social entrepreneurship and innovation - splash: social...
TRANSCRIPT
Jamila Aman UFT FEB 18, 2009 1
Social Entrepreneurship and Innovation
Jamila Aman UFT FEB 18, 2009 2
Presentedby
Jamila Aman, Executive DirectorNorthwood Neighbourhood
Services
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Remember
• A bad idea with a champion is better than a good idea without a champion
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Workshop Purpose
• Celebrate and build on success• Outline systematic approach• Earned income
– Establish business objectives/criteria– Product development– Product screening– Risk management and readiness
• Shared services (MSO) Management Service organization
• Venture philanthropy, why social enterprise
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Social Entrepreneurship
• Why Social Enterprise?
• To generate an restricted revenue• To use an restricted revenue for advocacy) the
forbidden word)• To use revenue from social enterprise it for
programs/ services that are hard to cell to donor agencies
• To create social purpose enterprises
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Social Entrepreneurship
• Application of entrepreneurial attitudes to social sector:– Change is the norm– Embrace change– Seek change– Client focused– Shift resources from low to high productivity– Calculated risks– Create something new– Strive for Transparency
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Organisational
ReadinessRisk Management
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Issues
• Fear of loss of control• Resources – financial/human• Risk averse culture• Conflicting ends• Lack of structure/governance for success
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Organizational Readiness
• Strategy• Governance• Human resources• Finances• Operations, Products and Services• Market perspective
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Strategic Management OverviewC. Input D. Throughput A. Output
Current State
Change Management
Strategic Implementation
Annual Strategic Review and Update
Future State
5. Current State Assessment and
Business Planning
4. Objective Development
3.Strategic Priority
Parallel Process with
Key Stakeholders
2. Strategic Planning: Vision, Mission, Values
B. Feedback
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Mapping the Future
Ideal Future Vision• Formulate dreams that are worth believing
in & fighting for by meeting 3 challenges.Challenge #1. Vision Statement Challenge #2. Mission StatementChallenge #3. Core Values
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Ideal Future Vision
Answer all or any of the following questions:
What will put you out of business? What is your ultimate vision of success?
What is your ideal community vision?
Answers may be - end of homelessness, hunger etc.
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Mission
What is your organization’s part in achieving the vision?
What do we produce? Who do we serve? How do we do it?
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Values
What do board members & employees stand for & embrace?
What are the rules?May include integrity, transparency,
entrepreneurship, innovation etc
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Strategic Priority Development
Balanced Score Card FormatConsider organizational success from more
than one perspective, for example:Internal Business Processes
ClientFinancial
Human Resources
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Strategic Priorities Financial
Answer the question:
How do you wish to appear to your owners/funders?
Client
Answer the question: How do you wish appear to your client/customer?
Internal Business ProcessesAnswer the question:In order to achieve your mission, what business processes must you excel at?
Human Resources
Answer the question: How do you sustain your ability to learn and grow?
