AI may help social entrepreneurs unlock new finance sources

A new research chapter suggests that artificial intelligence could help tackle one of the biggest challenges social entrepreneurs face: getting the funding they need to grow.

In the chapter Artificial Intelligence as an Enabler for Financing Social Entrepreneurs, researchers Dr Nisha Prakash and Rajitha Burra of the Royal Docks School of Business and Law, University of East London explore how new AI-powered financial tools could support businesses that aim to create social impact.

Many social entrepreneurs struggle to raise money through traditional routes such as banks or mainstream investors. Funding systems often focus on financial track records and short-term returns, which can make it harder for organisations that are trying to balance profit with social or environmental goals.

New opportunities

The researchers suggest that artificial intelligence could help change this by analysing a wider range of information about organisations and their activities. This could help investors and lenders better understand businesses that are working to solve social problems.

The chapter looks at how AI tools such as machine learning and data analysis might support new ways of connecting social enterprises with funding. These tools could help match entrepreneurs with investors, assess potential risks and better understand the impact a business is having.

Dr Nisha Prakash, Senior Lecturer in Financial Management, said the research highlights how funding models are beginning to evolve alongside new technology.

“Social entrepreneurs often face barriers when trying to access finance because many funding systems are designed for more traditional businesses,” she said.

Alternative funding

Alternative funding models are beginning to emerge alongside technological developments. AI-driven fintech platforms may become important channels for connecting social enterprises with finance, particularly as investors look for better ways to understand both financial and social performance.

At the same time, impact data is likely to become increasingly important. Digital transparency and clear metrics can help demonstrate the value social enterprises create and support more informed funding decisions.”

The researchers also stress that technology must be used carefully. AI systems used in finance need to be transparent and fair, and they should not exclude entrepreneurs who already face barriers because of their background or ethnicity.

“We hope that academics and technology developers will take forward the case we are making to build AI-powered systems that will support social entrepreneurialism and inclusivity,” said Dr Prakash.

The research appears as a chapter in the edited academic book Building AI-Driven Decision Making Competencies for Sustainability, published by IGI Global.

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