By Jennifer Walske & Laura D. Tyson
In our research, we took a deep dive into eight successful social enterprises in order to identify the critical elements of their success.
To read the full blog, visit Berkeley Haas Institute for Business & Social Impact.
Calling all Venture Capitalists
Revolution Foods, which produces high quality school lunches and consumer products, got its initial boost by placing first in the Berkeley-Haas Global Social Venture Competition. The prize money provided co-founders Kristin Groos Richmond and Kirsten Saenz Tobey with a small amount of prize money, but more importantly it led to a $50,000 investment from angel investor, Dick Beers, and then to a $500,000 investment from DBL Investors.
Those investments allowed Kirsten and Kristin to get a truck, lease kitchen space, and hire four additional employees, including an executive chef, two prep cooks and a driver. That in turn enabled them to run a pilot program, which provided the proof of concept for their business model and paved the way for additional investors. Nancy Pfund, founder of DBL Investors, told a recent Berkeley-Haas colloquium on social finance that she quickly saw the potential for Revolution Foods, leading her to supply meaningful early stage funding.
“I met Kristin and Kirsten at Haas, and immediately saw the value of their idea,” Pfund said. “Providing large amounts of early capital is extremely important for founders who are proving the field.”
Another key lesson from Revolution Foods is the value of seeking funding from traditional for-profit venture capital firms. Revolution Foods began as a for-profit enterprise, though one with social goals, but it raised money from both kinds of investors. The social venture capital firms included DBL Investors, Catamount Ventures, New Schools Venture Fund, Physic Ventures, and the Westly Group. But they also garnered significant financing from traditional VC firms, led by Oak Investment Partners. Revolution Growth, the venture capital fund created by AOL founder Steve Case, recently invested $30 million.
One hurdle for social venture capital investors is the lack of standardized metrics for assessing social impact. According to Kirsten, Revolution Foods developed its own metrics rather than relying on frameworks developed by its investors. And, now that Revolution Foods is B Lab certified, which provides some standard guidelines for social impact, the process of social impact measurement has become even easier.