When two students from UCLA entered the Haas School of Business at University of California at Berkeley business plan competition, they weren't participating in your run-of-the-mill venture capital contest. The criteria focused on creating a business that could add both economic and social value.
The winning project, EasyDiabetes, an Internet-based diabetes management system, helped spark discussions on how for-profit companies and nonprofits could work together.
Most of the enthusiasm came from the MBA students themselves -- the competition drew 66 teams from around the nation, Reuters reports. The idea is to make charity begin in the workplace, where people spend most of their time. According to the Reuters article, many young entrepreneurs "dabble in volunteer work and plan on donating money once they make it -- but typically make this kind of giving a side project separate from their main work."
Another problem surfaces when companies with a social mission struggle financially. This often happens to socially conscious companies because venture capitalists look for businesses that yield the biggest return in the shortest time, regardless of a company's mission or social value, the news service reports.
There is an upside to all of this newfound wealth -- investors are becoming more generous with the notion of bringing a social conscious to the workplace. For example, the Entrepreneurs' Foundation in Menlo Park, Calif. encourages member companies to donate stock to community organizations.
This sort of generosity remains rare, however. According to Reuters, as one example some investors admit they wouldn't fund a drug that cured a deadly disease if the disease afflicted a small number of people.
Despite this pessimism towards socially-conscientious investing, there is hope. While entrepreneurs doubt the for-profit sector will be able to replace nonprofits, they do believe investors can find value by diversifying to include social merits in their business plans.
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