Moving the Needle with Purpose-Driven Innovation

Social impact startups are not a new thing. Long before it was mainstream, I have been lucky enough to work with social entrepreneurs with a focus on impact. 6 years or so leading an innovation department on a university campus full of amazing GenY founders at the time probably increased the odds of that happening, and during the years 2013/14 I met three very different and amazing founders with social impact startups.

One of the first was US national, Prashant Mehta who introduced me to Conscious Step, an e-commerce brand that both sourced and manufactured products ethically plus also directed a portion of profit towards particular charities and causes blatantly aligned with a selection of the United Nations SDG’s. Next a very young Brad Lorge introduced me to his company Foodbank Local, that essentially is a logistics software company that had entered the market with goals to minimize food waste and early on partnered with a large supermarket chain, helping to move potentially wasted food to hungry people in need. Soon after I met Prashan Paramanathan, who introduced me to Chuffed.org, the first social impact crowdfunding platform I had encountered in Australia and the first social impact startup to secure mainstream Venture Capital in that market.

My role at the time was to provide coaching and to connect young entrepreneurs with people, resources and opportunities. The truth is, I did as much learning (or more) than anyone, and I specifically remember feeling impressed and privileged to be associated with – let to be alone able to support people and companies like this.

Some of the interesting things I learnt were in regards to the misconceptions about social impact startups and the motivations of their founders. I recall Prashant explaining;

“As for misconceptions, one of the biggest misconceptions among social entrepreneurs is that there social mission will be its primary driver. The truth is your product has to be superior to the rest of the market, offer competitive advantages, and a social mission and presence is the cherry on top. Mission driven companies, whether startups or major corporation are becoming more and more common, and almost now an expectation with increased awareness of the many issues around the world.”

Brad from Foodbank Local agreed;

“Identity crisis is a challenge, and knowing the difference between good and bad ideas and practice. A misconception is that you need to give up on growth of investment because a social startup has a social objective. Social startups with the right business acumen grow faster, have stronger support and break through barriers better than any other.”

Another observation was that, if combined with corporate resources, rigor and strategy, the potential for social impact is very likely to significantly increase. Prashan from Chuffed.org made two great points on this matter at the time;

“1. Social entrepreneurs not focusing enough attention on whether there’s a commercially-viable business case behind their venture. There’s not enough focus on delivering a great product or service for your customer, which manifests in several ways including: directly copying businesses from the commercial sector and assuming they’ll work for the non-profit sector; focusing too much on servicing a beneficiary, instead of a customer; or assuming that being a ‘social enterprise’ gives them slack in the market on delivering an excellent product.

2. As a social sector, we need to do a better job of attracting smart startup brains from the commercial startup sector. There is a very large bank of knowledge on how to run a startup well which needs to be imported into the social enterprise scene. I think we confound these startup skills with general ‘commercial’ skills and seek them out from experienced corporate types – this isn’t the best place to get them.”

Now we are 6 or 7 years on, these three startups are still going strong (although Foodbank Local has pivoted and is now known as Premonition.io) and social impact startups have become more mainstream. Some of you may know about 12 months ago I made a big move to Japan to lead Rainmaking Innovation Japan, a company I was drawn to – in part – for its genuine commitment to social impact. At Rainmaking, we have been studying impact ventures closely, for example via our joint report of Nordic social startups conducted with the Danske Bank which unveiled these insights;

? The business acumen of Nordic impact founders were impressive - 46% of them having prior entrepreneurial experience. Many also taking their prior experience of founding growth startups to the impact scene. 

? The majority of Nordic impacts are addressing SDG 12 Responsible consumption and production contributing to closing the gap of some of the lowest SDG scores of the Nordic countries tied to our high consumption patterns. 

? It is not entirely on startups themselves to measure their impact - focusing on the big picture should be their priority. Investors should do the hard work of designing impact metrics.

? Impact startups are going mainstream. More and more impact startups are acting like regular growth startups - and we foresee a future, where this horizontal category will be embedded in verticals and impact will be a mandatory license to operate.  

So how can we combine a well-resourced, strategic corporate approach with the energy, innovation and passion found in social impact startups like these?

And now for the really exciting part.

The intersection of innovation and the UN Sustainable Development Goals is more relevant than ever.

That’s why we have developed a comprehensive and interactive SDG Compass with 2000+ startups who are unleashing innovation to address the 17 SDG’s. The Compass is for impact-driven leaders, sustainability strategists and people who want to unleash entrepreneurship and innovation to make a positive impact on the world.

And we are making the data available for free! See the full interactive SDG Compass here https://rainmaking.io/impact/compass-impact-sustainability/

If you are part of a Japan based corporation looking to be more strategic about innovation with impact, do let me know!

Sources:

Quotes within this article from Conscious Step, Chuffed.org and Foodbank Local representatives were originally published in this article I wrote for Smart Company, “Get Rich or Save the World Trying”.