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The one true thing that we seem to be able to say about business models in social entrepreneurship these days is that by necessity, they must continually adapt and change. Most people may think this is primarily true for direct product or service organizations, which face pressures to listen closely and adapt to customer demand, and thus make sure they are offering the product or service just as customers want and thus creating the benefit they intend. But the pressure to listen and adapt is also true for the vast and growing set of intermediaries with social purposes, even financial ones.
Our most recent CASE Business Model profile focuses on a successful and respected financial intermediary, E+Co, a nonprofit impact investing fund focused on building locally-owned small and medium size enterprises (SMEs) that bring affordable and clean energy into their communities around the globe. E+Co was the inaugural winner of the CASE Award for Enterprising Social Innovation (ESI) in 2009.
After investments in over 194 organizations totaling $45 million, E+Co’s model has developed into a robust set of services that “bookend” its investments: pre-investment, it offers significant capacity-building and support services to potential investees. Post-investment, it offers customized support to help investees manage their impact and growth. From the beginning, E+Co’s theory of change and business model were tightly interwoven. Its founders believed that without the capacity support, enterprises would not be ready for the capital. And without the capital, the capacity-building process would not result in growth. The nonprofit form allowed them to access both grants and debt funds to be sure the needs of their global SMEs were met. And its regional office structure followed this set of activities: allowing E+Co to build a staff that could spend a substantial portion of its time preparing the pipeline for investment, and managing the investments once made. Offering operating support and investment services within one organization seemed both effective and efficient.
But now fast forward more than a decade, and the picture has changed. The pipeline of invested enterprises is maturing and E+Co must consider its role within the maelstrom of growing interest in impact investing. CEO Christine Ebbs-Singer believes E+Co is facing a major challenge –that it has outgrown what it can accomplish as a stand-alone nonprofit. In our profile, she points out that E+Co’s ability to access debt capital and grant capital has become compromised by their current structure. And that their structure precludes them completely from using equity as an investment tool. Time for a new business model? Read our CASE Business Model Profile on E+Co and let us know what you think.
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