Funding
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For-Profit Social Startup Capital: The Missing Middle?
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Echoing Green Leader Cheryl Dorsey Named One of Top 20 Leaders in the US
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Giving Life on Your Birthday
Ashoka and Google's Million Dollar Friendship
Published August 28, 2009 @ 07:51PM PT
Ashoka is one of the leading organizations supporting innovative social entrepreneurs. Google is one of the most innovative for-profit organizations of our time, and although their focus isn't explicitly social, their mission to get the world's information online has had a dramatic impact on the way the world's have nots access knowledge. Given that, maybe it's not a big suprise that Google co-founder Sergey Brin and his wife Anne Wojcicki have donated $1,000,000 in matching funds to Ashoka.
The announcement was made earlier this week and promoted as a matching contest to get more people to contribute. I think this is interesting for a couple of reasons:
The current explosion of social entrepreneurship is funded in large part by tech entrepreneurs. Jeff Skoll and Omidyar have been some of the most important actors in promoting social enterprise over the last five to ten years. Bill Gates is obviously heavily invested in this space and Google.org and now, Brin's individual philanthropy are also aimed on social enterprise. I continue to believe that there's an even more fluent conversation that can happen between the social and tech entrepreneurship worlds, and these funding relationships can help that happen.
I think it's an interesting case study in the obligations of wealth. Google.org is the primary way in which Google as a company expresses its financial commitment to social good. But the question becomes, does that take those who have made money with Google off the hook for their own individual obligations? I'm excited to see Sergey invest in a totally unrelated organization; I think this sends the right message.
Help Ashoka access these funds by donating here.
(Photo: Starmedia)
Tweet Your Way to Venture Capital (and Richard Branson)
Published August 18, 2009 @ 03:51PM PT
The elevator pitch is so 20th century. In today's world, it's all about the Twitpitch - a single shot of brilliance that condenses your big idea into an effervescent 140 characters. And right now, PerfectBusiness.com is giving entrepreneurs on Twitter the chance to get up in front of Sir Richard Branson and other investors, all for sending a great micropitch.
peHUB wrote about the contest today. The details are that the top three entrepreneurs will be flown to LA for PerfectBusiness.com's PerfectPitch conference in late October. There, they will have a chance to pitch their idea in front of conference attendees, which will include Angels, VCs, and Branson himself. To get full contest details, check out their Twitter account @perfectbusiness.
I'm mostly interested in this as another example of how the social media landscape is making it easier for investors to find exciting companies and organizations (and vice versa). I also think it's interesting as an example of how a young company (in this case PerfectBusiness.com) can use a contest to quickly distribute information about themselves to thousands and thousands of potential clients.
I wonder if any social companies will make the cut?
The Controversy Around Kiva's US Loans
Published July 07, 2009 @ 03:04PM PT
Kiva CEO and President, Matt Flannery and Premal Shah
There is a fascinating and instructive debate happening on the Kiva Friends website about whether or not Kiva should be providing loans to US based entrepreneurs. The first US loans, announced just a few weeks ago, were met with much excitement.
As with any site that has been driven by it's member's participation however, there are many members of the Kiva family who feel that US loaners should be accessing credit elsewhere, and even that having US-based entrepreneurs on the site crowds out others.
A poll started just a couple weeks ago on Kiva Friends asks:
Question: Having loans to citizen's of the world's richest country funded by Kiva members is:
- Taking money from the pockets of entrepreneurs in the third world and should be stopped with immediate effect.
- A good idea, as it doesn't matter where you live, if you can't access credit, you can't access credit.
- Don't know yet.
The debate has been raging for 22 pages of comments. Of those that feel that the site shouldn't be loaning to US entrepreneurs, most of the arguments come down to the fact that credit tends to be more available (in their opinion) for those in the US, that the presence of the larger loans needed by the US will crowd out other loaners, and perhaps most of all that loaning to US entrepreneurs was not what Kiva was intended for, and is somehow an affront to or at a degradation of the mission.
On the other side, supporters point out that no one is committed to supporting US based entrepreneurs if they have personal reservations, that a tiny fraction of the loans available are intended for US entrepreneurs, and that even in the US many don't have access to credit right now.
There are a few things that I think are great about the debate:
1) Although KivaFriends.org is a separate site, it seems clear that Kiva itself is not interested in shutting down this debate. This reminds me of when Barack Obama supported the FISA bill and in response, his supporters used his own organizing site my.barackobama.com to ask him to change his position. Rather than trying to suppress them, he welcomed their participation, even when the group critical of his position became the largest on his site.
