The crowdfunding concept really seems to be taking off, especially with what Kickstarter has done to help fans fund creative projects. Now a startup called 33needs is bringing a similar approach to funding for-profit startups that want to tackle big, global issues.
Founder and chief executive Josh Tetrick said that the company comes from his experience working for “a venture capital-like initiative” for the United Nations in Kenya while he was a law student. During that time, he said he met “hundreds of entrepreneurs” who had great ideas and valuable experience but didn’t have access to capital.
“We are the only platform that enables ordinary people to invest, make a social impact, and earn a return,” Tetrick said.
The company whose model comes closest to 33needs’ is probably profounder, a startup led by Kiva cofounder Jessica Jackley that launched in November and also offers a crowdfunding approach to small businesses and startups. Both services reward their investors with a share of the revenue from their companies. Asked about how 33needs differentiates itself, Tetrick pointed to 33needs’ emphasis in companies with a social or environmental mission, and the fact that it allows investors to participate in the potential “upside” from their investments.
More than 895 entrepreneurs and nearly 1,000 potential investors have already signed up to participate in 33needs. Tetrick said his hope is to fund at least 30 startups in the next 60 days. Startup categories include “the planet”, education, community, health, opportunity, and sustainable food.
33needs is self-funded.
Update: There’s been some discussion about the accuracy of how Tetrick (and I) characterize the comparison between 33needs and Profounder. I’m afraid this is going to get a pretty finicky, but I think it’s important for folks who want to understand how the two companies differ (and what I got wrong).
First, here’s a statement from Profounder in response to the initial story:
We have always provided our investors with financial return, contrary to the statement from Josh. They are not the only company that enables ordinary people to (invest), make a social impact, and earn a return — we have been doing that for entrepreneurs and investors successfully for the last few months.
I had an instant message conversation with Tetrick clarifying the points he made. First, he noted that in his initial email to me, he said that 33needs is the only service that limits investments to “social enterprises”, not that 33needs is the only service that allows you to invest in social enterprises at all. So I paraphrased him incorrectly, and I apologize.
Tetrick also elaborated on his argument about 33needs allowing users to participate in the “upside”, in other words, to make money beyond their initial investment. He said that in Profounder’s “public” investment option, any return beyond your initial investment is donated to a nonprofit of the businesses’ choice. However, Profounder said it has actually eliminated that option, so it only offers “private” investments. Those deals involve a limited number of investors and offer the upside that Tetrick is talking about.
Now, it looks like Profounder would still disagree with Tetrick’s characterization of his company (“the only platform that enables ordinary people to invest, make a social impact, and earn a return”) but hopefully that clears up some of the facts. (And Tetrick said he’d rephrase it now: “33needs is the only platform that enables thousands of ordinary people to invest in one startup, make a social impact, and potentially earn a return.”)
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