Glossary

Base of the Pyramid: In economics, the base of the pyramid, also referred to as the bottom of the pyramid or just the BoP, is the largest but poorest socio-economic group. According to the World Bank some 2.8 billion people subsists on $2 a day or less, typically in developing countries. This group is increasingly being seen as a potential market, and new models of doing business that deliberately target this demographic are being developed.

Business Development: involves realizing a business’ full potential, using such tools as marketing, sales, information management and customer service. It may involve evaluating the business, analysing opportunities and constraints, and drawing up a strategy for growing the business. In strong companies, business development is often an ongoing process.

Corporate Social Responsibility (CSR): refers to organizations taking responsibility for the non-financial impact of their activities on community and the environment. This obligation is seen to extend beyond what is required to comply with legislation, and sees companies taking voluntary measures to improve their social and environmental impacts.

Equity: Ownership interest in a corporation in the form of common stock or preferred stock. (It also refers to total assets minus total liabilities, in which case it is also referred to as shareholder's equity or net worth or book value.)

Market-based approach to development: A market-based approach to development takes its point of departure in the poor as active consumers and producers, and seeks ways to utilize this for poverty alleviation and economic development. A market-based approach involves the poor on the demand side, as clients and customers, and on the supply side, as employees, producers and business owners at various points in the value chain.

Patient Capital: Funds invested for medium or long term (generally for 5 to 10 years).

Poverty Penalty: refers to the phenomenon that the poor live in very high cost subeconomies, where many essential goods are either lacking or priced higher than for midmarket consumers.

Responsible Entrepreneurship: Responsible entrepreneurs run their businesses in ways that enhances their positive contribution to society while minimising negative impacts on people and the environment. Therefore it adds value to both the business and society.

Short to Medium Term Operating History: The company is in one of the following stages of the business cycle: Start-up Stage – The company is ready to conduct business, but no commercial sales have typically taken place at this stage. The enterprise is usually less than 18 month in business. Early Stage – The enterprise has finally been launched and sales are trending upwards. The funding from this stage is used to reach the breakeven point. At this point the business is two to three years old. Expansion Stage – Enterprises at this stage usually need capital to increase sales, expand into new markets or launch new products or services. The company has been in business for more than 3 years.

Social Venture Capital: is a form of venture capital investing that provides capital to businesses deemed socially and environmentally responsible. The intension is that the investments will promote market-based solutions to social and environmental issues, while providing attractive returns to investors.

Social Entrepreneur: An individual who uses innovative, entrepreneurial and sustainable approaches to pursue social change for the benefit of society, and particularly disadvantaged individuals and groups. A social entrepreneur assesses success in terms of the impact s/he has on society, rather than in terms of profit and return. While social entrepreneurs often work through nonprofits and citizen groups, many work in the private and governmental sectors.

Sustainable Development: is a path and approach to development which take a long-term vision, focusing not only on meeting present human needs, but also on ensuring that these needs can be met in the future. The Brundtland Commission coined what has become the most often-quoted definition of sustainable development as development that "meets the needs of the present without compromising the ability of future generations to meet their own needs."

Sustainable Entrepreneur: An entrepreneur who ensures a balance in his or her enterprise between the three elements: people, planet and profit; and who envisions a long-term positive impact of the venture to sustainable development. A sustainable entrepreneur runs his or her venture in a way which ensures that it can sustain over the long term, while benefiting communities and the environment which it affects. The concept of ‘sustainable entrepreneurship’ emerged as a merger between the entrepreneurship and sustainable development agendas.

Sustainable Investing: entails the full integration of environmental, social and governance factors into financial analysis and decision-making, in order to invest in companies that meet positive sustainability criteria. Sustainable Investing is also a strategy for identifying companies with better long-term financial prospects, since better-managed, more forward thinking and innovative companies often are characterized by strong social and environmental performance (see Triple Bottom Line).

Triple Bottom Line (People, Planet, Profit): The Triple Bottom Line paradigm argues that a corporation’s ultimate success or health should be measured not by the traditional financial bottom line only, but also by its environmental and social/ethical performance. Triple bottom line accounting means, in practical terms, that the traditional reporting framework is expanded to take into account environmental and social performance in addition to financial performance.

Venture Capital: Venture Capital is a form of private equity capital, typically provided to start-up firms and immature companies with exceptional growth potential. Venture capital investments are generally made as cash in exchange for shares in the invested company. Managerial and technical expertise is often also provided.