Boston is the best city in the nation to be a social entrepreneur, according to a new ranking of the top 21 ecosystems, because social entrepreneurs in Beantown find it relatively easy to find funding there, especially from private investors and the public sector, and because of the overall awareness of social entrepreneurship.
Social entrepreneurs try to combine doing well with doing good, and often weigh a do-good mission as nearly or equally as important as business results. The report ranks cities from New York (No. 4) to New Orleans (No. 21), and looks at how fundraising differs for men and women social entrepreneurs, and people of different races and ages.
The top cities are similar to those on rankings of the best startup ecosystems, but they fall in a different order. San Francisco and New York usually top lists of the best cities for startups. Boston topped New York and San Francisco on the social entrepreneurship in part because it was more affordable. And Washington, D.C., tops New York City on the social entrepreneurship list – which is in part measured by the because of the amount of government funding available for mission-oriented businesses.
The report, based on a survey of more than 400 social entrepreneurs, ranked cities this way:
2. San Francisco
3. Washington, D.C.
4. New York, N.Y.
5. Chicago, Ill.
6. Austin, Texas
7. Denver, Colo.
8. Minneapolis, Minn.
9. Seattle, Wash.
10. Los Angeles, Calif.
11. San Diego, Calif.
12. Philadelphia, Pa.
13. Dallas, Texas
14. Atlanta, Ga.
16. Miami, Fla.
17. Raleigh, N.C.
18. Phoenix, Ariz.
19. Pittsburgh, Pa.
20. Detroit, Mich.
21. New Orleans, La.
The report ranked the cities across four measures: funding, human capital, quality of life, and regulation and receptivity – as measured by the embrace of social entrepreneurship on social media. Four organizations helped fund and present the report: Halcyon Incubator, CapitalOne, The University of Maryland’s Robert H. Smith School of Business and Deloitte.
The social entrepreneurs said the top determinant for what made a good social business ecosystem was the availability of human capital. The report highlighted a B Corp, Catchafire, which matches professionals with social enterprises based on their skills, cause interest and time.
One particularly interesting finding was that some social entrepreneurs found it easier to raise money from investors who are interested in the business case, alone. Impact investors were so risk averse that they didn’t invest at all.
Social entrepreneurs who are men raised more than twice as much, on average, as women. The male social entrepreneurs reported raising an average of $2,141,372, while the women raised on average $881,319. However, other studies suggest women social entrepreneurs have an easier time than women startup founders. Only 2.7% of the 6,517 companies that received venture capital funding between 2011-2013 had female CEOs, according to a Babson College study.
But, the amount raised could also reflect the fact that men put more emphasis on raising money. More men reported that their most important relationships were with investors, while more women said advisors and mentors were their most important relationships. Also, the report found women were more likely to found non-profits while men trended towards founding for-profit entities.
Disturbingly, but not surprisingly, compared with white respondents, black/African-American respondents report having more difficult finding advisors and felt less comfortable reaching out to social entrepreneurs in their regions for advice and support. In another sign of how blind to privilege people who have it are, the report found that 15.3 % of the respondents disagree that the social enterprise ecosystem in their region is inclusive and promotes diversity, while 84.6% of Black/African American respondents disagree.
The top funding sources for companies in the report were self-finance, friends and family (65.3%); crowdfunding (17.4%); grants (41.3%); angel investors (15.7%); venture capital (6.6%); customers (28.5%); traditional loans (2.4%); and other.
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This suggests something I have long observed, which is that the ranks of social entrepreneurs are dominated by people who are at least from the upper middle class, and often from the upper class. Doing good with your career has become a privilege.
Chicago and Minneapolis ranked 1 and 2 for quality of life.
Older social entrepreneurs were able to raise more money. Those over 50 raised on average, $3.3 million. The average funding raised by entrepreneurs:
- under 25 was $243,333
- 25-30 was $966,429
- 31-35 was $1,392,442
- 36-40 was $2,155,263
- 41-50 was $1,729,412
- 50+ was $3,321,774
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