I've just been watching some old editions of the Dragons' Den on the "Dave" channel. They've just had on a woman who was running a company making and selling little carry cases for fresh fruit for kids. A good enough idea I'd have thought.

But the Dragons seemed to be completely flummoxed by her business model. She was trying to get investment in return for a five per cent stake in the company. Currently the company gives all of its net profit to charities. The proposal was that the company would give 5% of its future profit to the investor and 95% to charity. They could not get their heads round this.

Understand this - a social enterprise is not itself a charity (usually). It is a trading business that has to make money. It so happens that it decides, or is even set up legally in some cases, to distribute or reinvest that profit for social ends rather than simply to whoever owns the company. If it takes in investors, sure, they get an equity stake and the profit apportionable to their equity stake is distributed to them.

Where's the beef? What is there not to understand?

There were other objections - one Dragon thought he would never be able to sit on the board of a company in good conscience where the other members were deciding what charities to donate all their profit to while he was going to walk out with his five per cent in his back pocket. It's certainly an issue - but perhaps he could have thought that without his investment the company would have far less to give away to its charities. Another said she quibbled with the valuation the owners put on it, but she didn't want to argue with them because likewise, she'd be talking down the amount distributed to charities.

But in principle, I don't see the problem if there's a decent valuation, and the investment could clearly make a difference to future profitability, and the investor gets his or her fair share of profits out the other end, why a capitalist cannot invest in a social enterprise if that's what the enterprise has decided would be the right way for them to raise new capital.

I normally quite respect these Dragons. On this, I'm afraid I just thought they displayed a big lack of understanding - most of them were twittering on about it being more efficient for them to give directly to charity and the charity get the tax breaks.