Vision MissionValues
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Earned Income
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Results in Other Ventures• 90% of successful ventures relate to the non-
profit’s mission• Planning matters• 46% of non-profits with ventures have more than
one• 69% are profitable• Profitability is reached in 2.5 years on average• Only 10% use a spin-off – cutting edge• The largest benefit is the creation of an
entrepreneurial culture (58%)
From a survey of non-profits operating business ventures
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Systematic Approach
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Systematic Approach• Determine organisational
– Need for innovation– Purpose
• Organisational readiness and commitment• Product development
– Search for opportunities– Create new services and screening– Research, design, testing– Launch, evaluation and revision
• Portfolio approach
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Strengthens OrganisationsAchieves Mission
• Generates revenue– Unrestricted– Greater degree of control– Enables growth beyond funding base
• Supports mission and strategic plan• Create valuable new services• Enhances profile
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Balancing Mission and Financial Return
Strong Business Case
SECOND PRIOIRTY BUSINESS
HIGHEST PRIORITY VALUE ADDED
Weak Business Case DON’T PURSUE PHILANTHROPY
Limited Advances Mission
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Product Development Process
Planning for Success
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Definition of a Good Idea
• Meets a significant customer need – a market• Return on investment• Risk managed • Competitive advantage
– Cost – Performance
• Leverages a strength/asset• Fits with mission/values
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Enterprises• Mission related products or services
– Same product, new market: geographic or customer– Programme related products (manuals)/services
(EAP)– Staff resources (training)– Public sector contracting
• New product/leveraging organisational strengths– Client resources (social firm)– Soft assets intellectual property (licensing/franchising)– Hard assets (rental)
• Unrelated business (Ben & Jerry’s)
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Product CreationPre-work
• Scan– Community trends and needs– Potential market opportunities – market research– Attend conferences/read magazines/annual
reports/web/etc– Assess what competitors are doing
• Scan– Internal capacities (swot)
• Leading edge networking
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Brainstorming• Use information/knowledge/fantasy/dreams/intuition• Build on experiences of and skills/knowledge in the
organisation• Lateral thinking, scramble patterns
– e.g. pose a problem and only outrageous solutions are suggested
• Look at data for opportunities, look at it from other people’s perspectives
• Be excited, accept thoughts/play with them - have fun• Bring experts from different organisations together• Discuss with others, family, friends, associates• Generate a list of opportunities e.g. Northwood case
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Level 1 Screening CriteriaDoes the idea further your vision, mission, values and strategic priorities?
1=no, 2=partial fit, 3=full fitIs there a potential customer benefit?
1=none, 2=some need/some customers, 3=urgent need/many customers
Are there profit potential (by third year)? 1= less than 20K, 2=more than 20 k but less than 50k, 3= more than 50k
What investment is required?1 = major investment , 2 = minor investment, 3 = achieve with current resources
Is there a champion? 1=no, 2= neutral 3=yes
Is there risk?1 = high risk (no known mitigation), 2 = medium risk (new strategies needed), 3 = low risk (strategies in place)
Scoring: each idea will have a score of 6-18
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Screening Phase 2• Create a concept statement
– Describe product– Target audience and reason for buying it– When, where, how?
• Product attractiveness– Financial results– Marketing issues and competitors– Risk factors
• Does it fit with the organisation?• Test with sample of external experts
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Screening Phase 3Feasibility Analysis and Priority Setting
– Does the product have financial potential?– How likely is the product to implemented
successfully (easy or hard)?– Is an investment required?– Is an investment justifiable in terms of
financial or mission improvement?– Does the product advance mission
and strategic priorities?
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The Success Quadrant
Highfinancial
and social impact
Low PotentialConsider Later
Top PriorityContinue Screening
Lowfinancial
and social impact
Not StrategicDo Not Consider Further
Long TermConsider Second
Low(Idea will be relatively difficult to
implement)
High(Idea will be relatively
easy to implement)
Fit with Organisation
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First Set of Measures
Financial Measure Weighting 0 1 2 3
Significant customer problem 2Not a significant
need
Need that is addressed by others
reasonably well Urgent unmet needUrgent unmet need
consistent with mission
Appropriate solution 1
Do not address need as well as
competitorsAddresses need as well as competitors
Addresses need in a unique and more
effective wayAddresses need and no
one else does at allRevenue potential 1 Under £50K £50-100K £100-250K >£250KProfit potential 2 Likely loss £0-50K £50-100K >£100K
Investment required 1Major investment
>£100K
Large amount of funding required -
£25-100KModest funding
required - <£25KCould achieve with existing resources
Investment financial payback 1 None >3 years 1-3 years First year
Rating
Product A
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Second Set of Measures
Success Measure Weighting 0 1 2 3
Fit with mission/ values 2Contrary to
mission Not a fit Partial fit Yes
Similar products in the market 2Many similar product exist
Few similar product exist, and cutomers
are satisfied
Few similar product exist, but customers
are not saitsfied No similar products exist
Stage of development 2 Conceptual Defined ideaDeveloped marketing
planBusiness plan thought
out
Spin-off effects 1
