Strengthening Ecosystems for Social Entrepreneurs
The Pieces Your City Needs to Support Mission-Driven Startups
I spent a good year visiting social enterprise support organizations such as incubators, accelerators, summer schools and universities in Northern and Western Europe, Australia, and parts of the United States. I spoke to more than 50 of such organizations to understand their programming, Alumni and mentor engagement, business models, approach to impact assessment and so on (learn more about Social Venturers).
Whenever I have a chance to travel to a new place, I scan their social enterprise landscape looking for interesting support organizations to talk to. After a year on the road and lots of conversations about how to best empower social entrepreneurs, one of my key take-aways was that the majority of large cities I visited had done a great job in putting in place a support infrastructure for social entrepreneurs from early to scaling-stage needs. Berlin, New York, London, Washington, D.C., and Melbourne don’t need another accelerator program for social entrepreneurs. Purpose-driven founders in these cities find the support they need. When we look at mid-tier cities like Richmond, Virginia, in the U.S., the picture is a different one.
What Makes a Supportive Ecosystem?
Having run Unreasonable Lab VA, a business model validation lab for social entrepreneurs, and in the planing process of running our next program for socially responsible business, I spend a lot of time trying to figure out how to strengthen the local ecosystem for social enterprise.
Halcyon Incubator in Washington, D.C., recently published a study according to which the best ecosystems for social entrepreneurs in any U.S. city provide four key elements:
- Funding (Seed funding, grants, venture capital)
- Quality of life (cost of living, transportation, arts and culture)
- Human Capital (access to mentors, team members, employees, and peer community) and
- Regulations and receptivity (regulatory environment, attitude and public discourse about social enterprise)
According to the study’s framework, the best cities for social entrepreneurs in the U.S. are:
- D.C.
- San Francisco
- Austin
- Boston
- Seattle
- New York
- Chicago
- Los Angeles
- Miami
New York, Los Angeles and Boston, for example, scored high in terms of funding thanks to their levels of venture capital investment and charitable giving. Austin came first in the area of quality of life thanks to good levels of transportation and low cost of living, followed by D.C. which scored high in terms of “energy of the city” through their lead in arts and culture. As far as human capital goes, large cities like San Francisco, Washington, D.C., Chicago and New York City lead the pack due to a high number of universities, volunteer engagement and access to nonprofits and foundations. Not surprisingly, Washington, D.C., also takes the lead in the area of regulations and receptivity since it is relatively easy to start a business there; it has created a lot of buzz around social enterprise through policy discussions, good press and raising awareness of social entrepreneurship.
I am not at all surprised that this ranking only features big cities. Of course the social enterprise ecosystem in D.C., Boston or New York City, are more advanced than in Richmond. After all, that’s where I go to conferences and speak to other support organizations. And that’s ok. We are not trying to be the next Austin (even though, disappointingly, it was the recent title of “Richmond Magazine”). What we can take away from these findings, however, are some ideas as to how to grow our ecosystem for social entrepreneurs.
Funding
Both in terms of charitable giving and venture capital, Central Virginia is a place to be. The Community Foundation, Robins Foundation, Richmond Memorial Health Foundation — the list is long — manage philanthropic dollars and New Richmond Ventures, CVA Angels, Blue Heron Capital — to name a few — bring investment capital to the table. As in many nascent social enterprise ecosystems, we need more bridge capital to navigate founders through the gap between their first funding round — often raised through friends and family — to a larger tranche. There is no doubt that we have capital in Richmond. The level of risk-aversion and a traditional investment mindset, however, keep those assets locked up and inaccessible, especially to early-stage founders. Working at the front end of the entrepreneurial pipeline, I would like to see funding that simply allows a social entrepreneurs to test an idea through experimentation by putting a low-fidelity MVP in front of potential customers. Organizations like Unltd’s in the UK fund experiments to speed up the learning process during customer validation. Great local starting points include Feast RVA, the Robins Foundation’s Innovation Grant, Kiva microfunds, Loanspot, and VCU offering student entrepreneurs a small fund to give it a go.
Quality of Life
Cost of living and transportation in Richmond are adequate. GRTC is planning more major bus lines, the city is slowly becoming more bike-friendly. It may not be perfect, but it’s possible to get around. Culture and Arts my be our strongest suits. Not a summer weekend that has less than three incredible events or festivals or markets lined up. We have an incredibly creative community, not least thanks to VCU’s Brancenter, the Martin Agency, numerous galleries, lots of street art and international movements like Creative Mornings gaining foothold in Richmond. Besides, living in Richmond is still fairly affordable.
Human Capital
Virginia Commonwealth University, University of Richmond, Virginia Tech, Union and State University — these schools power our human capital, and that’s not even looking an hour outside of Richmond to University of Virginia in Charlottesville or William & Mary in Williamsburg. Beyond academic institutions, Richmond is home to over 30,000 nonprofits and larger foundations that are beginning to show an interest in social entrepreneurship. An increasing number of universities are integrating entrepreneurship as a discipline across schools. Social entrepreneurs in Richmond, VA, should not have too much trouble finding qualified and dedicated mentors, team members, employees and peers. We can definitely do a better job in making these connections and giving students even more and easier access to the world of (social) entrepreneurship.
Regulations and Receptivity
Regulations and receptivity are trickier to assess and manage. Having the Benefit Corporation legal form is certainly helpful for for-profit social entrepreneurs. As far as I know, registering as a 501(c)3 with tax exempt status takes about as long as everywhere else. If we ask ourselves “How hard is it to start a business in your city?” resources like Virginia Business One Stop, Virginia Sourcelink and a number of local support organizations come to mind: RVA Works, BizWorks Enterprise Center, Virginia Biotech Research Park, Dominion Resources Innovation Center, Thrive (at the Small Business Development Center), UnBoundRVA, SCORE, Lighthouse Labs (for a full list click here), and many more.
While social entrepreneurship is not a big topic in Richmond (yet), the city has a strong community of Benefit and B Corps — the idea of using business as a force for good is not new and is a strong indicator for receptivity of mission-driven business in the area. What we can and should focus on is raising the profile of entrepreneurs who want to create social change by using innovative approaches to business.
Where Does This Leave Us?
This is a first assessment. I will be talking to local founders and get a better sense of how these factors impact their ability to launch and run purpose-driven companies (I feel a podcast coming… anyone?). Generally speaking, however, I am positive about where Richmond stands measured against these four indicators of a healthy and flourishing ecosystem that has the potential to help (social) entrepreneurs flourish. What we need to figure out now is how bring all actors from the East to the West End to the table to ensure we are building not only a flourishing but diverse and inclusive ecosystem.
B the Change gathers and shares the voices from within the movement of people using business as a force for good and the community of certified B Corporations. The opinions expressed do not necessarily reflect those of the nonprofit B Lab.
