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Promoting the Public Good – Profitably: How Best to Support Social Enterprise Startups

There are many promising changes emerging with the rise of ESG principles throughout the business world. One of these has been a surge in startups that focus on promoting the public good while also maximizing profit. These “social enterprises” and their founders are offering the world a new way of doing business that integrates newly-emerging ESG ideas with good business practice. So, how can we best support the founders and visionaries behind these organizations?

First, let’s consider what these social enterprises are not. Benefit corporations, community contribution companies, co-operatives, and social purpose organizations are all vitally important types of organizations. But these sorts of organizations often come with structures and ideals that don’t always align with the sort of profit-driven decision-making that guides a lot of venture capital.

The good news is that social enterprises both in Canada and internationally are not only profitable and exciting means of doing good, they’re also attractive to investors.

Toronto-based startup, Manifest Climate, is working to ensure that companies around the world are strategically addressing climate change with a focus on giving businesses the digital tools, data, and support needed to build climate confidence. They also recently closed a $30M Series A funding round. Likewise, Our Next Energy (ONE), an energy storage technology company, raised $65M in its Series B round, after a successful $25M Series A led by Breakthrough Energy Ventures.

Industry veterans are also turning their mind to positive social impact with a profit. Former KPMG and EY Partner, Gary Zed left private wealth management behind to launch Canada’s Forest Trust. As founder and CEO, Zed has teamed up with a veteran social enterprise executive, Farah Mohamed, formerly of the Malala Fund, to buy and build smart forests.

Even venture studios, a new model for entrepreneurship, combining company building with venture funding, are focusing solely on ESG. Combine, a Calgary-based venture studio and fund, is building disruptive technology companies that capitalize on the opportunities created by the rise of ESG.

This new age of startups has blurred what was once a clear dichotomy between for-profit corporations and charitable organizations, changing the nature of business in this space.

The attention that ESG entrepreneurs and their social enterprises are receiving is great news for industry, communities, and visionaries. But we must also commit to protecting their vision with as much energy as we commit to boosting their profitability.

We do this by tacitly recognizing the primacy of these founders’ visions to make a positive change in their community and around the world. These ideals must not be consumed by the zealous pursuit of profit. We can also further contribute to the surge in momentum that social enterprises are experiencing by recognizing growing international consensus on and commitment to social issues.

Green bond standards, mandatory ESG reporting, net-zero carbon pledges, and climate friendly initiatives all require sustained and consistent championing by all actors in the startup ecosystem if the visionaries building a better world are to have the comprehensive support they need to do their thing.

To those visionaries we say, we hear you! At MT>Ventures, we find creative ways to plug social enterprises into the ordinary course of business. This could mean helping social entrepreneurs insert themselves into supply chains, building connections with other for-profit businesses, or opening doors to capital and grants.

We work with exceptional social entrepreneurs because we know the true value of what they offer lies in more than just the bottom line. After all, social enterprises are the emerging winners in the time of ESG.

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