Social Entrepreneurship is a specific form of entrepreneurship based on the principles of social, economic and environmental sustainability. Mainly involves reinvesting profits for the benefit of the community. The paper gives an insight into the concept of social entrepreneurship, highlighting the challenges it faces. In the first part of the paper, the notion of social enterprises and entrepreneurs and the principles of social entrepreneurship are explained, the possible legal forms of social enterprises are presented. After that, the issues of social entrepreneurship development were highlighted through the main challenges in Croatia. The theory is corroborated by the example of an unsuccessful and extremely successful social enterprise in the Republic of Croatia. The methodology of approach to the matter and the presentation of examples from practice is expressed through the study of theory, indicating the most important elements for understanding it and comparing concrete information, the current situation of selected social enterprises in the Republic of Croatia.