let’s say the investor puts 1 million only and that we have a 50 / 50 share in the company

1 million shares belong to angel investor

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

what does the social venture capitalist get for their investment?

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

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

post money evaluation: company now worth 4.5 million

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

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

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

Social Investment Manual: A Guide for Social Entrepreneurs http://www.schwabfound.org/pdf/schwabfound/SocialInvestmentManual.pdf

2of4 dtruran ebbf - imsd - creating your social enterprise

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