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More and more, women are combining profit with purpose to create a better world

From a chance discovery in a Ugandan market, Leila Janah stumbled upon her next business idea: an organic skincare line made from Nilotica, a rare form of creamy shea butter extracted from the fruits of East Africa's Vitellaria nilotica tree nut, found primarily in the Nile River Valley.

In 2015 the Harvard-educated female tech entrepreneur from San Francisco officially launched the skincare line under the name LXMI — pronounced luxe-me. Its beauty supplies are now being sold in 300 Sephora stores, and its top-selling product, Pure Nilotica Melt, is a featured product on QVC.

Yet it wasn't only Nilotica's ability to hydrate Janah's moisture-deprived skin that compelled her to found LXMI. It was her commitment to chip away at some of the world's most serious problems, from childhood malnutrition to human trafficking: If she could cull Nilotica as a key ingredient for an organic skincare line, she could help marginalized East African women — many widowed and beleaguered by war — find dignified work through the wild harvesting, production and exportation of the high-grade tree nut.

"I thought to myself, This is incredible. Why don't more people know about this?" Janah said of Nilotica. "Why aren't women who are spending $300 on skin creams spending this on products that can better help the world?"

For the past two years, LXMI has provided Ugandan women the opportunity to triple their local wages.

Like Janah, many women founders are infusing their businesses with philanthropy aimed at helping women with regard to education, work or health. In an era when mainstream, male-run companies — like TOMS Shoes, Patagonia and Warby Parker — have popularized models based on sustainability and giving back, rising female entrepreneurs are increasingly pitching their socially driven ideas to investors.

Fighting the funding gap

Unfortunately, as with commercial ventures, female social entrepreneurs told CNBC they face some major obstacles: limited access to funding, especially venture capital; smaller networks, due to gaps in their professional lives; and business structures and cultures built for men.

In addition, traditional, often male investors are sometimes quick to label female social ventures a nonprofit or they aren't familiar with a proposed products, so they have no interest in backing it, founders said. The absence of policies that support working women, Janah added, is a barrier for social enterprises that rely on female employees.

"A lot of people loved the concept but didn't want to invest, because it didn't fit into their predefined investment structure," said Jasmine Aarons, founder of Voz, a luxury clothing brand that sources materials and labor from indigenous women in Chile. "Because we're an untraditional business, we have to present even more professionally than our traditional peers."

Aarons said she's found success with "avant-garde investors," who are open-minded about profits underscored by social impact, a term commonly used to highlight a company's environmental or humanitarian contributions. When Aarons presents Voz's mission, she highlights talent, profit and products — what any investor wants to hear.

Women helping women

As more women pursue social entrepreneurship, women investors are stepping up to provide funding. The investment group Pipeline Angels was launched in 2011 to allocate more angel investing dollars to women, particularly minorities, and nonbinary femme founders. The group has since invested $4 million in more than 40 businesses, and its spring class of founders is comprised of 23 percent Latina, 31 percent black and 46 percent white women.

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"If you've ever watched Shark Tank, what I like to say is that there are enough white-guy sharks out there," said founder and CEO Natalia Oberti Noguera. Pipeline Angels is active in U.S. cities, including New York, Philadelphia, Chicago and Austin, and hosts regular boot camps and pitch summits. "Pipeline Angels is creating more women and non-binary femme sharks.

Oberti Noguera, also a former entrepreneur, was committed to welcoming new ideas and subscribes to the belief of Girl Development co-director Vanessa Hurst: "Shouldn't doing good be the only way to make a profit?"

"Society has a gendered perspective of how we're going to change the world," Oberti Noguera said. "When a woman says she's going to change the world, society thinks she's going to start a nonprofit. When a man says he's going to change the world, society thinks he's going to start a business."

Winning over donors

The stereotypical profile of a social entrepreneur is a young change-maker driven by idealism, according to Siri Terjesen, entrepreneurship research chair at American University, who's also directing the university's center for innovation.

In fact, many women founders had full careers before starting their own socially conscious companies — a trajectory that includes celebrities such as Jessica Alba, CEO of Honest Beauty; and Rosario Dawson, co-founder of Studio 189. Some have a background in business; others took a risk to try something new or identified a need in past jobs.

The growth of social entrepreneurship, as it's often called, can be attributed to crowdfunding as well as increasing pressure by stakeholders on corporations to integrate more socially responsible practices, Terjesen added. Research has even suggested male CEOs with daughters are more inclined to work positively for society.

"All the lessons you would have in real life apply to social ventures: stakeholders, communication plan, understanding principles of going public," Terjesen said.

Women social founders want to solve what they define as a social crisis: anything from poverty and malnutrition to human trafficking or recovery from war and genocide. Janah, founder of LXMI, thinks business is the "only real solution to global poverty."

"To have this level of deprivation in a world where I am walking past the Millennium Tower in San Francisco right now," Janah said. "It's 2017, and no human being should be living in this kind of desperation."

"When a woman says she's going to change the world, society thinks she's going to start a nonprofit. When a man says he's going to change the world, society thinks he's going to start a business." -Natalia Oberti Noguera, founder and CEO of Pipeline Angels

Other markers are on the rise for social enterprises to define their goals and gain legitimacy. For instance, the nonprofit B Corporation has certified more than 2,000 companies worldwide with socially responsible missions. There are existing pipelines, such as Ashoka fellowships, that filter women into social enterprise missions.

For the founders of Bella Kinesis, a U.K.-based sportswear start-up, the principles of business ring particularly true; they founded the brand after noticing that mainstream brands like Nike and Adidas didn't market clothing compatible for nonathletic people who are interested in being more active.

Bella Kinesis allocates its profits to aid Indian women's education costs. A government program called Social Enterprise UK also helped the founders access funding and mentors.

"I think a lot of people who want to start social enterprise are driven by purpose, and sometimes you are so keen on the course you're passionate about," Bella Kinesis co-founder Roshni Assomull told CNBC. "You need to make sure you're building something sustainable."

The likelihood of a social ventures' success still depends on money — and a narrative that sells.

"The stories are so powerful. That's what wins over donors. That's what wins over employees," American University's Terjesen said. "You should be able to tell a story that 95 percent of your stakeholders will buy into and that they can identify with."

A human trafficking survivor in Guatemala displays the bracelets she made for Durga Tree International's Bloom line.
Source: Durga Tree International
A human trafficking survivor in Guatemala displays the bracelets she made for Durga Tree International's Bloom line.

For New Jersey-based business owner Beth Tiger, her ties with donors are far more intimate, because they can witness her work developing. Tiger is the founder of Durga Tree International in Sparta, New Jersey, whose business arm, Bloom, employs survivors of modern slavery in Africa and Asia who produce products that are sold in America.

"Our challenge is to ensure each survivors' ability to evolve into an overall thriver, with the desired long-term outlook of becoming 'slave-proof,'" says Durga Tree's website about Bloom's mission.

"Most American women don't realize they can play a role [to end] slavery on the ground," Tiger said. "Because I'm a businesswoman, I'm always looking to try different things."

Tiger hasn't yet solicited investors but instead has relied on contributions from her personal and professional networks. As her business has grown, she's achieved nonprofit status, partnered with agencies to build shelters, developed a store in New Jersey and reacted to international crises, including the escalating conflict in Aleppo, Syria, late last year.

"It's all phone calls, people believing in me," Tiger said. "Because we're small, everyone sees the effects of what their money has done. ... My first $5 monthly contribution came from a friend of mine."

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