It has been 21 years since NESsT was launched in Budapest, Hungary. Our value proposition was that socially driven enterprises were a solution for the Centeal and Eastern European (CEE) region’s most critical social problems. They could address issues of exclusion, poverty, marginalization, and inequality, while shifting the paradigm from grant funded short-term initiatives, to entrepreneurial, innovative, sustainable solutions.
Has this proposition been validated? There has been growing recognition that these hybrid enterprises solve some of the most entrenched problems. However, few of them were able to consolidate and grow impact. Why is this? Having worked with thousands of enterprises and hundreds of stakeholders in the region, our response is quite simple: the social investment sector has not evolved. It is still grant dependent, and enterprises lack the enabling environment to become investment ready. There are few pioneers in the region doing incredible work. But they are few and far between. To scale the promise of social entrepreneurship, the private and public sectors need to take some real risks, to enable the difficult transition from startup to sustainability.
NESsT reflected deeply on the lessons from its work in CEE, so here is our list of ten things that we believe need to happen.
1. Social enterprises need different financing at each development stage. Quasi equity (convertible debt/grants, results based funding) and patient debt (low interest, grace periods, revenue based repayments) are appropriate early on. They need this less risk averse financing to grow– usually in the range of €20,000 – €500,000.
A blog by Nicole Etchart, Co-Founder and Co-CEO of NESsT and Roxana Damaschin-Tecu, Director of Portfolio in NESsT. Join the conference and meet them!
Read the entire blog on Alliance Magazine website.