Philanthropic Venture Capital: A New Model of Financing for Social Entrepreneurs

In recent years, philanthropic venture capital has attracted great interest due to its novelty and to the combination of two terms that are seldom heard in the same breath: philanthropy and venture capital. On the one hand, philanthropy implies donating; on the other hand venture capital implies investing in companies with the explicit purpose of realizing capital gains. So what exactly is philanthropic venture capital also called venture philanthropy? It attempts to apply the strategies and techniques developed within the venture capital industry to the financing needs of social enterprises. Venture capital is characterized by the temporary financing of new ventures or growing businesses, usually through equity and by the provision of knowledge and expertise by investors. Venture capitalists are active investors since they often sit on the board of directors, participating in the definition of the company's strategy and its key decisions, that closely monitor and control the company's financial results.