Mentor Capital Network

On the late afternoon of my first day in D.C. I found myself walking through Shaw, leaving the business-like city centre behind. Lots of people were on the street, school kids were roaming the sidewalk in their yellow uniforms – I was in the middle of the end-of-day buzz with one more interview to go. Arriving at WeWork Wonder Bread Co-Working space, I was welcomed by Ian Fisk – founder and long-time Executive Director of Mentor Capital Network, formerly William James Foundation. We sat on the terrace on the third floor overlooking the busy streets below. The sun was beginning to set while the WeWork staff were setting up for an event inside.

Mentor Capital Network supports for-profit social entrepreneurs in building their companies by matching them with mentors from their network of about one thousand seasoned entrepreneurs, investors and partners from other sectors. Their main program – the William James Sustainable Business Plan Collaboration – works with 100 to 150 entrepreneurs each year providing them with mentoring, feedback, and cash investment (for winners). Ian explains: “Out of approximately 500 applicants, we choose the best 100 to 150 for-profits that are driven by a social and/or environmental mission that makes their company stronger.”

Mission drives Margin: We focus on for-profit startups with a social/environmental mission. Click To Tweet

For each participating team, we assemble a mentor team of ten to fifteen experts from the entrepreneur’s field who we think can provide helpful feedback and experience. We choose professionals who understand the challenges the startup is facing and who are not competitors. The mentors have three options of getting involved once they have provided their feedback:

  1. Stay anonymous and not be contacted again (8%)
  2. Available to answer specific questions about their feedback (42%)
  3. Get more involved (over 50%)

Based on the feedback, the startups decide who they want to work with, then we connect them. During the last round, one of the mentors called me and said ‘I really don’t have time for this, but I will be their CFO until they find someone to fill this position.’ The mentors who decide to get more involved take this responsibility very seriously.”

Mentor Capital Network's Annual Gathering 2015

Mentor Capital Network’s Annual Gathering 2015

I ask Ian what he thinks a successful support program should have: “Most importantly, it shouldn’t get in the way of entrepreneurs running their business. It is important to stay connected and to help them think through the roles/positions that they will need to run their business. Beyond that, I believe support programs should focus on the company as a whole, not just the funding possibilities. It’s not all about getting that first funding.”

What about the social entrepreneurship landscape in D.C.? “There is a strong ecosystem for social enterprise in D.C. The Net Impact chapter, for example, has been active for 13 years and gives people in the industry a gathering point. A few of us supporters get together every two months or so at Impact Hub to talk about what’s going on, it’s informal.”

The advantage of Mentor Capital Network is that they have been around for a decade and have managed to build up a strong network of mentors around the world who like to support startups through their industry knowledge and entrepreneurial expertise. Ian gave a striking example: “If you are an entrepreneur who has built a solar plant in Uganda, we will bring you back as a mentor for an entrepreneur who wants to do the same in Pakistan. Entrepreneurs love sharing their knowledge. Plus, they have a good grip of what the challenges are.” The beauty of networks is that they grow stronger through personal connections and such positive mentoring experiences.

While mentoring is an immensely crucial support factor for evolving startups, I’m not sure that it is a stand-alone mechanism. It is less suitable for early-stage startups who haven’t learned their trade yet than for those who have been running for one to three years and are looking to refine their business model or scale up. In that sense, I think Mentor Capital Network provides a great service in enhancing social capital in the sector.

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Halcyon Incubator

I arrived in D.C. on the 9.35 a.m. Amtrak on a hot September morning. My first field visit of the day was Halcyon Incubator. I had only ever experienced D.C. in the rain and/or snow, yet that day I walked through Georgetown in sandals soaking up the sunshine. I spotted Halcyon House from a distance: a gorgeous dark brick mansion surrounded by lush green grounds. I rang the bell and was greeted by Ryan Ross and – in his hand – a much-desired cup of coffee (did I mention the 6 a.m. start that day?). The entrance hall to Halcyon is majestic yet simple and tasteful where you can see a staircase to the right and more rooms straight ahead. I dropped my bag and we began a tour of the house.

As we climbed up the white staircase, Ryan told me about the Halcyon Incubator Program which was launched merely one year ago and was getting ready to welcome its second cohort just two days after my visit: “We recruit eight ventures per cohort and work with them for a total of 18 months. During the first five months, they live and work here while participating in our core program.” That’s right. Halcyon runs a residential program in which participants live under the same roof while developing their ventures. “The core programming includes weekly pitch sessions and a set of skill series during which we help them build up expertise in areas that they need to run their ventures. These first five months culminate in a Demo Day where all Fellows pitch their ventures to partners and investors. Over the next seven months, Fellows still work out of Halcyon and make use of our mentor and partner network. After this first year in the program, we offer them work space at a reduced rate to further their ventures.”

