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Making money, socially

April 27, 2010

Sometimes, it seems that talking about social good just gets in the way of talking about how to make money. At least, that was one observation made at the Presidential Summit On Entrepreneurship held today in DC.

Comments made by African mobile entrepreneur Mohammed “Mo” Ibrahim certainly made USAID Administrator Rajiv Shah regret calling on him during a session focused on access to capital. Ibrahim questioned the panel’s focus on “social” entrepreneurship when the topic at hand was finance. “Aren’t we talking about social entrepreneurship tomorrow?” he asked.

He had a point. In a session where “venture capital, “private equity” “angel investing and “exit strategy” should have dominated, Melody Barnes, the White House director for domestic policy kept bringing up social entrepreneurship and the efforts made by individuals solving pressing challenges such as poverty, disease and hunger.

I think social entrepreneurship is great. It is a great idea with great goals and great people putting their minds to come up with great socially-inclined companies. We should have more of it not just in emerging markets, but around the world.

But it has its limits, scalability probably being one of them. If a company can’t make gobs of money, it can’t scale. And if you don’t make gobs of money, it is hard to attract other investors into your endeavor and you’ll likely remain a small local firm. Which is great, but it appears to me that our global problems need big solutions and a social start-up isn’t going to cut it.

Another challenge I have with social entrepreneurship is that it sucks all the air out of other discussions around business in emerging markets.   Just because you’re doing business in a poor country, does that automatically make it “social”?

Maybe it is just good business sense and if so, shouldn’t you be talking dollars and cents?

From → Emerging Markets

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