Virtuous Circle Life Cycle

There are six steps to the development of entrepreneurial social organizations, the ‘virtuous circle of social capital’ because it starts with the inheritance of social capital and it ends with the returns from the investment of social capital.
1. Endowment
All social entrepreneurs start with an endowment of social capital: a network of relationships and contacts, which are tied together by shared values and interests. Social capital is vital to social entrepreneurs: they usually have little else to start with. The first job of the social entrepreneur is to take whatever endowment of social capital he is given and to use these relationships to create more social capital, by getting more people and organizations involved with the project, by building a wider web of trust and cooperation around the project. With this start-up fund of social capital the social entrepreneur can then get access to the physical, financial and human capital needed to get the show on the road.
2. Physical capital
The initial endowment of social capital often brings access to physical capital, usually in the form of rather run-down buildings. Getting access to a physical base is vital. It provides a focus, a base for new services and a tangible sign that the project is achieving something.
3. Financial capital
A lot of goodwill and a run-down building can only get you so far. In addition, social entrepreneurs need some start-up funds, though often not that much. The initial network of supporters and helpers is vital to bring access to funds, through fundraising, donations and corporate giving. The more diverse and richer the network, the easier it will be to raise the funds.
4. Human capital
Armed with social, physical and financial capital, it is only possible for the project to get started if it recruits the right people. If at this stage only the founding social entrepreneur is involved the project will run into a bottleneck: it will not have enough of the right people to put the