Halcyon's 1st cohort

Halcyon’s 1st cohort

As we arrived on the top floor of the mansion, we were chatting in the center of a white sunlit room with windows on all sides – the library. On each side of the room a staircase leads up to mezzanine levels decorated with hammocks and cushions. “This is where most of the programming takes place.” Ryan explained. We walked into a smaller room next door: The walls were painted a light grey and with startup-notes all over them, a prominent “DO NOT ERASE!” above each section. Ryan walked me through a few more rooms: a dark-brown boardroom featuring a long wooden table with twelve chairs on each side. Everything here says Serious Business.

As we were overlooking the garden out back, taking in D.C. noon skyline and watching miniature cars speed across the bridge below, I asked Ryan what the ecosystem for social entrepreneurship in D.C. was like. “It is very underrated. By nature, a lot of people in this city focus on creating a positive impact: The government is here; people are concerned with the quality and efficiency of public service provision. You don’t usually think of D.C. as a startup hub, but universities are playing a big role and it’s really coming along.”

In the basement, we found ourselves in a long tunnel-like computer lab, and the event space already set up for their intake-celebration two days later. “As far as our application goes, we look for talented idea-stage entrepreneurs who want to create a positive impact in society. We scan for applicants who have demonstrated their ability to execute and who work on a relevant problem. Finally, we assess the level of innovation and sustainability of the solution they put forward.”

Students working at the top floor library during Halcyon's 2015 spring Hackathon

Students working at the top floor library during Halcyon’s 2015 spring Hackathon

The next morning I met with Amelia Friedman, Fellow of the first cohort and founder of Student Language Exchange. As we chatted over coffee in the hotel lobby at the Renaissance, she told me about her initial startup experience: ”When I first started working on the idea I didn’t see myself as an entrepreneur. But I fell into this community of social innovators at Brown University. Everyone was so warm and supportive; they cared about me as a person, and then about my venture. I think that’s what it comes down to: People who run support programs need to be genuine and transparent, and care about the entrepreneur, not just the venture.” Amelia was about to complete her Fellowship at Halcyon and was toying with the idea of starting her next venture. “Halcyon has been great. They have a good program and a great community; they are really good at finding the right people to be mentors, peers, and experts to help get your startup off the ground. Halcyon does an incredible job in selecting the right people for their program; there is only one person in the world I would start a company with, and I met him through this program.”

I have only come across one other residential support program – the DO School, where Fellows share an apartment for the first ten weeks while on campus. This cohort-approach – especially when sharing a roof – has its upsides. Participants get to know each other and each other’s ventures, they build trust and play on each other’s strength, often they remain friends long after the program ends. They build up their own support network with their peers within the Halcyon program. At the same time, it is crucial to constantly bring in new wind, new thoughts, and people from the outside that raise critical questions and challenge existing business plans. Amelia, for example, made an effort to connect with the D.C. startup community beyond Halcyon to stay inspired.

Halcyon’s advantage is its strong network of partners and funders. They are able to provide participants with a US $10,000 living stipend and, as mentioned before, accommodation for the first five months of the program – which is worth a lot in a city like D.C. Being able to connect their participants to relevant policy makers and winning corporate support for their skill series speaks for their networking success. I look forward to Halcyon’s impact report and seeing what their cohorts cook up!

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Field Study: United States

In late July 2015, after seven months of research and discovery of the European social enterprise landscape, and its supporters, I was headed for the US. Located in Virginia, I built up a solid home base to work as a freelancer (I recently launched my professional website anikahorn.com!) and take research trips to social enterprise hubs along the East Coast.

Before we dive into the field visits that – so far – have taken me to Washington, D.C. , New York City and New Orleans, I was curious to find out what academia and practitioners had to say about social entrepreneurship in the States.

What the academics say

I love reading up on academic findings in this field. The peer-review process and emphasis on scientifically sound methods shields findings from subjectivity; there is some neutrality and quality to the findings. With that said, I was surprised to find very little published work on social entrepreneurship in the US. The main papers I am referring to stem from 2010 and 2006.

