As the social capital market continues to evolve, so does the conversation about new ways in which money is being moved to support projects with meaning. Last week over 30 people participated in our twitter #SOCAPchat for a lively conversation on peer-led seed funding for social enterprises.

Kicking off the conversation was a question by @KevinDoyleJones, “Why is peer-led due diligence the key to unlocking seed funding?” The question refers a Village Capital model being that’s been piloted in Mumbai, Atlanta, New Orleans, our own Hub Bay Area and now adding Europe to the mix with a London fund in partnership with @merismcapital. The model? 16 social entrepreneurs participate in a 12-week evening accelerator program (sample @Hubventures schedule here) that ends with the cohort voting on which 4 individuals should receive $75k in seed funding to grow their social enterprise. Thus, the due diligence is put into the hands of people who become – over the course of the program - well known peers.

Answers to the kick-off question varied from why other models don’t work, market conditions and more: the standard venture model is too expensive; angels don’t have a great way to deploy capital; the pool & talent opportunity is still small; peer seeding provides critiques that weed out those who aren’t really mission aligned; and, the problems with other funding models such as fellowships and business plan competitions is that they only benefit the ‘winners’.

So what does ‘winning’ look like in this model? A traditional view might declare those chosen for the $75k investment as the victors, but the tweets streaming in formed a different story of where value lies. @DanAncona commented on how the program has sharpened their business massively on the topic areas covered, while @Kohlgill pointed to the fast & useful feedback of their peers (their ‘competitors’). @Activefree acknowledged that more focus is on all participants ‘winning’ the next level of funding, not just keeping an eye on the $75k. Offering a testament to this sense of camaraderie, Ross Baird of Village Capital recalled, “last yr in @hubventures cohort 1 co. met investor week 5, banked $500k wk 10, credited his peers.” It seems winning comes in many forms.

Keeping the big picture in mind was a reminder that seed stage for scaling social enterprise is just “one step in the journey”. @Calvert_fdn, @PYMWYMIC and others engaged in conversation around crowdfunding platforms like @33needs & @crowdcube as serving 5k-10k and @teamprofounder serving $50k before seed, while Investors Circle and others start coming in at $1m.

We hope you’ll join us this Thursday, May 5^th as we focus on another stage of funding for social enterprise – angel investing.

Thanks to the following tweeters that supported, listened and joined the conversation.

@PYMWYMIC,@Hubventures,@VillageCapital,@Kohlgill,@DanAncona,@Merismcapital,
@Calvert_fdn,@Activefree,@AspenANDE,@KevinDoyleJones,@Valentinvollmer,@shrock,
@rosaleeharden,@StaceyMonk,@elizlk,@thestudentinite,@Montero,@TweetforAmrit,
@DuncanMcFadzean,@aventuraspcs,@MowgliUK,@Johnniewalker,@producingchange,
@Swellr,@Peterdeitz,@UTMT,@GuardianSocEnt,@UnLtdWorld,@GreenMarketTV,
@Lornali,@FYSE, @mgibsonsf