For the majority of the social ventures, the Social Venture Fund uses the full spectrum of funding options: debt capital with participation rights, mezzanine financing (quasi equity) or license fees.
Debt capital + mezzanine capital
This is the Social Venture Fund’s most common funding option. It allows the support of stable business models while preserving of the invested capital. Debt capital is generally only invested in combination with a share in the success of the venture like a convertible loan.
Equity
Equity investments are made mostly through preferred shares. Most common are minority stakes where the management is being supported through a seat in the supervisory board. Co-investments with other equity investors are preferred. Equity investments are only made when a realistic chance for an exit is anticipated, e.g. through a trade-sale.
License Fees
In cases where the Social Venture Fund contributes to the creation of intellectual property (e.g. the buildup of a well-known brand) it is possible that the fund participates in the capitalization of the intellectual property.