2) I wouldn't actually accuse anyone of this, but I wonder if it's harder to feel the flow of philanthropy reversed on citizens of your own nation if you're not accustomed to it. Philanthopy is a powerful force for good, but it is complicated to go about it in such a way that affirms rather than denies dignity. I think Kiva's US loans - loaning to entrepreneurs in general - tends to be a way to do philanthropy that has dignity and ownership embedded at it's core, but it still might produce a different feeling for some in the US unaccustomed to being on the other side of that relationship.
3) I wonder if it's easier for people to be more judgmental about the entrepreneurial capacity of others when the activities of those people feels more familiar? When a US citizen is supporting a bean farmer in Uganda, we don't necessarily know anything about bean farming, and certainly not enough to know whether they're approaching bean farming the right way. We have to trust, and take faith in institutions like Kiva and their intermediary microfinance partners. When someone wants to sell hot dogs down the street from us, however, we may have a different intuition about the supply and demand and likely success of that person, making us be more critical because we have more information (or at least deeper intuitive feelings). I'm not saying that this is the case, but it wouldn't totally surprise me, either.
I'm a supporter of Kiva's experiment. I think their model of making these loans through a nonprofit apparatus may be well-suited to the need and I'm looking forward to seeing how they work.
"The No": Making the Most of Getting Rejected
Published June 23, 2009 @ 07:46AM PT
When you get to the point where you're ready to present a business plan to investors, be prepared for an onslaught of rejection.
The idea generation and executive summary process can be very encouraging - it's relatively easy to find people who are willing to give you feedback on your ideas.
Getting people to part with their money, on the other hand, is incredibly difficult. Educating yourself on the what type of investment is right for your business will likely save you from a series of meetings with investors who were never right for you in the first place. Remember: investors are not all equal, and finding the right type of investment will add value beyond providing needed cash.
But first, you must learn to deal with rejection. Some of the most successful, seemingly no-brainer investments get rejection after rejection - for example, Bessemer Ventures said no to FedEx SEVEN TIMES. Rejection is a reality of the fundraising process.
Here are three ways to make the most of "the no":
1. Proactively ask for feedback
I have heard/read many stories from investors about entrepreneurs that flip out after hearing "no". Not every investor (and many times, only a small sliver) will "get" what you're trying to create - that is a reality of the investment process. Say thanks and see if the investor has any feedback for you.
Ask them what they don't like, and how you can improve your product. Listen to criticism and, if you think it's valid, incorporate the feedback for your next presentation.
2. Try to separate yourself from your business
There is an inevitable emotional attachment that you'll develop with your business and in the startup world the lines between personal and professional are so blurred that it's tough to distinguish between the two. When fundraising, put in extra effort to establish boundaries between your business and yourself - a rejection from a investor shouldn't feel like a personal rejection (though for many people it does).
3. Keep in touch with potential investors
If someone tells you no, that doesn't necessarily mean they never want to see you/speak to you again (though if you flip out at them they most definitely will never want to speak to you again). Sometimes an idea is not at the right stage for an investor (too early or late stage). Make an effort to keep in touch with investors you like - they might have passed on your current deal, but could very well be interested in the next one.
Persevering in the face of rejection requires a unique mix of confidence and modesty. You should be confident enough to believe that a pass from an investor doesn't mean your idea is dead, but modest enough to ask for feedback and know that you are not the only person who really "knows" the business. If you work on making the most of rejections, you'll soon notice that hearing a "no" might actually be beneficial.
For more on dealing with rejection - Y-Combinator founder Paul Graham's piece from Aug. 2008 has some great advice as well: http://www.paulgraham.com/fundraising.html.
This column is part of Amanda Peyton's "Bank It: Ca$h For Your Ideas" series about how to be successful in business plan competitions and the fundraising process in general. Amanda is an MBA student at MIT Sloan and one of the lead organizers for the MIT $100K Business Plan Competition. She is also on the executive committee for Sloan Entrepreneurs for International Development (SEID).
FrontlineSMS:Medic and The Extraordinaries Win Big at NetSquared
Published May 28, 2009 @ 11:16AM PT
First and second prize-winning teams from n2y4: 2nd place project: The Extraordinaries: Mr. Mystery, Ben Rigby, Jacob Colker / 1st place project: FrontlineSMS: Medic - Isaac Holeman, Alex Harsha, Dieterich Law (photo from elstudio)
NetSquared's annual spring conference has become the go-to place to discover innovative social change technology products. Each year, they sponsor a project challenge that gives social tech innovators - usually grouped around some theme - the chance to win cash prizes, mobilize peers, and get great advice. Last year's big winners at the "mapping" themed challenge were crisis info crodwsourcers Ushahidi. While I wasn't able to attend this year, it was clear even from afar that it was all about FrontlineSMS:Medic. The scrappy team of big thinking undergrads, hacks of Ken Banks' FrontlineSMS software in tow, pitched their way to $45,000 in total prizes. They won first place in the Mobile Challenge, where the placement is determined by attendee voting, first place in the Microsoft Mobile Challenge, and were one of five winners of the French American Charitable Trust (FACT) Social Justice Award. FrontlineSMS:Medic will use that money to scale up their model of using mobile phones and simple coordination software to help rural clinics provide higher quality and more comprehensive home health care with lower travel costs.
