Typing socent in this title made me realize that just as grad school in the U.S. acronymized my language, twitter is teaching me to communicate in a different type of incoherent syllabus combinations for words.. Sorry guys!
I’d like to dedicate this post to a study and recently released iconographic mapping the social enterprise sector in Brazil by the Brazilian chapter of the Aspen Network of Development Entrepreneurs – ANDE Polo Brasil; Potencia Ventures; the Brazilian branch of Latin America’s sustainable development foundation Avina and Brazilian consulting company for BoP business solutions Plano CDE. The study analyzes in quite some detail 50 social enterprises in the country, out of a total of 140 identified by the group.
Some interesting findings:
- 50% of the interviewed businesses are concentrated in the especially economically active states of São Paulo and Rio de Janeiro, with 13% in the Nordeste, leaving the rest of the pie for the more economically depressed northern and interior regions. This could be in part explained by the fact that enablers in the impact investing space are centralized in São Paulo, complicating their reach to the more geographically remote parts.
- 78% of the interviewed entrepreneurs have attained either undergraduate (40%) or graduate levels (38%) of education, meaning that the sector is dominated by well-to-d0 and well-meaning mostly generation Y’ers, who want to improve the situation of but do not necessarily represent the Bottom of the Pyramid (BoP).
- Although all of the interviewed qualify as social businesses, just 50% apply methodologies, either internal (38%) or external (12%), for measuring their social impact. Having dedicated some effort to impact measurement both in theory and practice, I’d like to venture that this might be a trend that evidences a need for greater consolidation in the field of impact measurement..
- As this was part of the selection criteria, all of the analyzed businesses directly serve the BoP in either providing services or products (18%), or including low-income Brazilians in the value chain (14%) or both (68%). The latter statement includes businesses that outsource distribution and other services to BoP partners, which makes for a happy marriage between lower cost for the social enterprises themselves and stable clients for existing small service providers. An important distinction made in the study was that they did not consider hiring low income staff as a sufficient condition to qualify as a social enterprise.
- 86% of the interviewed entrepreneurs used their own resources to finance their startup! The difficulty of mobilizing capital for early stage high risk social enterprises is another reason why the BoP themselves are not enterprising in Brazil.
- 72% sell exclusively in the Brazilian market, 22% of which act only within their regions, while 28% act as international companies.
- While 64% of the businesses are financially sustainable, 36% are hybrids and for the time-being rely partly on donations, with some relying on the latter for as much as 90% of their costs.
- Education, financial services, culture, environment, agriculture and technology were the most represented sectors.
The list goes on, but the overview is sufficient to recognize some interesting trends.. It will be very interesting to see future studies, as right now seems to be a time of explosion for social enterprises in the country. As impact investing advocates including Artemisia, the group above, and the social enterprises themselves continue showcasing good examples, the sector in this 200 million-strong country is bound to have more than 150 examples to explore.