Reluctance to label startups as socially focused is stunting social venture growth in Australia, says Cambridge expert
Thursday, November 9, 2017/
The social entrepreneurship ecosystem in Australia is significantly lagging behind that of the UK, according to program director at Cambridge University’s Centre for Social Innovation.
Speaking to StartupSmart while visiting Sydney, Belinda Bell — who is a founder of multiple social ventures herself — describes the social ventures scene in Australia as “somewhat emergent”, but is surprised at the relatively low number of Australian social entrepreneurs both locally and in the UK.
“It’s interesting you’re not seeing a growth of social entrepreneurs in the startup space here, as in the UK it’s increasingly becoming the sexiest bit of the startup space,” she says.
“All the emergent cutting-edge entrepreneurs in the UK are wanting to make the world a better place, not just develop some widget.”
The Cambridge Centre for Social Innovation is embedded within the relatively newly established Judge Business School at the 808-year-old university and works with entrepreneurs through incubators and workshops to help them bring ideas to life, and then commercialise them and receive funding.
Bell believes the general outlook on social ventures and their perception has changed significantly; where in the past you’d see charities doing philanthropic work, they’re now pivoting.
“They’re pivoting now to more revenue generating models, and the traditional sector is transitioning to the more business side,” she says.
In the UK, more and more tech startups are placing an emphasis on the social side of the business, says Bell, with companies building products and services “just the same as a regular startup, but with a purpose to create social impact”.
“We don’t get people who are just making a widget unless that widget purifies water in the global south. Or the people who make that widget have some kind of disadvantage,” she says.
“We’re seeing a switch to the old days of businesses having the aim of benefitting the community, rather than just making money.”
Entrepreneurs unwilling to label themselves as social
Bell believes Australia is not seeing that same social focus from its startup founders, and this is due to the lack of entrepreneurs Down Under being willing to label themselves as ‘social’ entrepreneurs. Bell says she’s seen many examples of startups she would call social ventures but says the founders don’t identify themselves as such.
“It’s challenging when there’s no clear definition of a social enterprise or social venture, but there are definitely people who are motivated in that way, and it’s pretty obvious when you speak to them,” she says.
The disparity in the perceived ‘sexiness’ of social entrepreneurs between the UK and Australia is likely to do with both the less matured ecosystem, and the increased difficulty of setting out to build a social venture, says Bell.
Some local startup founders in the social enterprise space have lamented in the past about the struggles of raising capital, and while many UK social ventures are successful in that area, Bell says the risks are more associated with finding the wrong investors.
“There’s plenty of socially motivated capital about, but many entrepreneurs are cautious about talking about their true social motivation when seeking investment because they think it will decrease their chance of landing funding,” she says.
“That’s always a bad idea because there’s nothing worse than getting an investor who’s not on the same page.”
Greater concerns around mental health for those in social ventures
While all new founders encounter challenges in the early days of getting their ventures off the group, Bell believes the path of a social entrepreneur can be more challenging. She calls the typical startup goal of making money at the end of the month a “simple gig” compared to that of a social venture’s.
“Social ventures still aim to make money at the end of the month, but that money doesn’t actually mean they’ve achieved any social impact,” Bell says.
It’s a much more complex challenge, says Bell, which is why she believes the UK is seeing its “brightest and best” startup founders get involved with the social ventures space.
But the journey to start a social venture can be peppered with hurdles aspiring founders may never consider — including an aversion to honest feedback from friends and family.
“It’s hard to get honest feedback on an idea when the idea is around something like saving sick children, no one wants to tell you it’s rubbish,” Bell says.
“It’s also really easy to win awards and get media coverage as a social entrepreneur. The heroic social entrepreneur myth is even more insidious than the regular heroic entrepreneur myth.”
Bell also believes socially motivated entrepreneurs are more susceptible to the trials and tribulations of typical entrepreneurship, especially around issues of mental health and self-esteem.
The concept of “never doing enough” is prevalent in the social entrepreneurship space, says Bell, especially in cases where founders are motivated through personal experience with hardship.
“If what you’re doing is important to you in a way that just making an app isn’t, important the pressure can be really hard to deal with,” she says.
“Social entrepreneurs are also more isolated, and I’m always looking at entrepreneurs three years into their company with the most concern. By then the adrenaline has worn off, you’re struggling to turn a profit, and things can be grim.”