Negative impact on organisation
reputationNo impact beyond
initiativePositive impact on
organisation
Strong positive impact on organisation and
community
Risk 2 High risk Low / Medium riskManageable risk
(strategies to address) No risk
Existing skills 1Significant skill
gap
Skills are readily available through
partnersCan address skills with
modest training Have the skills already
Competitive advantage 2Competitive
disadvantage
No significant difference from
competitors
Good value proposition but can be
matchedSustainable unique solution with niche
Partnership opportunity 1 No likely partners
Believe there are partners, but not sure
whoPossible partnerships but unclear of interest
Likely partners exist and are interested
Inhibiters 1
Significant cultural or other change
required
Some inhibiters which may be difficult
to address
Some inhibiters, but likely to be able
address No significant inhibiters
Rating
Product A
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Highfinancial
and social impact
Lowfinancial
and social impact
Low(Idea will be relatively difficult to
implement)
High(Idea will be relatively easy to
implement)
Product A
Stre
ngth
of I
dea
Fit with Organisation
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Screening Phase 4Business Planning
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Benefits of Writing a Business Plan
• Refines the idea• Writing it down makes it real• Creates a framework for making the idea
happen• Method of external communication• Internal due-diligence tool
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Guidelines for Successful Plans
• Aim for a maximum of no more than twenty pages in the main body of the plan
• Be as brief and crisp as possible when explaining your idea and strategy
• Quantitative• Specific• Cover what investors are looking for• Address risk and exit
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Business Plan Format• Cover Page and Executive Summary• Description of the business• Industry and Market Analysis• Marketing, Communications and Sales Plan• Management and Operations / Launch Plan• Risk Assessment and Contingency Plan• Exit Strategy• Financial Plan for Your Venture• Supporting Documents
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After That….
• Development• Testing• Launch
Entrepreneur
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Organisational Structure
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Why Separate?
• Different cultures/ends• Shield non-profit from business risk• Raise external capital • Enhance focus on non-core markets
without compromising non-profit’s purpose or funding
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StructureNon-profit
Organisation
IntellectualProperty
Operational Support
PurchaseOf
Service
EnterprisesHoldings
Business
Business
Business
Business
Investors
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Transition
• Clean break, separate entities• Share resources, purchasing services• Conflict of interest• Sharing management• Compensation• Share purchasing• Transition plan and monitoring
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Relationship With Non-profit
• Customer/vendor/owner (major shareholder)
• Separate companies – consistent vision• Some price concessions to keep charity as
a customer and meet mission• Mutually beneficial for Enterprises to
succeed• Negotiated and governed by contract
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Significant Key To Success
• Foster a dynamic, success generating, entrepreneurial ethos
• Provide support to staff who are:• Creative • Innovative• Entrepreneurial• Productive• Successful• Aspiring
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Partnerships, Alliances Mergers, Acquisitions
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• Working together– Creating efficiencies– Enhancing quality
• Allowing for a focus on services• Supporting social enterprise
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Context
• Pressure to create efficiencies• Enormous duplication
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One Approach - MSO
• A management service organisation (MSO) is an integration that includes the creation of a new organisation in order to integrate administrative and fundraising functions, and thus to increase the administrative efficiency and effectiveness of participating organisations. It may include co-location.
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Benefits
• Enhances quality, strengthens organisation• Generates revenue: cost savings/profit• Frees management time• Keep up• Enhances profile/reinforces advocacy partnering• Reduces risk• Entrepreneurial spirit• Supports mission and strategic plan
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Examples of Savings and Quality Enhancement
• Procurement– Average 26%, Up to 50% on certain items– One organisation – 32% savings (equivalent
of a 1 FTE freed up for the organisation)• Finance/HR/IT
– Higher quality, more comprehensive service– Potential for savings/minimally breakeven
• Fundraising –access to focused expertise at low cost
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MSO PossibilitiesManagement Service Organization
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Process
• Creative/interactive/inclusive• Full participation of the stakeholders,
leading to a strong sense of ownership • Mentoring• Idea creation and implementation process • Systematic
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Way Forward
• Initial meeting/test concept• Research/interviews/preliminary assessment• Workshop/obtain commitment to the process • Business feasibility and priority setting• Stakeholder meeting/commitment• Business planning and communication• ‘Partner’ meeting/buy-in• Launch/build scale• Add products• Add members/customers
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Process
• Refine Business Plan with Trustees• Council support - letter of intent - £1.25M• Identify other markets• Discussions with other potential partners• Fundraising• Commitment from Trustees to MSO• Launch MSO Early 09
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One Final Thought
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The acid test for shared services (Tom Peters)
• Are we good enough to sell this service on the open market?
