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In early January I was invited to speak on a panel at the World Enterprise Summit (WEs 08) in London. I joined four other speakers on the subject of what social entrepreneurs (SEs) need to prosper. This session was taken as televised “evidence” designed to be part of a Global Commission on this subject being put together by a range of sponsors. I thought/hoped that all of us said some sensible things, each offering insights reflecting our diverse backgrounds. It was only after the event that I read an article about what we had said and learned that it caused a bit of a storm at WES08. This surprised me as I had not intended those remarks to be controversial and. even as I re-read the article about the session, I find myself feeling fundamentally puzzled.

I pointed out that SEs and investors are failing to communicate with one another, as if they were conversing in two different languages. SEs enthuse about their operations and how they stand to make a major impact on some social ill they are attempting to address. Investors, with a few rare exceptions, still focus on financial returns–a nd in many cases are obliged to do so. They are minded to assist firms generating social returns but not if it means a significant profit sacrifice. Some SEs merely restate their positive attributes and appear fixated on a strategy of “persuasion through embarrassment”, and persist in challenging the motives of the prospective investors. I have observed such discussions on so many occasions it is depressing, with neither side understanding or appreciating the language of the other.

The reality is that only one side needs to change–that of the social entrepreneur. It is that statement that seems to have generated such rage at the WES08 meeting in London. To my mind this was such a statement of the obvious as to be uncontroversial–this is not how the audience saw things. By their yardstick, each side “needs” to approach the other. This might seem an appropriate objective or approach in relationship counselling or international negotiations but in the reality of the SE funding market it misses a fundamental point. There is no symmetry in this SE investment relationship! The investors have the cash and SEs want and need it. SEs lack an alternative and investors have many choices social and otherwise.

There may come a time when this is not the case–but it is years away. SEs need to choose between trying to win the moral battle today, with odds that are not terribly good, or adjust their propositions and successfully raise the capital they need to make a difference today.

Rodney Schwartz

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