Incubator growing social ventures

GREENHOUSE EFFECT: From left, Social Enterprise Greenhouse CEO Kelly Ramirez, intern Kendre Rodriguez, Communications and Development Manager Marissa Tuccelli and SEEED Summit Manager Julie Meros. / PBN PHOTO/RUPERT WHITELEY
GREENHOUSE EFFECT: From left, Social Enterprise Greenhouse CEO Kelly Ramirez, intern Kendre Rodriguez, Communications and Development Manager Marissa Tuccelli and SEEED Summit Manager Julie Meros. / PBN PHOTO/RUPERT WHITELEY

Social Enterprise Greenhouse is practicing what it teaches.

The nonprofit incubator of socially conscious businesses was at a crossroads after going independent in 2008 with diminishing attention from donors and a depressed, increasingly competitive fundraising environment.

So the organization began a transformation into a more competitive, revenue-generating enterprise centered around the flourishing startup accelerator concept and gaining market share in the world of social ventures.

SE Greenhouse abandoned grants for revolving loans, began hosting the SEED conference and a year ago dropped its original name Social Venture Partners.

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From 2010 to the end of last year, SE Greenhouse has grown the number of enterprises under its tutelage from 10 to 150, its employee count from one part-time to nine full-time equivalents and its annual budget from $50,000 to $310,000.

Having outgrown its shipping-container headquarters in the Box Office on Providence’s Harris Avenue, SE Greenhouse is poised to move into a new 3,800 square-foot office on the first floor of 10 Davol Square in the city’s Knowledge District by October. (A tentative lease is scheduled for approval by the SE Greenhouse board on June 12.)

The larger offices would allow the organization, like a growing number of Providence business incubators, to offer co-working space similar to what’s available at the Founders League on nearby Chestnut Street.

And the location will strengthen SE Greenhouse’s partnership with Brown University, which owns the building, and has agreed to partner on an online, interactive, social-enterprise curriculum for accelerator participants, including those that may not be based in Providence.

“We have been able to aggregate the social-enterprise community – there was almost none to speak of five years ago,” Ramirez said in an interview from the Box Office. “We are among the top ecosystem builders in the nation and we think partnering with Brown will make us a New England-wide draw. There is real interest in social enterprise at the university level driven by students.”

To reach the next stage of growth and realize the regional potential Ramirez envisions, SE Greenhouse, like the social ventures it works with, wants to raise additional capital and generate more of its own revenue.

Right now about half of the organization’s budget comes from grants, one-quarter from individual donors and another one-quarter from income it earns through the SEED conference and contract services with partner organizations.

Ramirez said the near-term goal is to cover half of its expenses through earned income.
A growing movement of roughly the last 10 years, social entrepreneurship combines the growth objective of traditional businesses with the public problem-solving goals of charitable or social-service organizations.

These “dual bottom line” ventures can be for-profit companies, nonprofits or, more recently, new hybrid corporate forms such as “benefit corporations” and L3Cs.
In addition, the field includes the use of public-private partnerships such as social-impact bonds to tackle large problems.

Ramirez said the ventures SE Greenhouse works with are split roughly evenly between existing nonprofits looking to shift to a more entrepreneurial strategy and mission-conscious startups (some straight out of area colleges) looking to establish themselves.

In both cases, SE Greenhouse and its roster of 140 business-community partners offer inexperienced entrepreneurs a crash course in business management and advice on breaking into their respective markets.

The organization also works with nine colleges in the area to facilitate the exchange of academic knowledge, internships and talent between social ventures and area classrooms.

For aspiring social ventures, SE Greenhouse offers incubator services, including mentoring, workshops, meetings and technical assistance.

Those with growth potential are offered the option of moving into its accelerator, a much more intensive program that will include the online partnership with Brown.

For those who complete the accelerator, SE Greenhouse offers a third phase called “the huddle,” which involves a three-hour strategy session and customized consulting with business leaders organized by the Harvard Business School Association of Southeastern New England.

Ramirez said the SE Greenhouse accelerator isn’t as all-consuming as full-time accelerators such as Providence’s for-profit Betaspring, allowing existing organizations to participate without moving everything they are doing to the Box Office or Knowledge District.

In its history, 42 ventures have gone through the SE Greenhouse accelerator, with 33 still operational and 17 having reached “scale.” The combined ventures employ 200 people.

As part of the push to pay for its operating expenses, SE Greenhouse will begin charging a fee for accelerator services but, at least for now, does not intend to take an equity stake in the companies.

While mentoring and technical assistance are often crucial for new ventures, most won’t be able to grow without funding.

So far, the SE Greenhouse’s loan fund has made $70,000 in combined loans to four ventures: nonprofit Solar Sister Inc., for-profit Metryx LLC, for-profit Maternova Inc., and Packaging Inc., Rhode Island’s first benefit corporation.

Maternova, an online clearinghouse for humanitarian medical equipment, started in a corner of the Social Venture Partners office and now has its own Box Office shipping container.

The loans, generally in the $20,000 range, are for three years with an interest rate within five points of prime and balloon payment in the third year. All interest earned on the loans goes back into the loan fund.

“[Social Venture Partners] mentorship helped us hone our market strategy and product development to where we reached a place with a beta product ready to launch,” said Stephanie Castilla, chief operating officer of Metryx, which was spun out of the Providence-based Highlander Institute to develop mobile teaching software. “We realized we needed a bridge loan to move into revenue generation and they filled that gap.”
Earlier this year SE Greenhouse approached the city-controlled Providence Economic Development Partnership about making a $100,000 “pilot” investment in the organization’s revolving loan fund.

The PEDP tabled the proposal, at the recommendation of Mayor Angel Taveras, the partnership’s chairman, to gather more information.

Ramirez said the idea of working with the city on a capital program for social ventures is still alive, but the PEDP has said it will need to make any loans itself, perhaps on referral, to comply with federal guidelines. (The PEDP is funded through federal Community Development Block grants.)

The PEDP had previously invested $50,000 in Maternova through its Innovation Investment Partnership.

When it was founded just over 10 years ago, Social Venture Partners was run out of the Rhode Island Foundation. Jessica David, RIF vice president of strategy and community investments, believes SE Greenhouse is now well-positioned to take advantage of the larger national growth in social entrepreneurship.

“Social enterprise is very hot right now for a lot of reasons, including the recognition that with the size and scale of challenges we face, philanthropy and government alone can’t marshal enough resources,” David said.

In its pitch to the PEDP, SE Greenhouse said by 2016 it hopes to have “accelerated” 600 ventures responsible for creating 2,000 jobs, raised SEED conference attendance to 800 people, and grown its annual budget to $750,000.

“We see substantial growth because there is a lot of interest,” Ramirez said. “Rhode Island can become the place to be for social enterprise in New England.” •

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