Social venture capital

Social venture capital is a form of investment funding that is usually funded by a group of social venture capitalists or an impact investor to provide seed-funding investment, usually in a for-profit social enterprise, in return to achieve a reasonable gain in financial return while delivering social impact to the world. It deviates from the traditional venture capital model, which focuses on simple risk and reward. However, there are various organizations, such as venture philanthropy companies and nonprofit organizations, that deploy a simple venture capital strategy model to fund nonprofit events, social enterprises, or activities that deliver a high social impact or a strong social causes for their existence. There are also regionally focused organizations (both for-profit and nonprofit) that target a specific region of the world, to help build and support the local community in a social cause.

Apart from the traditional venture capitalists focusing on just the financial profit, social venture capitalists believe in achieving financial success through social impact to the world. Beside, those Venture philanthropy funds such as Venture Philanthropy Partners initiate investment in a high-performing nonprofit organization, the following criteria that social venture capitalists generally assess on social venture companies for funding:

Social Venture Accelerators is a form of Seed accelerators that fixed termed, cohort-based entrepreneurial development programs designed to transform validated idea of the social startups companies to seed funding. Hence, increase the outcomes for sustainability and growth of startup companies that have potential to scale(usually tech-based companies). Such programs allows startup companies to gain exclusive visibility to early- stage investors and other resources such as providing initial investment, technical facilities/development, to office accommodation and under the guidance of experienced mentors, all of which in return of a minor share in the invested startups companies, or under grant funding to support participating companies. Seed Accelerator companies will assess based on startup companies' business model and ensure market/customer sector validated, to develop a commercial validity of the social startup companies to investment ready and prepare to scale their impact.

Business Incubator usually provides business with facilities and funding with the help of external management team to manage an idea that was developed internally. Given the intense efforts involved, the incubator period usually lasted longer the Seed Accelerator, and takes up a much larger amount of equity than Seed Accelerator as well.

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