The following post was authored by Anshula Chowdhury. Anshula, 21, is the Financial Planning Director at the Young Social Entrepreneurs of Canada (YSEC) and is heading up the YSEC Fund project. She sleeps, eats, and breathes ideas for the fund, ranging from a social metrics to new ways to effectively fund young social entrepreneurs. She can be reached at anshula[at]ysec[dot]org.

This weekend is YSEC’s Re:Vision Conference and, in a separate event, we’re launching our pilot YSEC Fund event with the YSEC Pitch Competition. I wanted to say a few words about the Fund, the Pitch Competition, and the amazing young social entrepreneurs that are making this happen.

The Pitch Competition was an idea that started at the YSEC office at around 5AM, when a late strategic working session led to Assaf and I scribbling away on a piece of paper. We realized that we could offer a low-cost loan (for us and for them) to social entrepreneurs. The structure allowed us to connect young social entrepreneurs to each other, provide small loans, and also have the amount of funding increase incrementally each time the loan was given out. We were particularly excited about the fact that every loan recipient has a hand in choosing out another project that they think is worth funding: a mechanism in which “lessons learned” from previous loans can be passed on from former loan recipients to future ones.

After tossing around the idea for a few minutes (literally…is this the way of startups?) we decided to go for it; the YSEC Pitch Competition was born. Today, we have three finalists, supportive community partnerships, and some generous donors that will carry us through to the night of March 25^th, when the first $1,000 interest free loan will be handed out. We’re hoping to prove a few things:

• Young Canadian social entrepreneurs are worth investing in. They have the ability to create innovative and revenue generating projects with social impact. We believe that the right funding infrastructure will help these young people succeed in their initiatives.

• “Investing” isn’t just financial. Instead of creating a traditional funding relationship, the pilot Fund project works to address key barriers to success of young social entrepreneurs: lack of community, lack of knowledge resources, etc. For example, we’ve created “stress tests”, which ask applicants to create contingency plans in case their projects don’t launch as expected. The decision of who to fund is partially based on applicants’ stress test responses. The thinking behind this is based on YSEC’s market research: contingency planning is one of the things severely lacking in youth-driven social enterprise. The stress test is one of our solutions.

• A loaning program can have repayment without creating an “us” versus “them” mentality. The loan preparation process makes it clear to loan recipients that YSEC is here to make them successful. With this and other initiatives, we’re hoping to create a community, something that we believe is a key success factor for youth-driven social enterprise.

• There are still unexplored funding structures. The Social Finance Chain, our pilot project (see embedded slides) is suited to loaning small amounts of money. While there are clearly risk issues with the current structure, particularly when scaled up to tens of thousands of dollars per loan, we are playing around with this kind of structure: ones that both mitigate risk and are conducive to creating communities. This has led to what we (somewhat tongue-in-cheek) refer to as “tribrid” funding structures: one’s that borrow the community engagement of microfinance institutions, the investment in startups from venture capitalists and angel investors, and investment mechanisms of banks.

 So, we’re excited about March 25^th; so far the pilot round has been going well. The three finalists are nervous but excited (or so they tell me), and I’m looking forward to watching the five panelist judges make a decision about the first YSEC loan recipient at the Centre for Social Innovation at 6.30PM on March 25^th (Shameless plug: you can buy your tickets here).

One last thing: we know this is an ambitious plan. We don’t have all the answers, so we’re running a small, conservative pilot that will help us understand how to create the Fund. When we find out the answers to the questions buzzing around our office, we’ll tell you. Or, perhaps more likely, we’ll show you.

Anshula Chowdhury, 21, is the Financial Planning Director at the Young Social Entrepreneurs of Canada and is heading up the YSEC Fund project. She sleeps, eats, and breathes ideas for the fund, ranging from a social metrics to new ways to effectively fund young social entrepreneurs. She can be reached at anshula[at]ysec[dot]org.

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