DORV Project

Goals & Process

Since the establishment of the first DORV center, the demand from municipalities for the transferability of the DORV concept to other regions has increased steadily. With the support of the Ashoka grant, Heinz Frey was able to scale the DORV concept in Germany on the basis of a franchise model. In addition, the transferability of the DORV concept to urban residential quarters has been developed and successfully successfully piloted ("quartVier centers").

To achieve this, the company had a financing requirement of 150 000 euros. The money was needed as advance financing for the UG until its own revenues can fully cover the expenses. With the additional funds, the DORV team is able to roll out the social impact of the roll out the DORV concept throughout Germany.

Why did you choose this funding type?

Scaling with as hybrid business model:  two non-profits. Combined they form the “wandering  DORV- school.” 

1. nonprofit for social profit (integration of people, like the elderly, etc.), needs financing for keeping the ideal alive (Lobbying, networking, etc.) 
2. purely entrepreneurial (consulting, operations, education), social profit, licensing adds to quality control, DORV company and former businessman can run company operations  

Mezzanine-Financing with social responsibility as a hook that is a cheap and flexible method of financing, which is paid out when reaching social development goals that are predetermined. Additionally, the liquidity stays within the company to expand its operations. 

As a social enterprise, DORV UG is run on a market economy basis. The profit generated is invested exclusively in the further expansion of the business and transferred to the non-profit sister company DORV gGmbH, which is itself a self-contained financing system.
The prerequisite for this is that the hybrid investors should, as far as possible, not claim any profit distributions, i.e. do not take a stake in the company.

Successes & Challenges

• The DORV project has built a solid network of philanthropic supporters. Foundations in particular support the further development and dissemination of the DORV idea.
• In order to avoid potential conflicts with the philanthropic funders when financing DORV UG as a franchisor and consulting company, and to create positive synergies the DORV project should be financed independently, using profits to support the social mission.

Takeaways & Additional Information

• A hybrid business model makes financing the endeavor with different financing opportunities easier.  
• Mexxanine financing can often represent a viable alternative for startups.  
• Social dividend and financial dividends as motivation for investors.  
• Don’t underestimate the role of business angels and charities when starting or running a company.  
• (Social) entrepreneurs should seek professional advice whenever they can.  
• Successfully operating since 2004 with 12 established centers and continuously expanding.

Source: FASE Deutschland