Lack of Investment Crimps Social Enterprises Looking to Grow

As startup small businesses aiming to serve social needs proliferate, they are running into difficulty attracting capital to expand their operations, writes The Wall Street Journal.

In a survey of 740 for-profit social ventures published in 2010, nearly 80 percent of respondents said they needed more investment funding to stimulate the growth of their enterprises. While such firms are generating interest among individual investors and philanthropists, “it’s still tough to raise money,” says Jeffrey Bradach, managing partner of nonprofit consultancy the Bridgespan Group.

According to the Journal, social enterprises are hindered by competition among a growing number of entities chasing the dollars. In addition, they often do not provide the kind of that data that supporters want to see, such as revenue projections and measures of their impact, making it hard for investors to determine if a venture can scale up effectively.