Impact Investing: Determinants of External Financing of Social Enterprises in Brazil

Abstract

Social impact investing and social entrepreneurship have great potential for solving global problems. However, practitioners and researchers know little about the entrepreneurial process and the investors’ criteria. Therefore, we identify the determinants of access to external finance for social enterprises in an emerging economy using a quantitative approach in a large sample (N = 601). We found that impact sector, business model, entrepreneurial support, development stage, and the adoption of technologies impact access to finance by social enterprises. We also show that green technologies have greater funding access than other enterprises and that social impact investors are more aware of environmental issues and less concerned with financial returns. To raise more funding, we suggest that social entrepreneurs include environmental issues in their business, quickly validate their idea, add an intermediary company between the enterprise and the consumer, seek the support of incubators or accelerators, and adopt emerging technologies in the product or service offered.