Social capitalism itself isn't new. Under names like corporate
social responsibility, socially activist corporations, and
sustainable business practice, the idea has been around for years.
The Social Venture Network, a
San Francisco group for
entrepreneurs, investors, and others interested in social
enterprises, organized in 1987. And The Body Shop opened the first
of its 1,900 all-natural, no-animal-testing cosmetics shops in
1976. Newer, socially activist concerns, many run by MBAs who are
scarred veterans of the Internet startup boom and bust, are just
coming around to this idea.
Why entrepreneurs' sudden interest? One big reason: Social ventures
are suddenly more attractive to customers. Fifty- eight percent of
Americans surveyed by
Toronto research firm Environics
Inter-national last year claimed to have recently boycotted or
spoken critically of a company they saw as socially irresponsible.
That was up from 43 percent in the 2000 study, notes Chris Coulter,
Environics International director of the corporate responsibility
monitor. "Consumer activism is moving," he says, "and it's clearly
a warning signal that companies need to be paying attention
to."
Another force driving entrepreneurs into the social arena is the
availability of capital. These days, venture capitalists and
traditional lenders are shunning start-ups. But investors who
prefer socially responsible ventures are still active. CitySoft,
for example, is backed by angel and venture investors led by the
Sustainable Jobs Fund, a 3-year-old
venture capital firm based in
Durham,
North Carolina. Says Kang, "The only way we raised money is
by having this mission."
CitySoft, which formerly marketed mostly to conventional
businesses, now hopes to capitalize on its social component by
seeking work from charitable foundations, educational institutions,
government agencies, nonprofit organizations, and other activist
businesses. "When we are going after markets that share our vision,
we are beautiful in their eyes," Kang says. "And we're finding this
message is ringing very loud and strong."