“Go slow to go fast”: Seven new founders on how to better support social impact startups
Future of Good’s 2022 New Founders to Watch list highlights some of the most exciting social impact changemakers pushing for creative and effective solutions in today’s rapidly changing world. But carving out their own space in the social impact world wasn’t always easy for these new business owners.
A lack of early-stage funding, access to networks, mentorship, and professional support are just a few of the gaps that challenged these new founders in their journey to establish their organizations.
Many of these challenges are also what Nabeela Merchant, senior associate at the TELUS Pollinator Fund for Good, says they found as gaps within the social impact ecosystem before launching the fund. She adds that there is a misconception that social impact investing is concessionary, which amplifies the perceived risk of an impact startup, especially at an early stage. As a result, there’s a “dearth of funding at the early stages for social ventures to get to market validation,” says Merchant. “On the contrary, we believe there’s a great opportunity to do well by doing good. By addressing fundamental needs, we can create thriving, sustainable businesses.”
We asked new founders from our 2022 list how organizations with the capacity to support their startups can provide meaningful and holistic support. How might leaders in Canada’s social impact world contribute to a landscape that is nurturing for social impact startups? Here’s what they told us.
Build awareness around systematic exclusion
“There’s a lot of excitement for opportunities that address EDI (equity, diversity, and inclusion) opportunities but very little understanding around the issue of social equity,” says Danika Kelly who co-founded My Normative, a female health app. “These really significant opportunities exist because they’re harder to address and often require more investment, time, and thoughtfulness than other market opportunities.”
Investors need to start by understanding how founders who come from marginalized communities have been historically and systemically excluded, according to Kelly, adding that this is the first step in forming meaningful relationships.
“Education and training on the systemic and systematic exclusion of certain populations for key stakeholders in the start-up ecosystem will help future generations of innovators in the social purpose space more effectively create change…and [build] big market opportunities,” adds Kelly.
Dr. Golnaz Golnaraghi, founder of Accelerate Her Future, a career accelerator for women of colour, explains that it’s “essential for an impact investor to respect the founder as an equal partner, while working to help remove systemic barriers by providing access to their networks, asking great questions, and helping them think more broadly. The relationship must be transformational and humane as opposed to transactional and purely about metrics.”
Create mentorship opportunities for budding entrepreneurs
Mentorship is critical when it comes to new founders who are trying to navigate the often overwhelming situation of building a new venture. Samanta Krishnapillai, who founded the On Canada Project, an online platform that provides young Canadians with credible information about the COVID-19 pandemic, explains that she didn’t have any background in business prior and struggled in many areas when launching her own startup.
“I would have loved to better understand the actual technical details (legality, financial, scaling, etc.) around building [a social venture]. I was lucky [to find] incredible folks along the way, but I suspect this is something many non-traditional entrepreneurial types struggle with,” says Krishnapillai.
Merchant adds that there’s a real need to reduce barriers for new founders by not only connecting them to investors but other service providers and mentors as well, a significant gap TELUS is working to bridge through the Pollinator Fund.
Ashley Hill, founder and executive director of The PREP Academy, an organization that helps African Nova Scotian students prepare for college and university, agrees and cites her own experiences as a Black entrepreneur as an example. “I didn’t know where to go or how to get information to start a non-profit organization. I did a lot of my own research and was lucky to have amazing people and community organizations in my network who pointed me in the direction I needed. It took a lot of long nights, unanswered emails, cold calls, you name it.”
After understanding the difficulty of not having guidance, Hill wants to be a resource to other aspiring Black entrepreneurs who want to start their own business or non-profit.
Early-stage funding must be a priority to grow a startup
Many new founders from our 2022 list agree that they have difficulty gaining financial momentum at the starting point of their business or non-profit.
Scott Keesey, founder of DISCOVELO, a digital platform that helps students regulate their emotional and physical energy through exercise, says though the organization gained support and funds from family and friends who trust them and have lived experience with the problems they’re tackling, “fundraising at our current pre-seed stage is our biggest hurdle.”
“We also have a number of investors interested in our future seed round once we have some traction established, but we are struggling to find those medium-sized cheques to get us to the seed round as we establish our foothold in the market,” says Keesey. “We really need to get in front of impact investment opportunities earlier. And that’s our focus now, as most fundraising discussions lead to VC opportunities or investors who are waiting until the opportunity is de-risked further.”
Merchant points out that capital is the least available at the early stages, and providing it can help fill a significant market gap. “Funding at the early stage is critical in the impact sector, especially in the proof of concept stage.” The stakes are high: around 20 per cent of startups fail in their first year, and 60 per cent don’t make it past three years.
She adds that with the urgency of issues like income inequality and climate change, there is a growing need for more solutions. “Helping those companies grow sooner will allow them to have a bigger impact in addressing these challenges. It also encourages more people to build on ideas they might have.”
Founders need investors to trust their vision
When it comes to new startup ventures working towards innovative solutions, new founders say it’s hard to find impact investors who will genuinely understand their vision. In this situation, trust is key.
“Building relationships and having mutual understanding with mission-aligned investors is key,” says Jonah Chininga, founder of MICC, a social lending and credit building platform. “From my experience, the best approach is to connect with investors who have been in the same industry. They know the flaws, can provide mentorship,” and founders can ultimately apply their creativity and work ethic to bring the vision to life, he says.
“I think it is all about alignment,” says Karen Yip, founder of Choro, a platform that connects people with local helpers for everyday tasks. “Alignment of goals, mission, values, and direction. There has to be an overall strategic plan in place that everyone [on the team] is totally jazzed about!”
As the investment world is changing, Yip says investors cannot make decisions without considering the critical problems we are facing in society today. “If you can make shareholders happy in ways that everyone feels good, why not?”
Create space for patience
In the startup world, it can sometimes seem like overnight success is the pinnacle. But Kelly explained that while there can be a sense of urgency for new social ventures to solve problems fast, sustainable solutions take time. “In starting My Normative I’ve felt an immense pressure to succeed in solving the problem of female inclusion in tech quickly… but if it was an easy solve, it wouldn’t be the opportunity it is.”
“There is a reason your opportunity exists. There’s a hurdle other amazing people haven’t been able to overcome in their pursuit of change and impact — and it’s going to take a lot of resilience and persistence if you want to be the person who finally overcomes that hurdle,” says Kelly.
Merchant says startups addressing a problem with an impact lens need to ensure that their solution is effectively meeting the needs of their customers — which takes time, especially for novel solutions.
“In many cases this means that you have to go slow to go fast. Laying the groundwork is important and a growth at all costs mindset at the very start can be damaging, not only to a company’s eventual success but also to the communities they are trying to impact,” says Merchant.
For investors who want to contribute to this culture of patience, Merchant says this could look like being a trusted soundboard for founders in the early stages, and being open to bumps along the way or changing directions.
“Don’t let anyone make you feel bad about that journey or the length of time it takes you to get to where you want to be. It’s so much more important that you’re genuinely creating an opportunity that addresses what you know to be the complexities and realities of your target impact group,” says Kelly.
This article was written by Neha Chollangi, and was originally posted on futureofgood.co on March 28, 2022
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