Entrepreneurs for change

The RSA’s commitment to building a home for social innovators

Throughout our history, the RSA has been home to those interested in social innovation and to those who displayed the ethos of social entrepreneurialism before the expression existed. Today, it is more essential than ever that the RSA continues to be a home of social innovation. The complex social challenges that we are committed to solving require the experimentation and energy of entrepreneurs.

As part of its new Design for Life mission and Entrepreneurs for Change programme, the RSA has been thinking about how we build on this history, and how radical entrepreneurship might shift our systems to be more resilient, rebalanced and regenerative. How can we support growing movements of social entrepreneurs, given they are the ones with perhaps the greatest potential to improve systems that fail to keep pace with the challenges we face? And how can we support even those entrepreneurs whose products and services are not designed for direct social impact, to ensure their business models and practices are built on regenerative principles?

Supporting entrepreneurs is important for the RSA’s mission because innovative, challenger businesses play a key role in imagining, designing and creating the future. Small and agile, they demonstrate what is possible in the here and now. Incumbent institutions, businesses and governments are often large and hard to change but they are able to respond to outside influence. Where entrepreneurs innovate and lead, incumbents follow and formalise. Entrepreneurs test and trial new innovations, while responsive institutions can ensure that infrastructure and support systems act on what has been shown to work.

As Nicolas Colin, author of Hedge: A Greater Safety Net for the Entrepreneurial Age, says: “Before the state can act, the field must be marked by a first generation of pioneers. Innovators and activists are the only ones capable of doing the hard work at the early stage, namely spotting the new economic and social challenges of the day and discovering the basics of the new mechanisms that can effectively tackle them.”

By supporting entrepreneurs to realise models of a resilient, rebalanced and regenerative future, we can in turn influence the trajectory of larger businesses, institutions and even whole systems towards better futures for people, place and planet.

A home for entrepreneurial ideas

Experimentation requires risk-taking: stepping into the unknown to bring fresh thinking to challenges that defy existing knowledge and practices. This risk-taking requires support.

At the RSA, we have identified three forms of support that can benefit individual entrepreneurs and entrepreneurial movements: capacity and skills building; funding and investment; and connecting and platforming. Throughout its history of providing support, the RSA has experimented with all three.

In 2019, the RSA hosted the Economic Security Impact Accelerator. This combined finance with connecting and networking. We applied the accelerator model – short-term, intensive support for innovators – to tackle the social challenge of economic security, the reality of millions of households living below the poverty line, facing the joint impacts of wages declining in real terms and employment becoming more precarious.

The thinking behind this approach was that what was needed was a connected ‘scene’ of ‘system entrepreneurs’. We hoped that the discrete innovations of participants would coalesce into a field of practice to impact wider systems change. Traditional accelerators prefer to take a cohort of entrepreneurs and funnel them down into one or two ‘big bets’. The RSA programme instead focused on ‘field building’, bringing projects and businesses driven by the same purpose together to develop a narrative for big change. Participants appreciated this non-competitive approach, which allowed a genuine and collaborative peer network to develop.

In 2020–21, we ran Rethink Fashion, a learning journey for entrepreneurs working on alternatives to fast fashion. This intervention focused more squarely on skills and capacity building. We began by acknowledging the damage that the current extractive, linear fashion industry causes to both people and planet, creating huge volumes of waste, pollution and exploitation. The programme collaborated with 12 innovators working across different parts of the fashion system to develop a cohort of complementary innovations with a shared mission to transform the system to be more regenerative. Again, the key positive outcome of this approach was the way it brought together a diverse cohort and encouraged collaboration; this approach also developed a shared purpose that helped clarify the intentions of each of those taking part. As one participant said: “Rethink Fashion helped us gain clarity on our mission, tell our story and articulate how we are driving a paradigm shift towards a regenerative future.”

These two programmes have emphasised the power of bringing entrepreneurs together in non-competitive spaces to consider the broader system in which they operate, and how their innovations begin to create an alternative future. A shared limitation of each of these programmes, and one that doubtless connects to wider issues of inclusion, is the need for financing to support this kind of engagement.

In terms of pure funding, the RSA has financially supported social entrepreneurs for over a decade through its Catalyst programme. Over the years, the programme has supported a huge range of innovations that seek to benefit society, from an ethical food delivery service aiming to do things better than the gig economy giants, to community shops where people can go to borrow items that they might otherwise buy. The RSA’s explorations of other forms of support, through the aforementioned Economic Security Impact Accelerator and Rethink Fashion programme, have shown how grant funding can be powerfully combined with offers that focus on capability building and peer learning.

