Here’s a depressing fact — most startups fail. That’s not just for web startups, but all startup businesses of any kind.
If you’re a do-gooder, it’s even harder.
Social good startups have the odds stacked against them. Most companies focus specifically on the bottom line, but social good startups are dealing with two measures of success: financial and social impact.
Why does doing good and doing well have to be so hard?
It may be challenging, but there have been many social good startups that have succeeded including prominent companies like Tom’s and Warby Parker. I started CauseVox, a nonprofit crowdfunding platform, with nothing more than a dream and now we have grown it to serving thousands of charities all over the world, including the American Red Cross.
Here’s what we learned that can help you launch your own social good startup.
Remember, you are creating a business
As a social good startup, you’re looking to make the world a better place. Helping people is fun and intrinsically rewarding, but you also need to find a scalable business model.
The first step in creating the right model is to ask:
- Who specifically am I helping?
- How big is that market?
- How much will it cost for them to buy my product or service?
The best way to answer these questions is to talk to and observe your potential customers every day. When we started, we booked dozens of calls and meetings with nonprofits every week. These insights will help you refine your product/service and become more useful.
Keep your day job (for now)
Most social good startups fail because they run out of time and money before they can find a scalable business model. To increase our runway, we kept our day jobs for as long as we could and worked on our startup after work.
In some cases, your employer can help grow your social good startup. Chances are there’s a program at your current employer that you can take advantage of. Look out for these common ones:
- Sabbaticals — A sabbatical is an extended leave of absence that allows you to pursue projects and passions. Consulting firms like McKinsey and Deloitte are well know for paid sabbaticals.
- Corporate Social Responsibility (CSR) Programs — These are formal programs at corporations that focus on doing good. It’s a great way to hone your idea and build a network while on the job.
- Volunteer Programs — More than 20 percent of employers pay their employees to volunteer. Why not use this as a way to meet potential customers for your social good startup?
If your current employer doesn’t have these programs, there’s nothing that you can’t do by hustling during nights, weekends, or your lunch break. Once you’re ready to take the leap, look into structured startup programs.
Apply to an accelerator program
Startup accelerator programs help speed along the early stage development of your social venture. Typically, you get mentorship, office space, and/or access to funding.
Since we’re a tech-based startup, we went through Founder Institute to prepare us for the startup world. You can also apply to the usual suspects like Y Combinator (funds startup nonprofits as well) and Techstars. The following accelerators are specifically focused on social good:
- Echoing Green (up to $90k plus stipends)
- Fledge ($17k in funding)
- GoodCompany Ventures (access to mentors and funders)
- ImpactEngine ($25k in funding)
- Praxis Labs (access to mentors and funders)
- Unreasonable Institute (access to mentors and funders)
Get out of your cave
There’s a saying that if you want to go fast, you go it alone, but if you want to go far, you go with friends. Finding people with a like-minded passion for social change is crucial for you to build a team and refine your idea.
We did that through StartingBloc, an institute for social ventures, but you can also immerse yourself in a social good coworking space. There are dozens out there; here are just a few:
- Center for Social Innovation (New York)
- Forge Portland (Portland)
- Green Spaces (Denver)
- Impact Hub (San Francisco)
- Propeller (New Orleans)
Find your funding
Whether it’s building a minimum viable product, testing your marketing strategy, or just surviving until your social good startup takes off, it takes capital. You can get funding in a few ways.
- Potential customers — Get your potential customers to fund you by charging upfront or by doing pre-sales. This can also help you test your pricing model and your true value-add. Paid consulting projects and contracts can also help fund your startup.
- Self-fund — This is how we did it at CauseVox. We slaved away on the day job and saved up our own money to start the venture. It takes longer to accumulate enough capital, but you get to keep 100 percent of your company.
- Friends and family — Rich uncle? Supportive parents? People that you’re connected to on Linkedin? These are the people who respect you and want to see you succeed. Organize a friends-and-family seed round or use a crowdfunding platform.
- Angels or VC – Angels are wealthy people that want to see new ideas flourish. Organizations like Investor Circle, Omidyar Network, and Kapor Capital are also funding opportunities once you have a concept ready to scale.
- Grants — Look for government or foundation grants (international as well) that are aligned with your mission. Typically this is better for startups with traction.
For more ideas on funding, check out this good (if a bit old) list.
Rob Wu is a founder at CauseVox, a crowdfunding platform for nonprofits and social good projects. Rob’s work has been recognized by the Mayor of Austin and featured in the NYTimes, CNN, Forbes, and WSJ.