The latest Time Magazine has a great article about social entrepreneur Reed Paget and his startup Belu that has grown from $13,000 in 2004 to nearly $4 million in 2008 while providing water in corn based bottles that can be composted and redeploying its profits to projects that bring clean water to deserving regions of the world.
In the article Paget says it was important “to remove the ‘We must maximize profit’ from our management system.” His objective is to provide maximal social and environmental benefit, like social businesses defined by Yunus. However the challenge for him is finding socially motivated investors. Over the past several years he has managed to raise $2.5 Million in 32 painstaking rounds of funding. Even environmental charities like Greenpeace do not see it in their purview to fund startups like his.
This is a classic example of the type of opportunity that makes business and social sense but is left hanging as there are not enough socially motivated investors willing to take this early stage risk. As we mentioned in earlier posts, this new market segment badly needs socially conscious investors who are willing to support early stage companies and to take a lower economic rate of return in exchange for greater social/environmental impact. Like Belu, many socially motivated businesses struggle with fundraising expending precious resources in multiple rounds of incremental funding instead of focusing on building and scaling their businesses.
The Social Ecosystem 