We all want to do the right thing to help our community. Some of us buy cookies from kids who come to the door; others attend charity dinners or write cheques to favourite causes. Bill Young took this desire to do the right thing a step further.
“I was intrigued by a new movement going on in the U.S. called venture philanthropy, which uses the principles of venture capital. It involves finding social entrepreneurs with great ideas and aligning them with the right people who can bring capital in form of investing.”
In June 2001, Young formed Social Capital Partners in Toronto, and created a list of criteria for early stage not-for-profits to meet. The list mandated that it would help organizations that had the following: a visionary leader that could impress a social entrepreneur; a breakthrough idea; and a new approach to solving a structural or social problem. It also demanded that the organization would have already proven itself, could work at a national level, and didn’t have significant dependencies on other social service agencies or any single funding organization. Out of the 10 organizations that had been narrowed down from a list of 40, Social Capital Partners discovered that none of them fit the criteria.
“It wasn’t because they didn’t have great leaders or great ideas or that they weren’t terrific organizations, but because it’s difficult to find a not-for-profit organization that doesn’t have significant funding dependencies. Not surprisingly in the Canadian context, they’re dependent on government funding.”
Getting the experience
Born in Hamilton, Ont., Young grew up in Ancaster, Ont. and attended the University of Toronto for his B.A. From there, he completed his C.A. at Clarkson Gordon in Toronto and went on to receive his MBA from Harvard. Coming back to Canada in 1981 with his latest degree tucked under his arm, Young joined the family business at Hamilton Group in Toronto.
“At that point in time, Hamilton Group was a series of businesses that had been started by my great-great-grandfather,” Young said. The Canadian vendor leasing company had a presence in Europe, the United States and in Mexico, where Young ended up working for the first few years of his career.
“In 1984, I was put in charge of the Canadian computer operation, called Hamilton Computers, and in 1986 I became the president and CEO of Hamilton Group,” Young said. “We embarked on a strategy of selling off our other investments of the Hamilton Group portfolio, including our Mexican, American and European operations and used the funds to reinvest in our computer operations. Effectively, Hamilton Group became Hamilton Computers.”
Over the next five years, Young successfully lead Hamilton Computers, which specialized in the renting, leasing, and selling of used and new computer equipment to resellers as well as financial services and systems integration. The company grew from $15 million to $250 million.
“We made it into the 1990s boom and then in 1993 we sold the company to G.E. Capital. I stayed on for six months to help with the transition and integration and left at the beginning at 1994,” Young said. “I got married the same week we closed the deal with G.E. Capital, so after I left I did a bunch of things, including travelling around the world.”
Upon returning, Young formed a private investment holding company, which made a number of early-stage investments in tech companies.
“I almost got involved in a couple of start-ups,” Young laughed.
In 1997 he became president and CEO of a company focused on the reselling of local telephone lines to Canadian local exchange carriers.
“We rode a little of the boom in emerging telecom, such that we were able to take the company public in 1999.”
Young stepped down to the position of chairman when the company recruited a CEO with 25 years of experience in the telecom industry, and it was at this point that he decided that he wanted to try his hand at something new.
“I was lucky enough to have had a decent windfall from Hamilton Computers…and frankly, was ready to do something different. Particularly in the final incarnation of my career in the private sector – which was on the lunatic fringe of capital markets – I realized that this was not what I wanted to do with the rest of my life. I knew that I had more money than I could ever want or need, so I asked myself how I could use it in an innovative way to give back.”
Finding a need
Agreeing that he would leave in 2000, Young spent his remaining time in the private sector exploring what sorts of innovative movements were happening in the world of philanthropy. To his surprise, Young discovered that while some innovative philanthropic movements were going in south of the border, little was happening in Canada.
Young recognized that in the public sector, the government is the number one – and in many cases the only – source for funding, whereas in the private sector, companies rely on banks as well as private equity and private capital.
“If there was only one source of funding in the private sector, there wouldn’t nearly be the diversity of new ideas,” Young said. “We kept finding these terrific organizations that were financially strapped. They ended up spending more time on fundraising than on their goals, and that’s when we decided that instead of funding existing models, we’d focus on new models: ones that will be revenue generating and aiming for financial self-sufficiency.”
Part of Young’s vision is to fund social enterprises that employ the socially disadvantaged. Instead of training these people to get the skills and send them out to get a job, Young’s idea is to give them a job, which will perpetuate the self-funding initiative, Young said.
“My notion is that we should try to get the keys for the car back for the social outcome instead of going hat in hand for funding. That is now the mission of Social Capital Partners: to get a model that at its core is self-sustaining. Our big vision of what we’d like to achieve in five to seven years is to create a series of social enterprises, be able to operate them all under one brand and engage the community.”
Opening doors
Social Capital Partners has recently announced a business plan competition in order to engage social entrepreneurs. The plan has to aim for financial self-sufficiency and employ a sector of the disadvantaged population, Young said. The company will provide a $15,000 cash prize for the winning business plan, but as Young pointed out, that isn’t the true prize.
“We will provide up to one million dollars in financing to get the business off the ground if it meets the criteria – this isn’t just an academic exercise.”
Young is hoping that this contest will not only engage social entrepreneurs, but other wealthy philanthropists who may be looking to apply their talents and maybe change a career. It’s worked for Young.
“I don’t have to go home and ask myself why I’m doing this,” Young said. “I know that I could devote the rest of my career to this – it’s a fun and intriguing way to use the skills I’ve built up in over 20 years in the private sector.”