Social entrepreneurship: Tackling unemployment and supporting intercultural understanding in the Euro-Med region Incubation and access to finance in early stage of social business development Matteo Bartolomeo

2 Make a Cube 3 Make a Cube 3 is the first incubator in Italy dedicated to social and eco-innovators. Make a Cube³ provides comprehensive support to new businesses with high potential for creating social and environmental value. Break even in 14 months Early stage Capacity building Intensity CommunityIntegrity Privately owned, but public utility Our key words

3 A joint venture between Avanzi and Makeachange Make a Cube³ is a joint venture between Avanzi (80%) and Make a Change (20%). Avanzi is a leading think tank and consulting firm working on sustainable development issues since its foundation, in Make a Change is an Italian association dedicated to the promotion of social business. Consulting. By driving cultural and organizational changes we help business and organisations to become more sustainable. Habitat. Avanzi’s location is much more than just an office space. It is a marketplace for sustainable innovation where business, ideas and projects can meet. Think tank. We are constantly seeking the most effective ways to drive sustainability into innovation.

4 The first Italian “low profit” The two shareholders have incorporated Make a Cube³ as the first low profit company, adapting to the Italian context the concept of community interest companies and B Corps. Socially oriented Priority to the maximization on the social impact as a statutory provision. Economic sustainability conceived as a mean to achieving sustainable development goals. Low profit e low dividend Limitations in the return on investment, a cap to the top management salary and other important features have been introduced, voluntarily and without any tax advantage, in the statute. Accountability Evaluation of social, environmental and economic perfomances and impacts generated through its activities

5 Prisoners enrtrepreneurs Renewables Collaborarion Makers Digital craft Migrants Womenomics Sharing Disability Creativity Culture Local development Participation Co-ownership Welfare Energy efficiency Social innovation Inclusion Social venture Upcycling Natural resources Peace Access Public goods Commons Empowerment Rights themes Impact finance Microcredit Respect

6 Market fallire and social business Incomplete markets Goods and service provided by the public sector Market economy Social business

7 Two market failures Market failures and incubation of social business Early stage Limited opportunities for capital gain

8 Features Challenges for social businesses (and therefore of social business incubators) Limited economic returns and high social returns Loss making businesses requiring support from the state and volunteers Good ideas but limited entrepreneurial skills To transfrom trade offs into opportunities To develop sound and robust business models and to explore opportunities for economies of scale, replicability, efficiency Capacity building Fast shrinking of welfare state Speed up time to market, replicability and attractiveness for investors Challenges

9 Needs The ecosystem Financial support Managerial support and capacity building Tests and pilot projects Venture philantophy Impact investire Venture incubators Incubators, partner organisations Private organisation Pre competitive procurement Scaling and replicability Industrial partner, impact investors incubators Who in the ecosystem

10 Supporting social business incubators Starting points and rationale: Recognition of public utility nature, due to high positive externalities for the market, the state and society as a whole Recognition of the intrinsic fragile business model (double market failure) Recognition of incubators as partners for local development programmes, grant making and public finance (limited asymmetry of information and effective management of funds) What could be done: Financial support to incubators, with venture phipantrohy or investment approach Involvement of incubators in grant making and public finance scheme, as skilled brokers of information and confidence, as consultant for monitoring and co-developers Support develoment of incubators into venture incubators Involvement of incubators in the design of pilicies and programmes