What we see: Trends in social enterprise

Every six months, Investors’ Circle is afforded a unique look into the developments and trends in the social enterprise space as well as a gauge on how potential investors are reacting to new businesses. During our application screening process we get a high-level look at what’s popular, what’s no longer exciting, what spaces are too crowded, etc.  Below is a sketch of some of the trends and curiosities we’ve seen over the last six months:

Consistent and Lasting Trends:

–         Boom in biofuel projects including power generation, fuel production and the technologies in between. Proposals show exploration of new feedstocks including algae, jatropha, sewage oil, etc. Several projects are also looking to source feedstocks from the developing world. However, investors’ issues remain: Uncertain barriers to entry, questionable carbon equations, inputs that compete with food supplies.

–         Wind and Solar Power solutions are a consistent presence, and with good reason! There is still plenty of “room” for technologies and models that make solar more efficient and affordable, offer pricing and installation solutions to bring solar to a wider group of residential and commercial users, and determine how to locate and develop wind power projects to reach a critical scale.

–         Diverse and plentiful green transportation solutions: Everything from websites that help you plan trips to hydrogen fuel cell cars, better batteries and adult tricycles.  Some projects are simple and some quite farfetched. One thing we agree upon: someone will win this challenge, even if it means defying the entrenched car culture.  The “who” and the “how” remain to be seen.

–         Beverages, Beverages, Beverages. New teas, healthy sodas, sustainable coffee, exotic juice. We always see lots of beverage companies but few make a great case about their ability to compete in a difficult, crowded market.

–         The all-purpose GREEN website, complete with online sales of green products, green product ratings, social networking, compelling stories, tips on how to go green, etc. Proposals for these businesses are a dime a dozen.

New Trends:

–         Emergence of Carbon Credits as a revenue source. A number of businesses are being built around the model of selling carbon credits as a source of revenue, either directly or via consulting or software sales for businesses developing their own carbon accounting systems. The carbon market in the US, however, is very premature and our Investors are left asking: Where are carbon credits liquid? What will happen in Copenhagen? What entity does the external verification?

–         New lines of sustainable home-ware. Filling the space between organic food and green building products, a new range of brands and products are supplying environmentally friendly alternatives to your everyday products: toothbrushes, silverware, dishes, Tupperware, water bottles, plastic wrap, etc. They’re employing a number of materials including recycled plastics, biodegradable plastics, bamboo,  palm, sorghum, etc.

–         Alternative banking and lending services are cropping up left and right. Either as a response to the recent economic crisis or due to good timing, we’re seeing a lot of solutions for providing banking services to the unbanked and for providing lower interest loans from non-traditional lenders or with new lending models. Community development banks are not a new concept, but are now better positioned and offering more attractive value propositions.

–         Focus on kids’ nutrition. We’ve seen lots of companies focusing on healthier snacks and meals for kids at home and in schools, whether that means producing natural and nutritious packaged foods especially targeted at kids or overhauling the traditional school lunch.

–         Smart systems for managing building energy. A number of new technologies employ software, monitoring systems, automated adjustments, etc. to help both homeowners and commercial building operators reduce their energy use.

–         Tools and services for the elderly. We’re seeing new offerings enabling elderly people to live independently longer, to manage healthcare treatments, etc. In addition there’s a new focus on the elderly population as a specific target market for media.

–         Home, roof-top or backyard gardening tools. Businesses are capitalizing on the recent popularity of home gardening and providing a range of tools, kits, grow boxes, services, and even modular green houses to help the average American do as Michelle Obama does.

On the decline:

–         Website for personal healthcare and social networking around health topics. Whether it’s that people no longer trust the web for health-related advice, that there were simply too many sites launched around the same time, or that early models failed to become profitable businesses, we’re seeing less of these models among our proposals.

–         Organic as “enough” to create a successful brand. Compared to a few years ago, turning a conventional product into an organic one and naming it is no longer a sufficient strategy for creating a new food brand. The potential winners in the natural foods space seem to be those that also focus on the sourcing of their ingredients, especially in ensuring products are fair-trade, and those that are bringing a new ingredient to the market or re-introducing that ingredient based on its health benefits.

We have 22 outstanding companies presenting across several categories at our Fall Conference and Venture Fair. It will be exciting to see how the investors respond to these winning proposals.


One Response

  1. Hi!

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