Advisory Boards for Social Entrepreneurs

1
Hybrid Social Enterprises
Charly Kleissner, Ph.D. charly_at_kleissner.com Co-F
ounder, KL Felicitas Foundation
May 16th, 2006
2
Hybrid Business Model
Hybrid Social Enterprise
In-Kind Equity Consulting Brand Intellectual
Property RD
For-Profit Entity
Not-For-Profit Entity
RD Consulting Profit Sharing Liquidity Events
3
Hybrid Business Model
Hybrid Social Enterprise Governance
For-Profit BOD
Not-For-Profit BOD
For-Profit Entity
Not-For-Profit Entity
4
Hybrid Business Model

• Why?
• To attract different types of capital / investors
• To partially subsidize services / products
• To invest in basic research
• To prepare immature markets
• To leverage both legal structures, while not
  being boxed into only one

5
Case Study Biomass Electrification in Rural Sri
Lanka
6
Case Study Biomass Electrification in Rural Sri
Lanka
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Case Study Biomass Electrification

• Village Societies
• Organizational Development
• Training
• Reforestation Program
• Training
• Management
• Partial subsidy of tariffs

• Biomass
• Project Management
• Project Planning
• Installation
• Training
• Maintenance

In-Kind Equity Consulting
Flowing Currents Ltd.
Aspira
Profit Sharing Liquidity Events
8
Hybrid Investment Strategies

• Social Investors
• Foundations

• Social Investors
• Foundations
• Social Venture Funds
• Banks

• Social Investors
• Foundations
• Social Venture Funds
• Banks
• Governments
• Corporations

• Banks
• Governments
• Corporations
• Etc.

High
Grants Social Loans
Grants Social Loans Commercial Loans
Invest- ment Risk
Grants Social Loans Commercial Loans Government
Loans Equity
Commercial Loans Government Loans Equity
Low
Seed
Start-Up
Early Expansion
Late Expansion
Enterprise Life Cycle
9
Hybrid Investment Strategies
Investors
Banks Commercial Loans
Equity Social Investors
Equity Foundations Mission Related Equity
Foundations Social Loans (PRI) Social
Venture Funds Social Loans
Social Investors Grants Foundations
Grants
Not-For-Profit Entity
For-Profit Entity
Entities
Hybrid Social Enterprise
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Case Study Biomass Electrification
Local Bank Commercial Loan Social Investors
Equity Aspira In-kind equity Social Venture
Fund Social Loan
Investors
Social Investors Grants Foundations Grants
Aspira
Flowing Currents
Entities
Hybrid Social Enterprise
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Conclusion

• Define mission of social enterprise, then
  implement best legal structure to support the
  mission, not the other way around.
• Hybrid structure is appropriate if you
• Need to/want to attract different types of
  capital/investors
• Need to/want to partially subsidize services /
  products
• Prepare immature markets
• Invest in basic research
• Examples Flowing Currents, World Of Good, IDE-I,
  CBI, etc.
• Watch out for
• Governance and leadership issues
• Clear value proposition for different types of
  investors
• Need to work on business model templates

12
Hybrid Social Enterprises
Charly Kleissner, Ph.D. charly_at_kleissner.com Co-F
ounder, KL Felicitas Foundation
May 16th, 2006