In November, the international team of Yunus Social Business gathered on the grey shores of Lake Constance for our annual strategy meeting. It was the first time we had Country Directors from all seven countries gather. They were seasoned development professionals, braving the bitter German cold, armed with successes and lessons learnt in social business investing from Haiti, Albania, Colombia, Brazil, Tunisia, Uganda and India.
Yunus Social Business (YSB) was founded by Nobel Peace Prize Laureate Prof. Muhammad Yunus, the founder of microfinance and Grameen Bank. YSB invests exclusively in social businesses. A social business must be financially sustainable and are set up to solve specific social or environmental problems. It must recycle profits into the business itself or the community it supports. Since 2011, YSB has invested in more than 20 social businesses, addressing issues in Education, Nutrition, Unemployment, Women Empowerment and Vocational Training. YSB makes blended debt and equity investments ranging from $50,000 to more than $300,000. Some of YSB’s investors include Deutsche Bank, SAP, the Swedish Postcode Lottery and the African Development Bank.
Very soon the discussion at the strategy meeting turned to the qualities of the perfect social business entrepreneur. YSB receives more than 200 business plans per country, per year. The Fund can invest in a maximum of six businesses per year. Every year we have to turn away many good ideas and talented people. Social business startups, like their for-profit counterparts, depend heavily on the commitment and drive of the entrepreneurs. We asked our Country Directors, how do we distinguish the characteristics of a great social business entrepreneur?
Passion was a no-brainer. Why do they get up in the morning? Are they committed to the cause? Will they stick it out when things get tough? For YSB, a burning interest is not enough; we look for a deep and mature understanding of the complexities behind the social or environmental issue that stems from years of hands-on experience. An Albanian entrepreneur, Suela, is one of the founders of E Jona, a new coffee shop for disabled young people. Her concept of the café came from her first hand experience navigating the shops and cafes of Tirana on a wheelchair. She knows that for a young disabled person going out was no easy matter. This isolates them and prevents them from gaining formative social skills and friendships.
The entrepreneur must have an in-depth understanding of the local community and markets. Often, being a member of that community is the key differentiator. We look for entrepreneurs who are leaders in the community that they intend to reach, who understands the market for the product or service the social business aims to provide. E Jona’s entrepreneurs have first hand experience of the needs of disabled youths. They have demonstrated the viability of their business idea by running a prototype café, serving drinks to real customers in the center of the capital city Tirana.
Lastly, entrepreneurs must have the ability to attract talented people to work with them, to create an outperforming team. No matter how talented the entrepreneur may be, only through the creation of an effective team will the business be able to scale. Suela is a leader of a community of motivated young people that includes both disabled youths and those who care deeply about the issue. Thus, she was able to build a successful team behind E Jona, as well as leverage her build on her connections to a community of E Jona’s future customers.
YSB’s fund is usually open only to large investors with investment sizes of more than $50,000. However, occasionally, we try to offer everyone the opportunity to invest in a great entrepreneur like Suela. We have teamed up with non-profit crowdfunding platform Kiva to raise the loan for E Jona online. You can make a $25 loan to the business through the website. The business will pay back the loan over a period of 6 years – every month you will receive a small repayment in your Kiva account which can be invested into other projects on the website.