Doeringer (2010) argues that social enterprise in the US “reflects a focus on generating income for organizations that provide services typically thought of as being provided by the nonprofit sector” (p. 292), while the European concept focuses more on tackling the issue of chronic structural unemployment. Doeringer’s work very much discusses social entrepreneurship through the lens of law; he highlights the role and distinction of the nonprofit sector so if you are interested in learning more about that, I recommend his work!

Similarly, Kerlin (2006) focuses on the distinction between social enterprise in the US versus Europe and claims that “much of the practice of social enterprise in the United States, termed as social enterprise, remains focused on revenue generation by nonprofit organizations” resulting in nonprofit social enterprise, nonprofit enterprise, nonprofit ventures, and enterprising nonprofits (p. 248).  According to Kerlin, the European understanding is rooted in the for-profit sector through “firms who seek to enhance the social impact of their productive activities.” (p. 249). The author sheds light on the role of cooperatives and the work of EMES – a research network of universities with a focus on social enterprise, social entrepreneurship, social economy, solidarity economy and social innovation. They are a good resource if you are interested in learning more about social entrepreneurship in Europe – which – however – is not the purpose of this introduction to social enterprise in the United States. But hey, knock yourselves out!

All in all, academic research of social enterprise in the U.S. very much relies on a comparison to Europe. The sources I consulted had me sort through pages and more pages of historic developments. If that’s what you’re into, that’s great but a word of warning: having interviewed more than 25 support organizations in Europe, I just don’t see any of these findings reflected in the current world of social enterprise in Europe, which makes me doubt the validity of U.S. findings. I don’t  mean to discredit anyone’s research, but let’s say I have my reservations.

Practitioner Insights

Similarly to the academic universe, I had a hard time digging up any up-to-date research on social enterprise in the U.S. in practitioners circles. The most extensive resource I could find is Social Enterprise: A Portrait of the Field by Community Wealth Ventures, Social Enterprise Alliance and Case at Duke from 2010. Here are the delicious bits from their report that surveyed 400 social entrepreneurs in 2009:

  • Main sectors social entrepreneurs are active in:
    1. workforce development
    2. housing
    3. community & economic development
    4. education, and
    5. health
  • Workforce:
    1. 41.7% of social enterprise have one to five employees
    2. 12% have more than 100.
  • Most common social enterprise types:
    1. education & training institutions
    2. retail & thrift shops
    3. consulting
    4. food service & catering
    5. arts-oriented ventures
Social Enterprise: A Portrait of the Field, p. 10

Social Enterprise: A Portrait of the Field, p. 10

  • Income:
    1. 34% of social enterprises in the US reported an earned income of more than one million dollars
    2. 25% quoted less than $100,000
  • Biggest challenges social entrepreneurs in the US face:
    1. sales & marketing (27%)
    2. financial issues (23%)
    3. human resources (13.8%)
    4. operations (11.9%)
  • Greatest support needs were rooted in a lack of technical assistance and training in
    1. business plan development (51%)
    2. introductory training to social entrepreneurship (48%)
    3. market research and analysis (45%)
    4. accessing capital (42%)

The authors argue that the biggest challenges in growing the sectors lie in the areas of funding and finances, lack of seminars and training, as well as changes in legislation. All in all, it seems to require a cross-sector effort from the investment community, support organizations and advocacy groups/legislators. It is not the most current report, but I really recommend it if you want to dig a little deeper into U.S.-American social enterprises!

Social Enterprise: A Portrait of the Field, p. 7

Social Enterprise: A Portrait of the Field, p. 7

If you are looking for more recent data, check out Ben Thomley’s The Facts on Social Enterprise in the US in Huffington Post Impact from 2012. Be aware that the links don’t direct to the data source he mentions but the general website of Social Enterprise Alliance.

In 2014, Michael Belinsky argued in Stanford Social Innovation Review that three developments had influenced the sector in the previous year. Foundations were able to make a new type of investment well suited to social entrepreneurs: Program-related investments are similar to grants with the difference of having to be repaid. Corporate forms such as Benefit Corporation (adopted by 31 States as of February 2016) and L3Cs – low-profit limited liability companies. Thirdly, in 2013 Social Impact Bonds made an entry to the US. Often referred to as a Pay For Success model, which offers a more output-oriented financing models to social entrepreneurs. I asked Michael for an update but haven’t heard back yet.

Even though not a detailed insight, I hope this got your mouth watering! As I am based in the united States for now, this section will not be as consistent as the European field visits. I will throw learnings and insights from trips to other countries in, so make sure to use the tags in the right sidebar to navigate!
Let’s dive in and see what social enterprise support looks like in the United States!