Social entrepreneurship – a guideline to financing : a study of social venture financing in Norway

Abstract

In Norway, as well as the rest of the world, the field of social entrepreneurship is receiving an increased interest as social and economic differences defy the conventional solutions of the public welfare. While social entrepreneurship and social venture literature see an ascending trend on publications on the subject, strategies and tools for financing the social venture is still a young subfield. Thus, the question arise how social entrepreneurs can fund their social venture to ensure that the business can stay financially viable over time. This study explores funding options for social ventures in Norway, depending on their social business model and the ventures life cycle phase. I aim to create a guideline that can help new entrepreneurs to choose the most relevant funding options for their social venture by answering the following research question: What type of funding are most relevant depending on social business model and the stage of the entrepreneurship process? Drawing on the literature of social business models, the life cycle and funding options in Norway, a questionnaire was distributed to social ventures in Norway. The social ventures were categorized by using a framework by Saebi et.al (2019), while I identified three different life cycles of social ventures based on literature. When responding to the questionnaire, the social ventures described which funding options they had used in the different phases of the social venture life cycle. Based on my sample, I could identify differences and similarities across the four social business models, the three phases and their choice of funding. I was able to determine which type of funding was most used, both according to frequency and percentages. This enabled me to rank the funding options. I found that private and public support were most used. However, the variation in choice of funding between the social business models and life cycle phases indicated a possible need for a guideline. The data was used to create a proposal for a funding guideline. To the best of my knowledge, this is the first study in Norway to propose a tool to help social ventures in Norway. My findings can provide recommendations when starting and funding a social venture, and thus has theoretical and practical implications.