The 1930s and 1940s witnessed a formative era in nation-building, through the conscious ‘making’ of New Zealand. At the same time, New Zealanders had to ‘make do’ through depression and another world war, and these global onslaughts only intensified the quest for security at home and abroad. Making do and creating a nation moved in symbiosis, because, as often happens with the evolution of a sense of national identity, panic, crisis, anxiety, or rupture produces stories and rituals to soothe and explain. This context saw the rise to power of the first Labour government, which resolved to pick up where the 1890s’ Liberal model of state development left off.

‘In New Zealand more than in any country in the world we find justification for the words of the Bible, “All flesh is as grass, and all the goodliness thereof is as the flower of the field”’. So began the issue on pasture land of the Making New Zealand pictorial survey to mark New Zealand’s centennial, in 1940. This biblical phrase had multiple meanings for New Zealanders, in relation to ‘ecological imperialism’, feeding Britain, and the sacrifice of its best young men in war.

This chapter introduces venture debt (VD), a little-known yet critical source of funding for a specific group of expanding and later-stage companies. Throughout a company’s life cycle, a myriad of funding options is accessible, ranging from equity to debt-based sources. In the nascent stages of startups, innovative funding sources such as business angel funding, crowdfunding, and initial coin offerings have gained prominence in recent years. Despite these advancements, a noticeable funding gap persists during the critical scale-up phase, when startups require capital to grow and internationalize their venture. Venture debt has emerged as a tailored solution, specifically designed to bridge this gap in scale-up financing and offering a lifeline to companies striving for growth but not yet eligible for traditional bank financing. One VD fund manager focused on European companies said: ‘What we have seen over the last decades is that entrepreneurs are getting more educated about how to start businesses and, more importantly, how to grow businesses. The more sophisticated entrepreneurs prefer VD because it is less dilutive, and they do not have to grant board seats to us like they do with the venture capitalists.’

This chapter considers three sources of early funding and support for new ventures. As will be apparent, these sources of early funding have only presented themselves since the early 2000s; judging from their adoption, they have resonated well, especially in the European context.

Entrepreneurs tend to recognize market opportunities on a fairly regular basis and are optimistic about their market potential. If they are serious about pursuing a perceived opportunity, capital is needed to transform the opportunity into a proposition that can be brought to the market. The challenge to obtain this capital is to generate proof of the added value of the proposition early on. That is where the sources addressed in this chapter come in.

This chapter will provide an overview of impact investing and how to finance social entrepreneurs. Social entrepreneurship is emerging at the intersection of three sectors: the public sector, the private sector, and the third sector (including non-profit organizations and civil society). It challenges the perceived boundaries between sectors and provides innovative solutions for social needs that are not adequately dealt with by public authorities, businesses, or traditional non-profit organizations. We view social entrepreneurship as a field of practice and social entrepreneurs as the individuals who set up and manage social enterprises. Social enterprises can adopt various legal forms and can be characterized by pursuing a social mission while competing in the market economy. In this chapter we refer to social enterprises as the organizations in which impact investors invest. They can pursue social and/or environmental objectives.

Investments in early-stage ventures are characterized by being private and by their ‘equity nature’, as discussed in the previous chapters, stressing the mutual dependence between investor and entrepreneur. Moreover, the investment is typically temporary and done between so-called ‘perfect strangers’ – that is, both parties have large information asymmetry and are faced with agency challenges yet will be condemned to one another because of the illiquid nature of the investment.

Investors, such as venture capitalists and business angels, should have the exit and return on their investment in mind from the outset. The main goal of this chapter is to discuss how investors in entrepreneurial firms time the exit of their investments and choose between different exit routes.