Bridging the Social Investment Divide: How Can We Generate More Investments in Social Ventures?

Social ventures, constituting a small fraction of startups, are pivotal in addressing global challenges and fostering inclusive economic growth. Despite their significance, these ventures encounter sub-stantial funding deficits, particularly in early stages, with only a minimal percentage of social funding directed towards nascent initiatives. Contrary to the assumption that low financial returns deter inves-tors, recent research indicates that the primary barrier is investors' difficulty in assessing the dual objectives—social impact and financial viability—of these ventures. This challenge is exacerbated by investors’ limited training in social sector evaluation and a lack of prior experience with social in-vestments. To bridge this investment divide, the article offers practical recommendations for inves-tors on how to approach investments into social ventures successfully.