Harjula, Liisa / Tensions between venture capitalists’ and business-social entrepreneurs’ goals: Will Bottom-of-the-Pyramid strategies offer a solution?
Greener Management International, 51: 79-87.

This paper examines the case of an entrepreneurial venture with a disruptive innovation in the field of medical technology. The case entrepreneur is striving for the so called double bottom line of both financial and social returns. The paper analyses the relationship between the entrepreneur who is both socially responsible and business oriented and a putative mainstream venture capitalist interested in the financial success of the venture. It is asserted that venture capitalists may not be initially interested in investing due to the social targets of the entrepreneur and due to the disruptive nature of the venture’s business concept. In the case company the social goals do not need to be ‘sold’ to investors as these are derived automatically from the core business. Any increase in the case venture’s business operations leads automatically both to financial profits and social returns. It is discussed whether the bottom-of-the-pyramid (BOP) strategy provides a solution to problems related to disruptive innovations. The theoretical business model applicable in the BOP markets is based on high volumes seeking millions of customers. The use of the high-volume target in the case venture’s business is analysed. This may also present a solution to the double-bottom-line problem. The growth in volume automatically raises social returns by creating benefits for an increasingly wider proportion of the population. This case serves as an example of at least two more general problems: (1) the different time-frames of venture capitalists and entrepreneurs; and (2) conflicts of interest between industry incumbents and innovators of new technologies and new business models.

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Sector: Medical Devices