Rebalancing the field of entrepreneurs

If entrepreneurs shape futures, it is imperative not only that we support regenerative principles in their development, but also that we encourage wider engagement with entrepreneurship from under-represented communities. Support and investment for entrepreneurs disproportionately goes to those in already privileged positions, and the impact of this touches us all.

The challenge to widen access to entrepreneur support was recently articulated in the RSA’s Design for Life programme of change: “What if all excluded entrepreneurs-in-the-making were supported and connected to seed and scale the innovations necessary for the transition towards more resilient, rebalanced and regenerative futures?”

According to a research report published by community interest company Extend Ventures in November 2020, less than 5% of venture capital funding in the UK goes to companies with a female founder, and less than 2% of venture capital goes to companies with a Black or ethnic minority founder. Nearly 70% of funding goes to businesses with all-male founding teams. As if further proof on the lack of diversity in funding were necessary, consider that 43% of all UK venture capital goes to graduates of just four universities: Oxford, Cambridge, Stanford and Harvard.

Substantial challenges face potential entrepreneurs from more diverse and less advantaged backgrounds. For example, research from the social enterprise accelerator UnLtd demonstrates that financing living stipends as well as business investment is essential to removing barriers for Black and ethnic minority social entrepreneurs. 37% of respondents to a survey carried out by UnLtd said that personal finances were the most prominent barrier to creating and scaling a social enterprise, and 34% cited access to funding and investment. This shows not only the importance of funding, but also of thinking creatively about inclusion in how funding is awarded, in order to address personal finances as well as finance for the venture itself.

Statistically, social enterprises have more diverse leadership than other small and medium-sized enterprises (SMEs). Research from the School for Social Entrepreneurs shows that 40% of social enterprises are led by women and 13% of UK social enterprises are led by people from racialised and minoritised communities. This compares with 17% of SMEs led by women and just 5% led by people from racialised and minoritised communities. There is still a long way to go to build a truly inclusive system of support for potential entrepreneurs who find they are excluded from progressing.

Reflecting on these challenges, the RSA has to acknowledge its own limitations in diversity of support, not just demographically, but geographically.

Supporting resilient entrepreneurs?

Widening the field of entrepreneurship is a priority for the future development of the Design for Life programme and its entrepreneurs pathway. To do this effectively, the RSA must consider the demand for participation as well as the supply of opportunity. What motivates someone to become an entrepreneur?

Some people are put off from thinking of themselves as entrepreneurs because of the dominant narratives of the 2000s. The world of Wired and TED Talks presents entrepreneurs as all-knowing titans of the tech world, engaged in a 24/7 battle to maximise personal productivity, push for global hyper-growth and increase company value with venture capital before selling out to Google. Meanwhile on television, the ‘entrepreneurs’ of The Apprentice are presented as money-grabbing narcissists, barely competent in the rush for the favour of a billionaire benefactor. The message is clear: to be a successful entrepreneur you must be an always-on risk-taker, you must prioritise profit and you must have the patronage of a billionaire funder.

To motivate a more diverse ecosystem of entrepreneurs we must understand that ‘risk-taking’ might mean something completely different to more vulnerable communities that are not White, male Ivy League and Oxbridge graduates. Having responsibility for the care of your family or the long-term security of your home is of a different order of magnitude from the risks of professional experimentation straight out of university.

All entrepreneurialism carries a risk of failure. The RSA will work towards supporting entrepreneurs in ways that are flexible enough to support commercial and innovation risks, but will aim to mitigate levels of personal or familial risks that might exclude less-advantaged communities from making the leap into venture-building. The RSA’s challenge is to provide scaffolds that can support entrepreneurs who are furthest away from traditional funders, who cannot commit to a three-month residential accelerator and for whom social change projects happen on their own doorstep, to begin to follow their passion and purpose.

Revisiting the ‘myth’ of the entrepreneur

Our narratives of success as well as risk when talking about entrepreneurs also need to evolve. It is not enough to reach into new communities if the incentives to participate in entrepreneur programmes are based around the priorities of the privileged. We must understand that, for many people, the aspiration of building a business is about constructing a good life spent engaging in pursuits we care about more than generating huge profits and unlimited growth.

In a recent research project, the RSA spent time with non-graduates, aiming to understand their motivations for lifelong learning. For many in the focus groups, there was an entrepreneurial imperative. They had found an interest outside of the workplace and wanted to professionalise their skills. The motivation to build a business often comes from the desire to move a peripheral activity that we love to the centre of our working lives.

Purpose in helping others is another driver for entrepreneurialism. In many nations, there was an explosion of social enterprise-building following lockdowns during the pandemic. For example, Social Enterprise UK’s No Going Back report, published in 2021, shows that, in the UK a record-breaking 12,000 social enterprises were created between 2020 and 2021, as entrepreneurs sought to help their communities in the wake of the pandemic.

