Collaboration
Fostering Social Enterprise:
Minister Brad Duguid on the Buzz North of the Border

Canada’s most populous province has become a leader in the social enterprise sector in North America, with over 10,000 social enterprises in operation employing an estimated 160,000 people. Ontario’s government has leant considerable support to the sector, directly and indirectly, to make this happen.

To learn more about how and why, I spoke with Minister Brad Duguid of the Ontario Ministry of Economic Development, Employment and Infrastructure.

“For some time, starting under the previous Premier, we’ve seen social enterprise as a very important part of our economic development strategy,” Minister Duguid said. “When it comes to social enterprise and impact investment, we’re actually seen as leaders [in North America]. We have the Governor’s office and others taking interest in what’s going on north of the border, in Ontario.”

The Minister noted that Silicon Valley is the world leader in the tech sector and will be for quite some time, but said being second in North America to Silicon Valley is nothing to scoff at.

“We’ve really managed to make a dent in social enterprise in Ontario — take the leadership role — and we see this as a place where you want to be a pioneer because it’s a growing part of the overall enterprise and innovation community.”

Improving the impact investing infrastructure in Ontario began in 2013, when with government support, the MaRS Centre for Impact Investing launched the Social Venture ConneXion (SVX), a first-in-North America social finance platform to connect investors with investment-ready social enterprises. The following year, the Ontario government announced an Ontario-California Impact Investment Partnership to help encourage cross-border capital flows, including through the use of the SVX. In May 2015, Ontario partnered with the Network of Angel Organizations-Ontario (NAO-Ontario) to launch Canada’s first impact investing angel network.

To date, the SVX platform has facilitated $5 million in impact investments. Over 100 investors are on the platform and 28 impact ventures and funds have been profiled. More growth is expected with the recent additions of Mexico, and Canada’s second-most populous province, Quebec.

“[SVX] acts as a bit of a stock market or a stock exchange for social enterprise companies and investors,” Minister Duguid explained, citing it as an important tool for cross-border investing. “It gives our companies the opportunity to find investors not only in Ontario but now in California, where there is a significant number of investors, and now Mexico and Quebec as well.”

Startups

Education and healthcare are popular sectors for Ontario-based social enterprises. Some stand-outs include:

  • JUMP Math — a numeracy program that encourages understanding and a love of math in students and educators through the provision of materials and training, which is growing across North America.
  • Future Design School (FDS) empowers teachers to deliver “innovation-focused” programming that engages students in a repeatable process of ideation, validation, and prototyping using a unique curriculum, technology, and special tools.
  • Eve Medical is creating user-centered medical products for women; its team is developing a method that allows women to comfortably and reliably self-collect samples to screen for HPV, chlamydia, and gonorrhea.
  • QoC Health is a cloud-based platform to connect patients with circles of care and support at a lower cost for health care providers, in part through the reduction of hospital re-admissions.

Other social enterprises that are crossing borders with their impact include SunFarmer, a startup that offers long-term financing for solar energy systems in underserved regions such as Nepal; and Lucky Iron Fish, which makes fish-shaped ingots from recycled scrap iron meant to be boiled in water or used in a cooking pan to combat iron deficiency, currently being piloted in Cambodia.

Government Support

Ontario is piloting social finance tools including social impact bonds, community loans (incentives for employers to hire people with disabilities or other barriers to employment), a Social Impact Voucher Pilot Program to provide training to eligible social entrepreneurs, and a $4 million Social Enterprise Demonstration Fund (SEDF) to provide funding and support to early-stage, high-growth social enterprises in the province.

When asked why the Ontario government has been so supportive of social enterprise, Minister Duguid said that Ontario has demonstrated considerable strength in the social enterprise sector, and that they need to help the province’s “fast runners” run even faster to keep up in the “next generation economy that we’re part of now.”

“Our economy is at the threshold of what’s probably going to be the most disruptive period we’ve seen for almost every sector of our economy, ever,” he asserted. “That’s going to happen over the next 60 months, so you’ll want to be leading that wave rather than being swept up in it. That’s where we’re trying to get to.”

The Minister also stressed the importance of governments creating conditions that facilitate deal flow, rather than investing directly: “The fact of the matter is, government support can’t drive impact investment, investors ultimately have to drive it — and good quality startups and entrepreneurs.

“What we’re trying to do is set up a platform where our entrepreneurs can succeed, can get the experience and mentoring and start that they need to build good business plans, and then get access to the capital that they need to scale and grow,” he said. “That’s really what our role as government has been and will continue to be.”

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