Not a Lack of Funding

Lessons Learned from Alternative Finance Experts - A View from Spain

Culture is an extremely complex concept to define. It is generally referred to as the set of tangible and intangible material assets of a social group inherited across generations in order to guide individual and collective practices. Cultural changes, the mindset of societies and the shift in thinking can usually take decades or even centuries or millennia. Changes take place gradually, so they are difficult to perceive on a day-to-day basis.

What about the so-called organisational culture, how do we define it, and is transformation possible in a short time? It is obvious that, since they are a system and structure, companies are embedded in the surrounding environment, but it is also true that they have their own inner universe of meanings; a set of norms and values that have been built up in the shape of an ecosystem made up of their own traits.

Image of Lego Serious Game. Organisational culture and entrepreneurial ecosystems are built little by little, block by block.

As a result of the focus group held within the framework of SocialFinanceLab research carried out, experts in alternative financing made an interesting analysis of the reality of the social entrepreneurship ecosystem in Spain. Some interesting notes were, precisely, regarding mentality, culture and knowledge:

• Prior knowledge and preliminary research are the key. As a rule, a social entrepreneur is someone who does not come with much knowledge about the financing alternatives available. Ideas in social entrepreneurship tend to come with the "social" part much more developed than the "economic" part.

• It is not a lack of funding, it is a lack of good and solid social impact projects. Arising from the previous point, we found an interesting issue on which all the participants in the focus group agreed: yes, there are initiatives, calls for new social entrepreneurship projects and so, new sources of alternative funding available, what is lacking in fact are good projects. Quality projects that are properly conceived, have a strong business plan, consider sustainability and economic impact, and that are properly validated do get funding. The challenge is that there are very few projects that meet these requirements.

• It's not about borrowing, it's about selling. There is a prevailing thought among social entrepreneurs that Crowdfunding or Crowdlending alternatives are not for them because they do not want to "borrow" money. The easiest task of the mentors and experts of these platforms is to convince the entrepreneurs that they are not "borrowing" money, but selling their product, just as if they were in a shop or a market. Their ideas and businesses have to be translated into economic value so that the social impact part is sustainable over time.

• The digital divide is a strong barrier. One of the areas where more training is needed is in online marketing and commercialisation: knowing how to persuade through social media and knowing how to create good online marketing plans and good mass communication campaigns.

• Validation is essential. Business plans always hold up on paper, the challenge is to validate them. Entrepreneurs often want to launch themselves into the market without the fundamental step of validating their idea. A good crowdfunding campaign can serve to validate an idea and even improve it.

• New, young and emerging ecosystem. The social entrepreneurship ecosystem in Spain is not a poor ecosystem or one that lacks funding opportunities, as is often argued, but it is potentially strong and incipient. All it needs is time to develop a culture of quality and build good foundations to get it off the ground.

Each of the above points has a link to the entrepreneurial ecosystem in Spain and to how the organisational culture is changing, slowly but surely, and with initiatives that create strong networks and contacts between companies. This snapshot strongly validates the work we are doing in the SocialFinanceLab Project as it reveals the need to fill the training gap in alternative sources of finance.

By the way, as a preview of things to come, remember the term "Fourth Sector" because in the next decade it will be heard in every nook and cranny of the European entrepreneurial ecosystem.