The characteristics many most associate with entrepreneurs are passion and purpose. In our experience of working with entrepreneurs, many consider their business model as a means to an end, the ‘end’ being spending time developing an idea they would aim to pursue regardless of reward. That was the risk worth taking.

Regenerative businesses

The extent of our ambition for Entrepreneurs for Change does not stop at ventures that are explicitly conceived as social enterprises; we want to encourage all entrepreneurs to think about the social and regenerative impact of their products and services. We believe the ecosystems of investors, accelerators and incubators that support entrepreneurs should encourage early-stage ventures to think not just about their business models, but also their impact on people, place and planet.

In a 2019 blog written for the RSA, Jenny Anderson, FRSA, described eight characteristics of regenerative businesses: they have planetary purpose; they think about intergenerational equity; they design for creativity; they think patiently; they operate systemically; they think collaboratively, not competitively; they are ‘multi-capitalists’ (thinking about social, human and natural capitals as well financial); and they seek new legal models. This thinking may sound radical, but it is already being embraced by large-scale organisations.

Patagonia is a brand of outdoor goods that embodies the values of the purpose-led business. The business’s stated mission is to “use business to protect nature”. The company has thrived through its commitment to the environment and future generations and has for some time styled itself as an ‘activist company’, though not without flaws (an internal audit showed that the company had benefited from Uyghur forced labour in their supply chain as recently as 2011), operating differently in an effort to redress fast fashion, as well as broader societal issues like free speech. Earlier this year, Patagonia’s founder, Yvon Chouinard, transferred ownership of the company to the Patagonia Purpose Trust to ensure its mission will not be diluted by buyers, heirs or public stakeholders. Instead of going public, Chouinard said, Patagonia is “going purpose”. In terms of thinking about intergenerational equity and seeking new legal models, this certainly fits into Anderson’s vision for regenerative business.

And it is not only ‘activist companies’ that are now thinking regeneratively. Karrie Denniston of corporate giant Walmart recently claimed “that in the moment of decision, in the moment of strategy, we’re putting humanity and nature into those decisions”.

Rethink Fashion aimed to bring trailblazers in early-stage fashion ventures together to explore what ‘regeneration’ means for their industry. The programme resulted in new products and brands being launched, as well as new networks being formed among innovators and amplifying their collective voice and calls for change within the industry.

The RSA plans to build on this model and create a distinctive set of tools and learning journeys that we can share with entrepreneurs in any field. We want to provide the next generation of business innovators to connect and capacity-build, to help them to support the regeneration of nature and humanity through their work and embed that deep in the DNA of their companies’ missions.

Committing to impact

A key element of creating these toolkits and developing a deep knowledge commons to support regenerative business will be providing the data to understand ‘what works’. Impact evaluation for social enterprise is an important but difficult discipline with a wide variety of metrics and frameworks that sometimes make it difficult to understand real impact. The RSA believes that we can contribute significantly to the developing field of regenerative impact by creating a strong evaluation capacity for early-stage ventures. As part of the commitment to thinking collaboratively, not competitively, impact data and case studies can move the whole field of regenerative entrepreneurship forward.

In designing the entrepreneurs pathway, we have sought to build on the long history of the RSA’s support for innovators and the lessons from our pilots, programmes and Catalyst funding. We are focusing on how to reach typically excluded entrepreneurs, with targeted interventions designed to meet their needs and aspirations. As a London-centred, privileged organisation, we know we cannot do this alone and plan to align with partners who have direct reach into the communities we do not. We want to support these communities to develop the agency, skills, ideas and connections that drive successful innovation.

We also want to work with partners who are already supporting entrepreneurs and new ventures. Our aim is not to replicate existing programmes or infrastructure to support new businesses. Rather, it is to find ways to augment these programmes and support new founders to embed regenerative principles into their ventures at the point of conception.

As the RSA develops its offer to pilot in this space, we aim to provide, not just financial support through Catalyst, but learning journeys and opportunities to connect to peers and investors, to influence change and to build social capital. Together we will work towards a world where all entrepreneurial ventures are able to support people, place and planet to flourish.

If your organisation believes in supporting regenerative entrepreneurship and would like to shape these pilots with us, contact zayn.meghji@rsa.org.uk

At the RSA, Joanna Choukeir is Director of Design and Innovation, Tom Kenyon is Head of Enterprise Design, and Zayn Meghji is the Catalyst Fund Manager

Follow the authors on Twitter here: @JoannaChoukeir @MrTKenyon

This article first appeared in the RSA Journal Issue 4 2022.