Ecosystem

For Social Entrepreneurs, It’s All About The Ecosystem

Anne Field | August 2, 2016

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No one operates in a vacuum. That’s especially true of social entrepreneurs. The ecosystem that social entrepreneurs encounter—everything from the availability of affordable housing to the prevalence of potential funders—can make or break an enterprise.

With that in mind, Halcyon Incubator and Capital One recently published a report on the subject, From the Ground Up: Defining Social Enterprise Ecosystems in the U.S.

“Entrepreneurs can only be successful if the ecosystem is successful,” says Kate Goodall, COO of S&R Foundation, which supports the Washington, DC-based Halcyon Incubator.

The most social entrepreneurial ecosystem-friendly city, according to the report? Washington, D.C., followed by San Francisco and Austin.

Researchers surveyed entrepreneurs in 9 cities. Source: SoCentCity.org
Researchers surveyed entrepreneurs in 9 cities. Source: SoCentCity.org

Researchers surveyed 400 social entrepreneurs in nine cities to identify gaps and weaknesses in their local ecosystems, and come up with a ranking. The responses revealed four areas, or “pillars,” critical to the existence of a healthy ecosystem—availability of funding, quality of life, human capital and regulation and government responsiveness. With those pillars as the framework, the report evaluated how each city fared with each one and overall.

Here’s more about each pillar:

Funding. Identified as the top challenge faced by social entrepreneurs, it includes seed funding, grants and venture capital from both public and private sources. Respondents from San Francisco, not surprisingly, were more likely to have raised $100,000 to $1 million and to “strongly agree” that funding was accessible in their region. On the other end of the spectrum, Washington, D.C.-based entrepreneurs tended to raise $50,000 or less. New York was the strongest when it comes to funding, which includes both venture capital, philanthropic and government funding. Overall, 52% of male respondents said funding was available, compared to 40% of women, reflecting a broader patterns of gender and funding.

Funding was the number one challenge cited by social entrepreneurs. That was true for both non-profit and for-profit ventures. Experienced entrepreneurs were more pessimistic about investors in their city understanding social enterprise than those just starting out.

Quality of life. That covers everything from a city’s vitality to the prevalence of social spaces.  As you might expect, the better the quality of life, the more likely a social entrepreneur was to recommend that city. Of course, such recommendations inevitably attract more entrepreneurs and resources, thereby improving the overall ecosystem. Austin, which earned high marks for transportation and low cost of living, came in number one. One implication: City governments can help the local ecosystem by encouraging more affordable housing and cultural happenings.

Human capital. You gotta have top-notch mentors, employees and advisors to run a successful social enterprise. And they’re more plentiful in cities that have high levels of educational attainment, access to universities and other institutions of higher learning and an engaged community. While the majority of respondents were happy with the pool of talent in their region, the more funding they’d received, the more likely they were to cite their satisfaction with the human capital in their area. San Francisco, Washington, D.C., New York City, Chicago and Boston did the best on that measure.

Regulation and receptivity. This pillar is about how easy–or difficult–local governments make it to start and run a social enterprise. It’s also about how receptive a city is in general to social enterprise—for example, the buzz and media attention that local social enterprises generate. Washington, D.C. took top honors here. The worst performers included New York, which–spoiler alert!–respondents said is a hard place to start a business in.

As for Halycon, the two-year-old incubator located in a historic house in Washington D.C. provides social entrepreneurs with a place to live as well as work space, access to mentors and a $10,000 stipend. Accommodations are free for five months and entrepreneurs have another 13 months during which they can work out of the space–and make the most of the city’s ecosystem.

Anne Field is a New York-based journalist who writes about social enterprise and impact investing. A version of this article originally appeared on her Not Only For Profit blog on Forbes.com.

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