If not, why are we “buying” from ourselves when nobody else would buy it from us?
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Venture Philanthropy
High Engagement Giving
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What is Venture Philanthropy?
Capital and human resources invested in charities by various types of investors in search of a social return on their investment. VP involves a high engagement over many years with fixed milestones and tangible returns and exit achieved by developing alternative, sustainable income.
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Venture Philanthropy
Investing In
Programmes Services
Infrastructure Commercial VenturesSocial Enterprise
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Elements
• Capital for growth, reliable money• Human resource expertise/strategic coaching• Partnering internally and externally• Performance centred, results orientated• Long term, exit strategy to sustainability• Business case/plan • Business to business presentation• Management, board, cash management, impact
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Venture PhilanthropyPriority
• Significant problem• Appropriate solution• Enthusiasm/being with a winner• Impact/building on success• Innovative and entrepreneurial• Fit with your values/vision
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VP Benefits – A US ExampleWhat Funders and Grantees Say
• Partnering• Reliable, long term grant money• Improved organisational capacity, better:
– Evaluation systems– Marketing business and strategic planning– Fundraising
• Improved organisational performance/growth• For every $1 invested, $3 gained in expertise
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UK VP ActivitiesJust Beginning
• Funds– World-in-Need– Impetus– Laidlaw/Ryan
• Corporate Involvement– Shell– Diageo
• VP Association
• Examples– Charity Technology
Trust– Plan International– Tomorrow’s People– Help the Hospices
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Investor Motivation
• Apply knowledge/intellectual stimulation• High engagement• Joy of giving• Image enhancement• Social return on investment• Corporate social responsibility• Help business units achieve their goals
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Case Study: Corporate Venture Philanthropy
Diageo plc– Small number of very high engagement initiatives– Directly led to the creation of Tomorrow’s People– Board and management support– Measurement and accountability
• SROI evaluation• Communication of value to stakeholders in community
– Exit strategy in long term
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Case Study: Strategic Partnerships
New Profit, Inc.– Modelled after a venture capital fund– Significant support to few investments– CEO coach from Monitor Group– Board of Directors position– Portfolio manager– Access to other resources
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Trade Association Driven Fund
Social Equity Fund– Created by trade association to further its
business objectives– Special purpose fund managed by the trade
association using VP principles– Invests in charities in a competitive fashion –
an market place for innovation– Mechanism for member organisations to act
as high engagement donors
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Trends
• Increased/new capital and expertise• Impact on/leverage with other funders• VP model will evolve• Impact on charity behaviour
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Increased Capital
• New philanthropic giving - people or corporations who may otherwise not be philanthropic
• Opening up opportunities departments to access funds/expertise from the various business units
• Increase the level of commitment of existing donors, reinvigorating and advancing mature funding relationships
• Success stories will lead to expansion
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Leverage Outside Of Movement• Traditional grant makers will adapt some of the
principles of the movement• Increase in the acceptability of infrastructure
funding• Traditional grant makers will co-invest with
venture philanthropists• Venture philanthropy due diligence/investment
will act as a positive signal to other grant makers• Venture philanthropists will provide services to
support other grant makers
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Evolution Of The Model
• Partnering in a true sense - working within the mission of the organisation as opposed to driving the mission
• Social return on investment evaluation will continue to be applied, leading to more efficient practices
• Increase in investing in mission-based social enterprise/trading
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New Capital Structures
• Funders will create blended fund portfolios – diverse funders, joint working
• Charities will lead the creation of captive funds in support of their mission
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The OrganisationalStrategic Plan
Internal Marketplace
ORGANISATIONALEXPERTISE
Funds Portfolio£
