Abstract

In the arena of social investing new investment approaches have emerged, which focus on a double bottom line and have adopted approaches from the venture capital industry towards funding social enterprises. Due to their long-term commitment as well as extensive non-financial support, these investors enter into a close relationship with the social enterprises funded. In addition, investors also claim certain oversight rights. This highlights the importance of a personal and professional fit of investors and investees. Scholars that study the relationship of social investors and social enterprises all focus on the perspective of social investors and how they are selecting their investment targets, although due diligence is a two-way street. Our aim is to take the perspective of social enterprises by analyzing criteria used in order to evaluate investors.

We test criteria that relate to supportive as well as oversight activities of social investors. Support is covered along the criteria network access and business advisory services. Oversight functions refer to information rights and control rights. In addition, we consider reputation of the investor as a potentially relevant factor for evaluating investment offers.

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