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Social Finance in Europe: The Transition from Grants to Follow-Up Financing for Social Enterprises

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Contemporary Developments in Entrepreneurial Finance

Part of the book series: FGF Studies in Small Business and Entrepreneurship ((FGFS))

Abstract

A large number of social enterprises (SEs) use grants as early-stage financing to establish their ventures. However, we know little about the requirements for SEs to receive grants and their follow-up financing opportunities. Based on an interview study with 13 European SEs, we show that SEs need to go through a resource-intensive application process to be able to receive a grant. To finally receive a grant, we find that nonfinancial aspects (e.g., involved people’s passion) and financial sustainability are the most important factors for convincing possible grant providers to finance an SE’s venture. Furthermore, based on signaling theory, we demonstrate that obtaining a grant increases the likelihood of finding follow-up investors. We suggest that further quantitative research should test our conceptual model, which is built on four propositions we formulate.

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Author information

Authors and Affiliations

  1. Trier University, Trier, Germany

    Mirko Hirschmann & Alexandra Moritz

Authors
  1. Mirko Hirschmann
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  2. Alexandra Moritz
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Correspondence to Mirko Hirschmann .

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Editors and Affiliations

  1. Trier University, Trier, Germany

    Alexandra Moritz  & Joern H. Block  & 

  2. Fulda University of Applied Sciences, Fulda, Germany

    Stephan Golla

  3. University of Siegen, Siegen, Germany

    Arndt Werner

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Hirschmann, M., Moritz, A. (2020). Social Finance in Europe: The Transition from Grants to Follow-Up Financing for Social Enterprises. In: Moritz, A., Block, J.H., Golla, S., Werner, A. (eds) Contemporary Developments in Entrepreneurial Finance. FGF Studies in Small Business and Entrepreneurship. Springer, Cham. https://doi.org/10.1007/978-3-030-17612-9_10

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