Small Talk: Entrepreneurship as a force for social good
One doesn't hear so much talk of the "big society" these days, but that is not to say it isn't out there. The rise of social entrepreneurship has largely gone unnoticed by the mainstream business community – or policymakers for that matter – but thanks to the support of some organisations that might surprise you, this is a movement which is definitely in the ascendancy.
Those groups include the Schwab Foundation, which is a major funder of social enterprises but is better known as the organiser of the annual festival of capitalism in Davos that is the World Economic Forum, and Oxford University's Said Business School, home to a social-entrepreneurship centre founded by eBay billionaire Jeff Skoll's Skoll Foundation.
To the list must be added Lloyds Banking Group, which has just announced a new package of support for social entrepreneurs that is worth £14m. Its Social Entrepreneurs Programme, which follows a similar initiative run by the bank last year, is an alliance with the School for Social Entrepreneurs (SSE), which operates 10 centres around the country.
Lloyds' funding is enough to pay for learning support from the SSE for 1,300 social entrepreneurs, with the bank also pledging contributions of between £4,000 and £25,000 for each entrepreneur's organisation.
But who exactly are these social entrepreneurs? It's a difficult concept to pin down – not least because there are many in the movement who argue that trying to provide a narrow definition would be counter-productive and potentially exclusive.
For its part, the SSE says a social entrepreneur "is someone who works in an entrepreneurial manner, but for public or social benefit, rather than to make money". It distinguishes social entrepreneurship from social enterprise, which many people use as interchangeable terms, on the basis that businesses in the latter space focus on profit as well as community good. By contrast, social entrepreneurs, the SSE argues, are wholly focused on public or social benefit.
In practice, the two concepts are clearly closely linked. And what is increasingly apparent is that many of the small businesses run as social enterprises not only add to the common good but also produce higher-than-average levels of commercial success. The survival rate, after five years, of organisations founded by graduates from the SSE is 13 per cent higher than for new businesses as a whole in the UK.
Enabling Enterprise, founded four years ago, is a good example of social entrepreneurship. The organisation works with schools in London, Manchester and Birmingham to help students develop a wider range of skills and experiences for life.
These small and medium-sized enterprises deserve more support of the type that Lloyds is now extending. Not just on the basis of the social good they deliver, but also because their track records of performance justify additional investment in the sector. The sustainable business models offered by many social enterprises have been valuable engines of job creation and added economic value.
Plus there's the fact that people like and trust these organisations, which is more than you can say about most private enterprises. In a post-financial crisis age, where free-market capitalism is no longer necessarily seen as a force for good, social entrepreneurship could just be the antidote to public antipathy towards business.
£3m launch for company spawned in university labs
Britain's universities have an excellent track record of spawning technologies that provide the foundation for commercial success. The University of Liverpool says an idea conceived in its laboratories will be another one: Versarien, set up in 2010 to commercialise a process for the production of porous metallic materials that the university pioneered, will today announce its intention to float on the Alternative Investment Market (Aim).
Versarien is expecting to raise £3m from investors in the initial public offering, and is targeting a market capitalisation of around £12m. Some £2.3m of the proceeds will be invested immediately in the acquisition of another business, Total Carbide, which works in similar technologies.
The combined companies will target the $11bn (£7.3bn) market for cooling systems in devices such as computers.
The materials invented in the University of Liverpool's labs have unusually good heat transfer properties – as a result, Versarien says its products are between three and 10 times more effective than traditional cooling systems.
Sun is still shining on the solar power sector
Solar-power panels still offer financial incentives, despite the Government's decision last year to slash the "feed-in tariffs" paid to those who install them on homes and other buildings.
The tariff still operates for smaller installations, while larger ones qualify for the Government's Renewable Obligation Certificate scheme, offering enhanced rates for power generated by renewable energy.
It is the latter projects that interest financial-services group Foresight.
It is issuing £20m C shares in its Foresight Solar Venture Capital Fund, and is also launching a solar-based enterprise investment scheme.
Small Businessman of the Week: Gilad Tiefenbrun, chief executive, Linn
My father Ivor founded Linn almost exactly 40 years ago to produce the Sondek LP12 turntable he had designed, to generate the best-possible audio quality. The company expanded over the next three decades and I joined in 2003, initially to run the R&D department. I became managing director in 2009 and my father became chairman.
Despite the economic environment, last year was arguably our best ever – sales up 5 per cent and profits up more than 20 per cent. Even in a recession people look for value; that may just be about a very low price or looking for something that will really last. The middle market gets squeezed.
My impact on the business has been to shift us into the digital age – when I first arrived we hadn't even begun to think about streaming media, so I immediately got a team working on that. We had our first digital streaming product on the market by 2007 and it was a huge hit – unlike on even the best quality CD players, you're actually hearing the music in exactly the way it sounds on the original studio master recording. We make everything in our Glasgow production facility, which gives the sort of teamwork that can really drive innovation.
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