Starting a business is tricky enough. Starting a business with a mission to improve the lives of millions or save the planet is even harder. So-called “social entrepreneurs” face bigger challenges than other company founders in converting their ideas into viable businesses. Investors are harder to find, and there are fewer established networks to provide support.
BGV supports entrepreneurs who want to use technology to change people’s lives for the better. Since 2011, it has backed 104 “tech-for-good” startups, investing £2 million ($2.7 million) in total in exchange for a 6% stake in each. “We are trying to demonstrate that investing in tech-for-good can be comparable in terms of return to investing in other early stage technology companies,” Ludlow said. Graduates of BGV’s accelerator program have raised £39 million ($52.6 million) from impact investors, mainstream venture capital funds and private foundations.
Finding the capital to achieve a viable scale is one of the biggest challenges for “impact businesses,” partly because the startup scene is so dispersed, according to Luni Libes, who set up Fledge in 2012 to help entrepreneurs with a mission as well as a profit motive. “There are fewer investors and they can be harder to find,” Libes said. “There is no equivalent of Silicon Valley for social good startups, there’s no one place where people are flooding to to start these types of ventures.” Fledge is headquartered in Seattle, but it also runs accelerator programs in Peru and Spain, and will expand to Canada and Italy in 2018.
So far, more than 80 startups from 22 countries have gone through Fledge’s accelerator program, which offers mentoring and entrepreneurship education, and prepares social enterprises to attract new investors.
Among its graduates is Evrnu, a startup that has developed a process to recycle cotton and partnered with Levis to develop recycled jeans. Fledge invests $15,000 to $20,000 in each of its “fledglings.” In return it gets a 6% stake in the company. So far it has invested $1.7 million. “We’re not investing for an exit, but for a share of future revenues,” Libes said. “Many of the companies I work with have no desire to sell or go public. They are driven by their mission, not dollars. They want to solve big problems.”