For those of us who believe in the social enterprise model, last Wednesday was a great day.
Impact Engine held its first Investor Day at Chase Auditorium, and Chicago’s first social enterprise incubator did not disappoint. All seven startups in their inaugural cohort gave pitches that were clear, concise and creative, demonstrating equal parts social consciousness and business smarts. Together, they proved profit-driven innovation can create solutions to some of the world’s most dire problems.
If I had a billion dollars, I’d fund them all.
Being somewhat less flush, I decided to evaluate each pitch on two completely subjective and not entirely-unrelated criteria: awesomeness and fundability.
Awesomeness takes into account all the “wow factors”—presentation, innovation (in concept, business model, and marketing channels), and social impact. The higher the awesomeness rating, the more likely I would be to make the company my prime example if I were describing the social enterprise model to a stranger.
Fundability is a coldhearted guess at the likelihood of the company attracting investors on a strictly financial basis. I should note that I am not a venture investor, and have never worked for one. Hell, I never even went to business school. But I have worked for a startup rejected by funders, and I did trade options full-time for 16 years, so I have some insight into how high-stakes investors think.
Ratings are from 0 to 10, with 0 equaling the worst pitch I’ve ever seen and 10 the best.
Awesomeness 8, Fundability 7
Identifying feminine hygiene as a barrier to women’s education and employment in rural India is brilliant, from both a social impact and a money-making perspective. It’s astonishing that something as simple as a sanitary pad can change so many lives, and this insight creates a market of 300 million potential customers for a product that costs pennies to manufacture. If I’m an investor I might be troubled by the time, difficulty, and expense required to ramp up a sales network of rural Indian women, but fortunes have been made building loyalty in markets that corporate giants couldn’t be bothered with.
Awesomeness 8, Fundability 8
Given the growing market for fair trade and similar goods, why haven’t American brands connected more with artisans in developing nations? In the best slide of the day, Founder Kathleen Wright explained: “Because it’s freaking hard.” But her company seems to have found a way, establishing a pipeline with niche brands and moving on to bigger names like J Crew. I only wish they’d come up with a better name for themselves. Their model is labor-intensive, but the goods they source are beautiful, their social impact is real and measurable, and their $600,000 in pre-funding revenues should impress any investor.
Awesomeness 7, Fundability 7
I liked the way founder Claire Tramm narrowed the focus of her pitch: from protecting the environment, to making homes more energy-efficient, to how her company enables homeowners to manage the improvements. The solution—a creative but complex-sounding model where investors earn a high yield on financing that’s repaid out of homeowners’ energy savings—might not be as sexy as a new energy-saving technology, but it could very well have a bigger impact. Equity investors might question the barriers to entry, but if debt investors warm to the idea, the revenues will flow like cheap electricity.
Awesomeness 9, Fundability 6
Ending “light poverty” in Africa is a great mission, their kinetic energy-storing pods are brilliant, and their presentation was lights out—literally, as the house lights went all the way down for founder Alan Hurt’s flash-lit entrance. Awesomeness abounds. How can you not love the idea of bike-taxi drivers gaining a second income as one-man power companies? My main concern is that they’ve set themselves a high bar for demonstrating scalability—selling a new technology through an untested distribution network, on a continent where instability and corruption challenge even the biggest corporations.
Awesomeness 7, Fundability 5
“Before you leave this room today,” founder George Page stated, “One thousand children will have died from causes related to unsafe drinking water.” That’s powerful, and Page made an excellent case for the utility of his company’s filtration container by wearing it comfortably strapped to his back throughout (he even wore it during the post-event reception, though I never got to ask whether it was full). No question NGOs will want it. But water treatment is a boom industry with players at every level. It might be hard to convince investors that the container is both simple enough to build cheaply and too advanced for competitors to replicate.
Awesomeness 6, Fundability 5
This is a cool idea—people offer up inexpensive goods and services in exchange for donations to charities of their choice.Co-founder Shayan Nahrvar cleverly described its appeal to non-profits as “holding a fundraising event every day of the year, without the hassle.” They certainly impressed billionaire Sir Richard Branson, who named Raise 5 the winner of his “Screw Business as Usual” contest. But I’ve seen a lot of similar models recently, and as an investor I’d question the upside of taking a cut from $5 donations. But who are you going to believe, me or Branson?
Awesomeness 5, Fundability 9
Compared to illuminating Africa or liberating 300 million women, ThinkCerca’s mission is a lot less sexy—a platform to help American educators teach critical thinking as part of the new Common Core State Standards (CCSS). It’s also complex, which might be why founder Eileen Murphy never quite explained what the platform actually does – one tangible example would have improved the pitch enormously. But if they’re first to market in helping school districts adapt to the CCSS, they’ll have the biggest bucket when $8.3 billion in implementation funds—government money, already earmarked—starts to rain down. Investors like that kind of thing.
So much for my opinions. With all the financial representatives in the crowd, I wouldn’t be surprised if a few of these startups prove me wrong (or right) in the next few weeks. I hope they do, because I want to write another great recap of Impact Engine’s second Investor Day next year.