The Editors' Post: The problem is the pipe, not the pipeline
Access to funding for diverse entrepreneurs is not a "pipeline problem", we hear at this week's Impact Shakers Summit in Brussels. Plus: new backers for Suzanne Biegel's legacy fund and why a UN resolution on the social economy matters.
Some trips are energising. And that’s how I feel today as I visit Brussels for the Impact Shakers summit. Claiming to be one of the first impact-focused startup conferences in Europe, the sold-out event is gathering hundreds of social innovators, impact entrepreneurs and mission-driven investors – and I’ve rarely seen such a concentration of fresh ideas, solutions and innovations per square metre.
One issue that has come up consistently in conversations and panel talks is the question of how to make impact entrepreneurship more accessible to diverse founders. The crux of the matter, when it comes to impact startups, is often access to investment. Many speakers today pointed out how little funding diverse entrepreneurs get – as little as 1% of all venture capital investment, according to some studies – and it’s not really getting any better.
One excuse often given is that “it’s a pipeline problem” – meaning it’s because there aren’t enough diverse founders for VC investors to choose from. But the data shows otherwise. As panellist Imène Maharzi, senior advisor at INDEFI Sustainable Finance, said today: the problem is actually the pipe. Instead of shifting the blame on diverse founders for not fitting the mould of their typical investee, VCs should ask themselves: do they offer the right products for diverse founders? And do they send the right signs to diverse founders that they are the right VC investors for them? There is certainly a role for impact investing to redefine what a “VC-fundable case” actually is. Let’s hope today’s conversations bring us one step closer to it.
But how do you design an impact investment fund that really works for diverse founders from the start? One word: co-creation. In the latest feature in our Rebalancing the Books collection, on inclusivity in social investment, we learn how two UK social investment funds – the Growth Impact Fund and Local Access Bradford – have been built with the input of the diverse social entrepreneurs they seek to invest in. Applications in the hundreds are proof that it can work; but it doesn’t come for free and we need to multiply these initiatives to respond to the demand – because yes, there’s actually too much pipeline.
One champion of investing in diverse founders is Suzanne Biegel, the pioneer in gender-lens investing who last month announced a US$1m investment to kick-start a new endowment tackling climate change and gender inequality – her legacy project as she revealed she was terminally ill with cancer. Today we learn the fund, Heading for Change, has secured its first backers, including the Skoll and Laudes foundations. Anna Patton has the details.
This week also in Pioneers Post, a collective of government ministers and global leaders of influential social economy networks reflect on the significance of the UN resolution on the social economy that was passed last month. While its potential to unlock the power of the social economy to solve today’s most pressing challenges is momentous, the authors write, the next step will be crucial: widespread implementation.
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Top image: Alina Klarner, Cyril Gouiffès, Agata Nowicka, Agnieszka Wojdyr and Imène Maharzi speaking at the Impact Shakers summit in Brussels on 5 May.
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