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  1. 1. Hybrid Social Enterprises Charly Kleissner, Ph.D. [email_address] Co-Founder, KL Felicitas Foundation May 16th, 2006
  2. 2. Hybrid Business Model For-Profit Entity Hybrid Social Enterprise Not-For-Profit Entity In-Kind Equity Consulting Brand Intellectual Property R&D R&D Consulting Profit Sharing Liquidity Events
  3. 3. Hybrid Business Model For-Profit Entity Hybrid Social Enterprise: Governance Not-For-Profit Entity For-Profit BOD Not-For-Profit BOD
  4. 4. Hybrid Business Model <ul><li>Why? </li></ul><ul><ul><li>To attract different types of capital / investors </li></ul></ul><ul><ul><li>To partially subsidize services / products </li></ul></ul><ul><ul><li>To invest in basic research </li></ul></ul><ul><ul><li>To prepare immature markets </li></ul></ul><ul><ul><li>To leverage both legal structures, while not being boxed into only one </li></ul></ul>
  5. 5. Case Study: Biomass Electrification in Rural Sri Lanka
  6. 6. Case Study: Biomass Electrification in Rural Sri Lanka
  7. 7. Case Study: Biomass Electrification Flowing Currents Ltd. Aspira In-Kind Equity Consulting Profit Sharing Liquidity Events <ul><li>Biomass: </li></ul><ul><li>Project Management </li></ul><ul><li>Project Planning </li></ul><ul><li>Installation </li></ul><ul><li>Training </li></ul><ul><li>Maintenance </li></ul><ul><li>Village Societies: </li></ul><ul><li>Organizational Development </li></ul><ul><li>Training </li></ul><ul><li>Reforestation Program: </li></ul><ul><li>Training </li></ul><ul><li>Management </li></ul><ul><li>Partial subsidy of tariffs </li></ul>
  8. 8. Hybrid Investment Strategies Invest- ment Risk Enterprise Life Cycle High Low Seed Start-Up Early Expansion Late Expansion Grants Social Loans Grants Social Loans Commercial Loans Grants Social Loans Commercial Loans Government Loans Equity Commercial Loans Government Loans Equity <ul><li>Social Investors </li></ul><ul><li>Foundations </li></ul><ul><li>Social Investors </li></ul><ul><li>Foundations </li></ul><ul><li>Social Venture Funds </li></ul><ul><li>Banks </li></ul><ul><li>Social Investors </li></ul><ul><li>Foundations </li></ul><ul><li>Social Venture Funds </li></ul><ul><li>Banks </li></ul><ul><li>Governments </li></ul><ul><li>Corporations </li></ul><ul><li>Banks </li></ul><ul><li>Governments </li></ul><ul><li>Corporations </li></ul><ul><li>Etc. </li></ul>
  9. 9. Hybrid Investment Strategies Not-For-Profit Entity Investors Entities For-Profit Entity Hybrid Social Enterprise Foundations: * Social Loans (PRI) Social Venture Funds: * Social Loans Social Investors: * Grants Foundations: * Grants Banks: * Commercial Loans * Equity Social Investors: * Equity Foundations: * Mission Related Equity
  10. 10. Case Study: Biomass Electrification Aspira Investors Entities Flowing Currents Hybrid Social Enterprise Social Investors: Grants Foundations: Grants Local Bank: Commercial Loan Social Investors: Equity Aspira: In-kind equity Social Venture Fund: Social Loan
  11. 11. Conclusion <ul><li>Define mission of social enterprise, then implement best legal structure to support the mission, not the other way around. </li></ul><ul><li>Hybrid structure is appropriate if you </li></ul><ul><ul><li>Need to/want to attract different types of capital/investors </li></ul></ul><ul><ul><li>Need to/want to partially subsidize services / products </li></ul></ul><ul><ul><li>Prepare immature markets </li></ul></ul><ul><ul><li>Invest in basic research </li></ul></ul><ul><li>Examples: Flowing Currents, World Of Good, IDE-I, CBI, etc. </li></ul><ul><li>Watch out for </li></ul><ul><ul><li>Governance and leadership issues </li></ul></ul><ul><ul><li>Clear value proposition for different types of investors </li></ul></ul><ul><li>Need to work on business model templates </li></ul>
  12. 12. Hybrid Social Enterprises Charly Kleissner, Ph.D. [email_address] Co-Founder, KL Felicitas Foundation May 16th, 2006

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