Dusseldorf “What are we going to do with Grandma?” Steffen Preuss and his three co-founders asked themselves this question five years ago. Some of them were still studying, but were all confronted with the topic of dementia in their environment. Preuss tried all possible aids, including digital ones. But all his grandmother saw in a tablet computer was a black mirror.
Then friend Leftheri had the brilliant idea. He packed the digital tools in a ball and built the first prototype: a singing, story-telling ball called “Ichó”, which offers relaxation and can be used to solve puzzles. And suddenly “Grandma was grandma again for a moment,” says Preuss.
The founders are now in talks with daycare centers, care facilities and health insurance companies about the use of Ichó. The therapy ball can also help children or severely disabled people. And: It holds a treasure trove of data because it can also measure physical reactions, tremors and other things.
Many business ideas that social entrepreneurs come up with, like Ichó, arose out of personal concern. Dementia affects more and more families; According to the WHO, there are 1.8 million patients in this country and 55 million worldwide. Ten million are added every year, especially in rapidly aging societies.
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Entrepreneurs like Steffen Preuss therefore currently have a good chance of finding sponsors and supporters for their ideas. “The phenomenon of social entrepreneurship is on the advance worldwide,” confirms Odin Mühlenbein from the social entrepreneurship network Ashoka.
Study shows potential for billions in social innovations
There are several reasons for this: The force of sustainability in finance is slowly unfolding, and the pressure on companies is increasing significantly. At the same time, the global problems with climate change and inequality are moving closer.
If you want to help quickly, you need entrepreneurial thinking in terms of social and ecological innovations. In a joint study with the management consultancy McKinsey, Ashoka put the economic potential of the social entrepreneurs considered at the time at a double-digit billion euro amount.
More and more governments recognize this and give money. For example, in Taiwan there is a competition every year for the best social innovations. Those who make it into the top five receive an implementation guarantee from the government. There are large funds in the UK and Portugal that support social entrepreneurs.
Canada, Australia, France, the Benelux countries, but also Indonesia are, according to a ranking by the Thomson Reuters Foundation from 2019, in the top ten places as countries in which social innovations find particularly good conditions. And, according to the coalition agreement, the new federal government is working on a “national strategy for social enterprises in order to provide greater support for companies geared to the common good and social innovations”.
But private donors also increasingly want to invest their assets with a positive impact on the environment and society. Nixdorf heiress Dagmar Nixdorf recently announced that, together with other entrepreneurial families, she wanted to invest up to two billion euros in so-called impact companies.
The Bertelsmann Foundation and its board member Brigitte Mohn have been committed to more social entrepreneurship, also known as social entrepreneurship, for years. The daughter of Bertelsmann founder Reinhard Mohn was also active in setting up the Global Steering Group for Impact Investment. The organization wants to promote social innovations. In addition, she accompanied the establishment of the Federal Impact Investing Association and the non-profit analysis and consulting company Phineo in Germany.
Social entrepreneur or impact start-up?
Impact start-ups or social entrepreneurs want to solve a social problem with entrepreneurial means and do business more responsibly. There is no uniform definition. Laura Haverkamp, partner at Ashoka, mentions one condition for the network to support founders as a fellow: The idea must not only solve a problem, but also have the potential to change a system.
The network, which was started as a project in 1981 by the former McKinsey consultant and Professor Bill Drayton, supports 4,000 fellows in 93 countries, i.e. people who want to change the prevailing systems with entrepreneurial means. And they are very different. In India, for example, the social entrepreneur Runa Khan with her organization “Friendship” offers basic health care in remote areas with hospital ships.
In this country, other topics are in focus. Christian Kroll, for example, founded the search engine Ecosia. Those who use them are helping to plant trees around the world. There are now more than 140 million.
For six years now, Silke Hohmuth from Menschbank has been committed to ensuring that founders receive financing at all, but also that the financial system is oriented towards people again. “I create trust with the decision-makers in the financial system and in administrations,” says Hohmuth. “Changes in the system can only happen together.”
“Perhaps one out of 100 social enterprises is changing social systems in a targeted manner,” says Odin Mühlenbein from Ashoka. However, these exceptions are particularly valuable. “You are the research and development department for our company.” Mühlenbein hopes that at some point it will be three out of a hundred. “To do this, we have to support these organizations better, something like basic research for technical innovations.”
The differences are illustrated by the example of Canadian social entrepreneur Nicole Rycroft: As an environmental activist, she used to feel impotent, then she first approached the paper processing industry and used them to develop new, more environmentally friendly standards and also won the publishing house of bestselling author JK Rowling, bestseller how to print Harry Potter on recycled paper. Then she worked with Zara, H&M and 170 other brands on new fibers in the apparel industry.
She would also have become a social start-up if she had founded a company that develops paper or textile alternatives. “She became an Ashoka Fellow because her ideas have the potential to change the whole system,” explains Haverkamp. “Ideally, the entrepreneur wants to make herself superfluous.”
Can only children of wealthy parents become social entrepreneurs?
So there are social entrepreneurs who alleviate symptoms and those who change systems. Both is important. As with all start-ups, money is central, but not necessarily the driving force for social entrepreneurs.
So only children of rich parents become social entrepreneurs? On the contrary, says Haverkamp. Many started out of their own dismay or deep motivation. Monetary profit is not a drive, at most a means to an end. And she adds: “I haven’t seen anyone get rich yet.”
Dirk Sander has observed that most social entrepreneurs “come from an academic household,” says the manager, who has coached many social entrepreneurs.
Sander is one of the two managing directors of Anthropia. The non-profit GmbH operates the Social Impact Lab on the Haniel campus in Duisburg. Founders from all over Germany apply there with their ideas. The facility is a breeding ground for ideas and tries to make social innovations scalable.
The family company Haniel, founded in 1765, today mainly active as an investor, dealt with and promoted social entrepreneurship very early on. Ideas have been supported by the company or its foundation since 2015. The reasons: Haniel operates in Duisburg-Ruhrort, a district badly affected by structural change.
Series: Social Entrepreneurship
With almost 150 start-ups and more than 300 founders, the lab is now Germany’s leading incubator for budding social entrepreneurs. And the need for asset management companies, as well as companies and foundations, to invest in sustainable projects is increasing.
In addition to the Otto Beisheim and KfW foundations, Haniel is one of the donors. CFO Florian Funck recently said: “The Impact Factory was initially on the edge of the Haniel orbit; some of your topics are now at the center of our strategy. “
The added value for the founders: direct contact with companies. Sander, who learned the craft of social business from Nobel Peace Prize laureate Muhammad Yunus, sees every day how much companies and social enterprises are moving closer together. “The founders and also the donors are growing.”
Sander says that contacts in the corporate world are also important for social entrepreneurs, “as a provider of know-how, cooperation partner and financier”. Preuss and his three co-founders also went through the lab and founded Ichó in 2018 – there are now eleven of them.
More: Dagmar Nixdorf wants to collect two billion euros through a new investment company. There are also other prominent names from the German economy