What Is a Social Entrepreneurship Startup?

Entrepreneurs that are driven to serve the greater good by launching a startup are known as social entrepreneurs. While these can be nonprofit organizations, three types of social entrepreneur business structures offer more flexibility than a traditional nonprofit: leveraged nonprofits, hybrid nonprofits, and social business ventures.

Unlike other types of startups, social startups are not created to gain wealth for the founders; they are created to make a positive social or environmental change. Social entrepreneurs shouldn’t expect a big payout from their startup; however, it is possible to make money with this startup model even if it is not a nonprofit organization.

A Social Entrepreneurship Startup May Be Right for You If:

• You want to build a company that will make a positive social or environmental impact.
• You aren’t interested in starting a company for profit.
• You have an idea that can solve a widespread problem, specifically for disadvantaged communities.

Leveraged Nonprofit

A leveraged nonprofit provides a service or product to at-risk communities and other charitable causes. The hallmark of leveraged nonprofits is that they are financially supported by outside funding invested in providing a public good.

Hybrid Nonprofit

Unlike traditional nonprofits, hybrid nonprofits can have private owners, blurring the lines between for-profit and nonprofit organizations. Essentially, a hybrid nonprofit is a startup that aims to help social and environmental causes by providing direct services and resources of which the part of the profit is used to cover costs.

Social Business Venture

A social business venture or social enterprise generates profit like any other business, but rather than giving the revenue back to its shareholders, the money is reinvested into providing more services and resources to make a greater impact. The aim of social business ventures is to solve problems for the common good and provide much-needed services.

Imperfect Foods is a startup that aims to reduce food waste and empower farmers by selling discounted foods that are mislabeled or imperfect but still edible. Powered by investors and reinvested revenue, Imperfect Foods is an excellent example of a startup created by an entrepreneur who took an idea for the greater good and created a lucrative startup idea.

Tech and charity meet with Be My Eyes, an app that connects low-sighted and blind users with sighted volunteers and company representatives through a live video call. Be My Eyes is technically a nonprofit organization that has raised millions of dollars and recruited thousands of volunteers to provide their service.

BANGS Shoes are ethically and responsibly made, and the company dedicates 20% of its profits to provide loans to small businesses across the world. Additionally, all repaid loans are reinvested into supporting other entrepreneurs instead of being counted as profit for the company.

Crowdfunding platforms are a useful tool for entrepreneurs, charitable causes, and individuals to raise money and reach their financial goals. To create a successful crowdfunding platform that is able to compete with other trusted platforms, you’ll need to create a unique idea or function that sets your platform apart. This could be a network of investors, advertisement opportunities, or specified crowdfunding topics such as real estate.

It’s no secret that clean energy is growing in both popularity and necessity. A clean energy startup can be either a product or service that takes a green approach to produce energy such as electricity-generating bicycles or solar paneling. Developing concepts and executing your business idea will require either knowledge of clean energy or the support of someone who has this knowledge.

With more schools adjusting to online teaching, an EdTech startup could give students an easier route to education. Whether it is for K-12 education or college-level students, the time to develop technology to enhance online learning is now. Make this startup unique and socially responsible by researching the problems schools face today with their elearning software or equipment and work to develop a product that smoothes the creases in online teaching.

A microlending business basically loans small amounts of money to people who don’t qualify for loans through other institutions. Normally, this startup charges a fairly high interest rate to its customers to mitigate risk if the borrower defaults on their loan. In underserved areas, microlending businesses can help provide communities with opportunities to introduce much needed resources into their own neighborhoods.

There are subscription boxes for everything these days. To lower costs, however, many businesses opt to sell products that the makers aren’t adequately compensated for. A fair trade subscription box startup provides the ease and excitement of a subscription box while introducing consumers to fairly traded, handcrafted products that they can feel good about purchasing.

Make philanthropy more accessible by creating a charity app. This could be an easy space to crowdfund for charities, make donations, or fulfill a need in your community. Since most adults have smartphones, a charity app startup can provide an easier way for charities to gain the funding and support they need to help people who need it most.

For more social entrepreneurship ideas, read our full list of startup ideas for social entrepreneurs.

To launch and operate a social entrepreneurship startup, you must have a passion for the cause your startup supports. Charitable organizations require charismatic leadership to drive the organization forward and keep the momentum going.

A well-crafted business plan is a startup essential. Your business plan serves as the roadmap to the first years of your business’s life by outlining the steps you need to take to reach important milestones. Moreover, you need to have a business plan to gain funding from investors or other lending institutions. To easily create a business plan for your startup, we recommend trying the Free Business Plan Generator from our friends at How to Start an LLC.

Every startup needs adequate funding; fortunately, there are several funding sources available to social entrepreneurs. This includes, but is not limited to, small business grants and loans, angel investors, venture capitalists, crowdfunding, and bootstrapping.

For startups that plan to start as or become a nonprofit, there are government grants for nonprofit organizations as well as the opportunity to apply for tax relief by obtaining 501(c)(3) status with the IRS.

To make the greatest impact, you’ll need to attract donors and volunteers using an effective marketing strategy. The best marketing tool available to social startups is their mission; by accurately depicting the goal your startup has and its impact, you will draw in more of the support you need to make your organization thrive. Additionally, you need to develop a strong brand for your nonprofit that will communicate who you are as well as the impact you hope to make in your community.

Building a network of support for your social startup is as simple as fine-tuning your networking skills to connect with other organizations, potential donors, and mentors. Your startup’s support system can help you navigate business-ownership challenges and troubleshoot problems along the way.

Finding a support network is as easy as reaching out to other organizations, joining a forum, or utilizing local resources from the Small Business Administration (SBA) website.

Social entrepreneurship is an honorable and important type of startup that is built to help make the world a better place through positive social or environmental impact. If this sounds like you, a social entrepreneurship startup might just be the perfect business for you. To peruse the top business ideas for social entrepreneurs, we recommend visiting our guide to top startup ideas for social entrepreneurs.