When I think of venture capital funding, immediately I think of for profit. Venture capitalists invest and in exchange expect monetary measured returns. Therefore, they are highly geared towards for profit. But what about the nonprofit sector? I suppose that the only type of funding nonprofit startups have is through grants and private donations. I haven't experienced any VCs investing in nonprofit organizations (perhaps I'm wrong?). I wondered this, took my question to google, and stumbled across some cool things.
craigslistfoundation.org
Designed for helping people help, they offer a nonprofit “boot camp” to help emerging nonprofit leaders (I really want to go to the one in NY, but if not, then for sure the one in SF in October) and provide online podcasts and notes from those boot camps. They're Project Entry Point does a really good job highlighting the problem areas in the nonprofit sector, primarily having no central gathering place to fulfill their needs (after spending hours in the past googling on nonprofit issues, I can attest to that) and reveals plans to become that hub. If successful (based off of craigslist.com this looks to be promising) this can be the place where nonprofit startups can come to find non traditional funding opportunities.
Social Entrepreneurship
"In the face of this new reality, an increasing number of forward-looking nonprofits are beginning to appreciate the increased revenue, focus and effectiveness that can come from adopting "for profit" business approaches. Increasingly, they are reinventing themselves as social entrepreneurs, combining "the passion of a social mission with an image of business-like discipline, innovation, and determination."
-- From "The Meaning of Social Entrepreneurship" by J. Gregory Dees.
I have plans to start my own nonprofit and to fund it through traditional means like grants and private donations, but this type of hybrid is becoming increasingly attractive. Which brings me to...
Echoing Green
Echoing Green is a VC for social entrepreneurs. However they seem to differ quite starkly in their application and development processes. When viewing Y Combinator and TechStars, the initial application is just a page, no business plan needed or wanted. With Echoing Green, the application consists of short and long essays, a resume, budget, analysis, and references. The tone seems to be much more serious and the competition stiff. And while both Y Combinator and TechStars very clearly explained how much community and consultant support recipients would receive, it wasn't that clear for Echoing Green. Recipients for Echoing Green, however, seemed to receive more seed money (up to $90,000) versus Y Combinator (rarely over $20,000) and TechStars (up to $15,000). And although Echoing Green showcased their fellows more, I got a more supportive vibe from Y Combinator and TechStars. This is probably due to the type of people they are trying to attract and want to have apply.
And the Recap: Worried about VC seed money for your “greater good” idea? No worries, there are “Echoing Greens” out there.
2 comments:
I was also googling this topic(which is how I found your blog.) That's interesting that you compare Echoing Green to Y Combinator and TechStars. Looks to me like the they are all open to potentially far out ideas, and its a shame their aren't more like it. At least I couldn't find more "Echoing Greens" out there.
I'm also curios about your non-profit idea. Can you give away any hints as to what it's about?
peter, you bring up a good point. and i'll be exploring more of the social entrepreneurship business model to see who exactly are funding these companies. a straightforward google search will bring you to the calvert foundation and skoll foundation.
as for non-profit ideas, i tend to lean toward providing education scholarships and technology equipment for underserved schools. it will be interesting to see how online communities can be built around these concepts.
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