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Unlocking finance for social tech start-ups: Is there a new opportunity space?

ARENA, M., BENGO, I., CALDERINI, M. & CHIODO, V. (2017). Unlocking finance for social tech start-ups: Is there a new opportunity space? Technological Forecasting and Social Change.  127, 154-165

Abstract

This paper performs a critical analysis of the financial instruments that can be employed to fund social innovation, with a specific focus on social tech start-ups that develop and deploy technology-driven solutions to address social needs in a financially sustainable manner. The paper analyses how these start-ups can access financing, the barriers to financing that these organisations experience and the financial instruments that are most suitable to address their financial needs. Social tech start-ups have many points of overlap with high-tech start-ups in terms of the barriers they encounter to financing in different lifecycle stages. Still, the institutional solutions that are commonly exploited by high-tech start-ups for growth are not enough to support social tech start-ups to scale. Therefore, we introduce the concept of SII and discuss its potential contribution to the social tech finance landscape. Then, using the case of social tech start-ups as paradigmatic of the broader problem of financing mechanisms for social innovation, we formulate a research agenda, including directions for research and theoretical development in the field of SII.

Highlights

Social tech start-ups are at the forefront of social innovation.
Social tech start-ups inherit many of the financing barriers of high-tech start-ups.
Common financing options are not enough to sustain social tech start-ups scaling.
Social impact investing is a potential solution to finance social tech start-ups.
Research agenda concerning the evolution of SII.

Authors

Full Professor, Director of Tiresia

Associate Professor

Researcher and Assistant Professor