Also rocking the casbah were on-demand mobile volunteer shop The Extraordinaries. I've been so excited to see how persistent these guys have been, how much more developed their ideas have become, and how much traction they've started to get. For my money, they're doing some of the best thinking about how to find and supply small, meaningful tasks to people who want to contribute. I love their screenshot with resume review. I would review 20 resumes a day. The Extraordinaries won second prize in the Mobile Challenge and were also awarded with a FACT Social Justice Award.
For anyone looking to fund innovative new projects or just looking for a does of inspiration, it's worth checking out the whole list of featured projects. This year's featured projects may be next year's winners (just ask The Extraordinaries). Congrats to all who participated and NetSquared for another great conference. FrontlineSMS: Medic describing their project:
The Extraordinaries:
The Limits of Online Fundraising Contests
Published May 27, 2009 @ 10:17AM PT
Stacey from Epic Change wrote an important piece yesterday about how vote-driven online competitions select against international social innovators and give Americans and Europeans one more advantage. I think she's right on, but I think it's important to parse a few things out.
1. Contests are PR and a context for asking for things. Don't get me wrong, I think online contests can be great if done well - we do one each year with Global Giving for the Global Engagement Summit. But they are largely about PR and marketing. The quid pro quo of an online contest is that you (the social innovator) have an excuse to mobilize your communities of stakeholders and ask for things, and in return, the action platform gets more traffic and eyeballs which could result in advertising, larger user bases, media and publicity that send more traffic, etc. I don't think this is cynical at all; people need reasons to act and contests are a great context for trying to inspire buy-in for both the project and the platform.
2. Contests are not rewards for quality social impact. Let's be clear and up front about this one; contests do not reward quality or quantity of social impact, they reward capacity for mobilization. To the extent that people are willing to be mobilized because of quality of social impact, there's a correlation, but by no means is quality a prerequisite. To hold our own feet to the fire a little bit, a lot of the young organizations who win contests frankly don't have the history or infrastructure to have collected lots of robust data about their impact, anyway, so we should be careful about being hypocritical with this critique.
3. Contests have taken on the significance they have because the cost-reward calculus is more clear than other forms of nonprofit fundraising. There is a more or less direct relationship between how hard you work and how likely to succeed you are in an online contest that requires mobilization. If you spend 18 hours a day emailing, you're likely to have more votes than the person who spends 8 hours a day emailing. Compare this to the largely opaque waiting game that is institutional funding. Often for small groups starting up, all they have is their communities of friends and family, and so this takes on the role of bridge or seed funding.
4. (Most) contests are not trying to solve the problem of seed funding for international innovators; not are they trying to solve the problem of internet access. The reality is that contests are designed to get lots of people to do a specific thing in order to increase traffic. This is different from setting out to solve the problem of seed funding for international innovators, which is a deep and profound problem. Now if someone was setting out to solve that problem with a contest, I think that the current constraints would most definitely make that a tough proposition. Even with that said, I think it would be a fair counter argument for someone like GlobalGiving to say that they *are* trying to solve that problem and that contests increase traffic which, overall, makes it easier to solve that problem.
5. Hopefully, contests (and even the current generation of action platforms) are the early indications of a changing social good funding ecosystem. One of the major motivations behind this blog is to see how the ecosystem for supporting and doing good is changing. Contests to me seem to be one exciting element of that, but they should be viewed in that larger context. There are conversations happening around the world about social stock exchanges, new forms of partnerships between non and for-profit orgs, and there are even folks explicitly focused on growing the social capital market. We should keep asking tough questions, but recognize that it won't be every organizations job to answer all of them.
Update: Looking back, I wanted to give a little bit more space to the question of whether contests, as they currently exist, select against international participants. The short answer is yes. We had students in Tanzania, Romania, Ukraine, and a number of other places participating in our Project Challenge this year. The contest was structured so that both amount of money raised and number of donations mattered. But for our international students, credit card processed donations weren't often an option, and so while they had people willing to give them cash, these individuals weren't added to their totals. This is a major problem and something we're working to update for next year; although how we'll do that we haven't figured out yet.
