In Research

Details

Year: 2020
Published in: Journal of Business Venturing Insights
Cited as: E. Vanderhoven et al. (2020). Can public venture capital support sustainability in the social economy? Evidence from a social innovation fund.Journal of Business Venturing Insights 13. e00166

Abstract

The Social Innovation Fund (SIF) – funded by Scottish Government and the European Social Fund – adopts a ‘public venture capital’ model to support socially innovative organisations. This article critically explores the use of public venture capital programmes to fund and grow the social economy through the case study of Heavy Sound Community Interest Company. We conclude that, while SIF funding helped Heavy Sound to scale-up an effective intervention in the short term, further significant scaling might undermine the project’s success and long-term sustainability was not assured. We call for further research into the long-term consequences of public venture capital programmes coming to an end, including coordinated evaluation of the SIF.

Recommendations from this resource

Future Research

1. Further research should examine whether SEs are able to survive in the long term (after the public venture capital venture is withdrawn) and with what effects on their beneficiaries.

2. To develop a coordinated evaluation of the Social Innovation Fund, exploring its success in producing sustainability for a variety of SEs and examining the conclusions reached in this study with a larger sample. Given that all SEOs funded by the Social Innovation Fund are required to work collaboratively with research institutions to evaluate their work – as in the case of Heavy Sound and GCU – this would appear to present a rich stream of data for future analysis.

Policy Makers

1. Recognise that some Social Enterprise and beneficiary communities will require greater and more long-lasting forms of support than others.

2. For those designing public venture capital programmes: there is a need to consider the context in which a programme is embedded: transferring commercial venture capital tools into an Social Enterprise environment may not work.

3. Finally, policymakers who see the potential of SEs for solving persistent social problems need to consider a holistic approach to SE development; financial investments do not offer a ‘quick-fix’ and more comprehensive support including, for example, capacity building is needed.

Support Organisations

1. Recognise that some Social Enterprise and beneficiary communities will require greater and more long-lasting forms of support than others.

2. For those designing public venture capital programmes: there is a need to consider the context in which a programme is embedded: transferring commercial venture capital tools into an Social Enterprise environment may not work.