Capital Innovation
Fund
Revolving Innovation
Fund
Endowment Innovation
Fund
BUSINESS PLANNINGExtra capacity + expertise
INVESTOREXPERTISE
INVESTOR
biddinginvestment
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Changes In Charitable Organisation Behaviour
• Charities will proactively encourage venture philanthropy and create venture philanthropists – creating an internal market
• Increased emphasis on social return on investment will encourage a more efficient use of resources
• Increased familiarity with business language and practices
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Screening Criteria
• Significant problem/appropriate solution• Good strategy, business plan, exit strategy• Good management team• Do the numbers make sense?• Enthusiasm/being with a winner
– Building on success– Innovative and entrepreneurial– Fit with your values/vision
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SROI Elements, social return on investment
• Issue/problem• Solution (product/service)• Investment required• Desired outcomes
– Client– Organisation/enterprise– Stakeholder/investor desired outcomes
• Data management/evaluation• Social and financial return on investment
– Social enterprise financial performance/value– Cost savings/gains to government– Client
Sources of information– Roberts Enterprise Development Fund– New Economics Foundation
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Strategic Issues
• Develop criteria in partnership• Trust, partnering and control• Due diligence and fit• Innovation and risk taking• Organisational readiness• Cultural differences• Exit and sustainability
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Process with a Charity• Product development/feasibility study• Finalise programme/infrastructure/commercial
selection and internal fund structure• Finalise readiness issues and solutions/plans• Prepare business cases and business plans• Research, preparation and training • Launch, implementation and evaluation• Networking and business to business
presentation• Follow-up and negotiation
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Identifying Potential Investors• Current supporters and their networks
– Existing member/donor database– Member/donor networks– Staff/volunteer knowledge
• Research – Competition– Rich lists– Trusts– Media– Investor groups– Companies
• Demographic identification and analysis• Networking/interviews/feasibility testing
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Business Case(Two Pages)
• Quote• Problem/market• Solution/business idea
– Right strategy– People to make it work– Exit/sustainability
• The organisation and its desirability
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Success Factors in Obtaining The Investment
• Is the proposal convincing?• Did the unique value come through? • Is the proposal customer driven?• Was it credible? Was it enthusiastic?• Would you remember the presentation? Was the
presentation style compelling?• Did it catch your attention in the first minute?• Was the “ask” or proposal clear?
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Key Learning's
• Build on current network, donors and investors
• Research the investor• Focus on and engage the investor, think
laterally• It is a sales process• Be patient/persistent, it could take up to 2
years• It is partnering, be organisationally ready
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How would you apply earned income from venture philanthropy
or Social Enterprise to your Organisation?
Remember a bad idea with a champion is better than a good
idea without a champion !!!!
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Some Great Resources… Fraser Valley Centre for Social Enterprise
www.centreforsocialenterprise.com Social Enterprise Alliance
www.se-alliance.org Social Venture Network, www.svn.org Social Venture Partners, www.svpi.org Centre for Community Enterprise
www.cedworks.com Centre for Social Innovation
www.socialinnovation.ca
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More Great Resources… Toronto Enterprise Fund
www.torontoenterprisefund.ca Aperio Consulting
www.aperio.ca Andrew Horsnell & Associates
www.AndrewHorsnell.com Canadian Social Entrepreneurs Network
www.csen.ca npEnterprise Forum, www.npEnterprise.net Sustainable Enterprise Resource Centre
www.sustainabilityincubator.com
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More Great Resources… Canadian Conference on Social Enterprise
www.socialenterprise.ca Business and Sustainable Development
www.bsdglobal.com Canadian Centre for Social Entrepreneurship
www.bus.ualberta.ca/ccse/ Canadian Business for Social Responsibility
www.cbsr.ca Sustainable Enterprise Academy
www.sustainableenterpriseacademy.com Net Impact, www.netimpact.org www.GreenBiz.com www.greenleaf-publishing.com
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Yippy! We Are Done!
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Jamila M. Aman
4330 Brandon Gate Drive Mississauga, Ontario
L4T 3K4
Direct: 416-618-3041
http://www.northw.ca