The playground of the rich? Growing social business in the 21st Century

Purpose - This paper aims to explore how nascent social businesses move beyond the incubation phase and it develops understanding of how early-stage social businesses access finance to achieve growth. Design/methodology/approach - This exploratory and inductive study is based on four focus group discussions with early-stage social entrepreneurs, ``successful{''} social entrepreneurs who had achieved growth, and social impact investors. Findings - Social capital allows a social business founder to access financial capital to ``prove their concept{''}, or to directly attract investment from family and friends for start-up costs. To gain funding, social entrepreneurs present the desired image of the heroic change-maker. Interestingly, creating the right impression is equally important in securing financial capital as the ``hard-work{''} itself. Research limitations/implications - This study was conducted in London, which, like many other ``global{''} cities, has a unique business environment. The study is exploratory in nature. Further work in this area is required to draw more definitive conclusions. Practical implications - Financial products offered to social businesses are often dispersed and inappropriate. The study indicates that access to ``soft loans{''} and grants is critical in the early stages of social business growth and that social entrepreneurs use both formal and informal funding sources to develop their businesses. Where a person is not connected to wealthy acquaintances either through family, or through social networks, they may often struggle to access finance in a world where the network's resources appear to be as important as the entrepreneur's resourcefulness. This has particular implications for the demographic make-up of ``successful social entrepreneurs{''} operating social businesses, as these may be drawn from the most privileged and/or well-connected members of a group which already appears skewed towards white middle-class males. Social implications - This study highlights that current support structures favour relatively privileged social entrepreneurs rather than encompassing and empowering those disadvantaged, social minority groups and those in the greatest need. This is important because social business is often portrayed, possibly incorrectly, as a mechanism for addressing poverty through empowerment of disadvantaged groups. Originality/value - Research in social business development has largely neglected the social and cultural dynamics that embed start-ups. This paper tackles this gap and contributes to building knowledge in the area of early-stage social business development.