3 Tips for Investing in Social Enterprise

There are various reasons to invest your money. For entrepreneurs and businesses, making investments in profitable industries is an effective way to build wealth, fund projects, and to create opportunities that will boost overall innovation in your industry.

In addition to the personal gains that can come from making wise investments, for many shareholders and lenders, it’s not always all about the money. In recent years, some of the world’s biggest venture capitalists have put social enterprises on the map.

With a growing amount of companies looking to make an investment in the greater good, it’s a great time to expand your investment horizons beyond major industry opportunities and look towards the growing social sector.  

For first time investors or those who are looking for new opportunities, here are 3 ways that you can make an investment in a social mission. ​

Collective investments

Sometimes investing in social enterprise can be a daunting take for investors. As the majority of socially-oriented companies are not-for-profit driven entities, it may seem too risky at first. To minimize risk, but still make a significant investment, lenders can pool their money into a collective investment fund, which can then be distributed to the social enterprise of your choice by a head fund manager.

Not only an opportunity to connect with like-minded professionals in your industry, working together can lower costs, such as transaction fees, while also serving as an effective method of gaining higher returns. Investors can seek out funding networks through their local government entities, which not only provide direct connections to collective investment opportunities but also various services and support to help investors diversify and strengthen their network.

Speak to a fundraising expert

Whether you are looking to invest in grassroots enterprises in your local community or interesting in funding an international project, a fundraising expert can help you figure out where to start. Even if you already know exactly where you want to invest, a financial consultant can help you make the most out of your investment by helping you define your expectations and goals, while making sure you take advantage of tax breaks, social impact reports, and continual opportunities.

As in social and also mapping out potential challenges that could come along the way. For first-time venture capitalists, it’s best to choose a consultant that specializes in social entrepreneurship can help connect you to the right companies and ventures that are looking for investors like you, which will help you save time and money, leaving more resources for the project of your choice.

Get out there and speak to people

When investing in social enterprises it can be difficult to know where to start. For venture capitalists looking to strengthen their social mission, it pays to get to know the community, which will help you understand both your personal expectations and the expectations of those who will be benefitting from your assistance.

Knowing exactly where the money will be going and how it can be dispersed to make the most impact will also help you chose worthwhile investments in the future, as you will have a better idea of what works and what doesn’t. Depending on where you are based, many professional communities have a local coworking space or innovation hub.

The majority of these spaces host events that provide networking for social entrepreneurs, and of course, there are numerous online communities that help to connect social venture and interested investors as well.

While there are still various misconceptions surrounding social enterprise, it’s becoming clear that putting your money towards a good cause will be the future of venture capital funding. Challenging everything from how businesses traditionally make their money, to charity, to how we work together as a society, it’s now increasingly lucrative to invest in a good cause, while also being imperative for a more developed future.