Every innovation process requires some finance. For social ventures it is key that the sources of finance should share the venture’s social goals as the primary driver of the enterprise. This may not always be possible. Raising capital may involve some compromise with the providers of capital, but the goal should always be to find ways for the core finance to come from those who share the venture’s mission.
As a rule, the earlier stages require least money but are also the hardest point to raise money. Here we look at the financing tools that help to take an idea from initial pilots into more sustainable operation. To finance new ventures there are a range of ethical banks and social funding agencies devoted to supporting new and expanding ventures. All forms of finance bring with them power relationships, which can sometimes threaten the values and relationships which the venture is built on. To guarantee that the initial venture funding remains subordinate to the values of the social mission, enterprises can raise social equity, limit the quantity of common shares, and seek subordinated loans from sources ready to share early risk without demanding a counterbalancing share in the project’s equity.