More commitment and cooperation needed to allow social enterprise to grow

Press release -

Social entrepreneurship

The Netherlands boasts increasing numbers of social entrepreneurs, running their businesses not simply to make money but also to serve a social purpose. The tremendous potential for growth in this young market remains sadly underutilised. Paving the way for long-term growth will require funding of around 4.5 billion euros. Impact investors generally have a strong preference for companies in the growth phase, however, and most social enterprises have not yet reached that stage. A stronger market structure is also needed, including traditional companies, government authorities and consumers. These conclusions are presented in ABN AMRO’s report ‘De romantiek voorbij: de noodzaak van marktontwikkeling voor sociale ondernemingen ’, which was published earlier today.

A young and rapidly expanding market dominated by startups

According to ABN AMRO’s figures, the Netherlands has 4-5,000 social enterprises that together provide jobs for 50-70,000 workers. These companies pursue their social mission first and foremost, combining social ambitions with a profit motive. Social startups serve consumers (62 percent) and businesses (over 30 percent) to help solve society’s issues such as labour market participation, social cohesion and climate change. These ratios are reversed among social enterprises that are more than five years old.

Short-term capital requirements: 1-1.5 billion euros

One in two of these entrepreneurs confirms that access to capital is the greatest concern for achieving growth. ABN AMRO has calculated that social entrepreneurs will need a total of at least 1-1.5 billion euros in the short and medium term – an estimate that climbs to 4.5-5 billion euros for the longer term. While ABN AMRO believes that sufficient capital can be raised to meet short-term needs, investors tend to ignore the majority of social enterprises in favour of the few that have reached the growth phase. To solve this issue, ABN AMRO calls for a greater spread across portfolios and better cooperation between financial backers.

A stronger infrastructure as a key growth element for social enterprise

ABN AMRO argues that the market for social enterprise requires a stronger infrastructure. ‘Traditional businesses have an important role to play in the development of social enterprises, for example as partners and buyers. Retailers such as supermarkets and retail chains can help social enterprises to reach consumers by adapting their product policies and forming partnerships. Government authorities can also contribute: as knowledge partners, policymakers and buyers,’ explains ABN AMRO’s Director of Social Impact Investments Eric Buckens. ‘Social enterprises play an important role, leading the way in the transition toward a more sustainable economy in which “shared value” is the rule rather than the exception. For this reason alone it is important to give them more support.’

Documents

Relevant links

Share

Join the discussion

ABN AMRO would like to know your opinion, so below this article you can react to this article via Disqus. By doing so, you agree to the conditions for reacting to articles on our website.

Related news items

More news about products and services