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Investors focusing on social enterprises Wednesday, October 29, 2008 | 6:23 AM By Teresa Garcia
SAN FRANCISCO (KGO) -- With the economy in the state it's in, you might be tempted to think that venture capital would be harder to find than a decent car loan. That's not necessarily the case. There is one specific industry that is having some success finding start up money.
That specific industry getting investment focuses on socially responsible businesses, anything ranging from fair trade tea to renewable energy. But this flow of money goes against the grain. According to a new report out from the University of San Francisco, which says the sour state of the economy has driven the confidence of Silicon Valley venture capitalists to an all-time low.
In a world teetering on global recession, investors are justifiably nervous. Starting a new business may seem near impossible in this tight credit market, but there actually is one arena where money is flowing. "I think there is a wave of new investing where people are not wanting it just to be about their money, but also to be about their impact in the world," said Kevin Jones, Good Capital.
Kevin Jones and his partners at Good Capital, a San Francisco venture capital firm, say if you're looking for investment money during these tough economic times, then the way to go is with a business venture that's socially responsible.
"There's a crush of new entrepreneurs doing a radical range of activities and sectors," said Tim Freundlich, Managing Partner, Good Capital.
"From healthcare to consumer products, fair trade kinds of things, financial services - a whole lot of things, and there's ways to make money and do good," said Jones.
To help people learn more about launching and getting investment for a socially responsible company. Jones started a conference called "So-Cap," or "Social Capital Markets." Organizers hoped for at least 250 people to show up at this first-ever October gathering in San Francisco, the turnout showed the hunger of a new generation of social entrepreneurs and investors.
"Blood on the streets in Wall Street, and yet we have 600 people, 650 people coming to this conference," said Jones.
Attendees came from around the world, all wanting to find out how to get a piece of the estimated $25-billion that's in the U.S. investment market for businesses focused on doing good.
"The whole idea of social enterprise is becoming really big in the United States. I mean I think we're seeing that there's something between pure business and pure charity," said Jim Fruchterman, President Benetech.
And some companies already operate this way. Jim Fruchterman heads up Benetech, for 19-years this Silicon Valley non-profit has been using technology to serve the social sector.
"Things like developing software for disabled students, human rights activists, environmental activists," said Fruchterman.
Benetech is one of many social enterprises excited about the possibility of cashing in on some of the existing good investment dollars.
"The world needs more businesses to think about society," said Fruchterman.
Some investment analysts do say the best time to start a new business can be during a market downturn.
VC's mentioned in the article: Good Capital - Kevin Jones, Tim Freundlich Benetech - Jim Fruchterman