One of the newest forms of investing is the social venture capital fund. Through investment in socially responsible companies, capital is raised to provide relief in some of the world’s most problematic areas. Designed to provide real solutions to environmental and social issues, as well as attractive returns to investors, these funds are a source of efforts to stimulate growth in some of the world’s poorest regions.

This highly philanthropic form of investing is a means for organizations and donors to impact the world in a positive way, while continuing to provide a healthy return on investment. Social investment funds, foundations and banks are all methods of raising money for the socially minded company. However, the social venture capital method is proving to be the most beneficial to both investor and investee. By offering a direct opportunity to an investor to be involved in solving a problem, there is both an intrinsic and an extrinsic reward.

Characteristics of a Social Venture Capitalist

The social venture capitalist is already predisposed to be interested in the work of the organization, and is likely to be more patient and understanding with the process of creating change in the world. Due to the social and environmental nature of the work, the venture capitalist is also more likely to be willing to be involved on a higher level – often becoming a member of the board or be active in a management position.

Social venture capital can be seen at work around the world in the areas of providing drinking water in third world countries, offering glasses to children who cannot afford them and using soccer to help educate communities on ways to stop the spread of HIV.

Generating interest in social problems has become easier with the use of technology, and the increase in social venture capital can be tied directly to the availability of information. The more information available about a certain social issue and how it can be solved, the more likely a social venture capitalist will be to invest in it.