Aussie Startups Creating Social Impact in 2018

Startups are diligently working on long-entrenched social and environmental problems. But don’t call them social enterprise, writes Will Dayble, the founder of the Fitzroy Academy.

It’s no secret that startups globally are paying lip service, and increasingly real attention, to their impact. Old boundary lines are crumbling, the language is shifting, and impact is being scaled up dramatically.

Trends, technology and cash

Startup leaders in Australia aren’t far behind global social impact trends, from Melbourne’s darlings YourGrocer’s recent $1.3 million raise with Tank Stream, to Sydney’s Chuffed $1.1 million with Blackbird, and Queensland’s Safety Culture’s meteoric rise and $23 million Series B round.

Startmate — Australia’s most esteemed startup accelerator — announced its first ever social enterprise late last year in contemporary urban housing non-profit: Nightingale.

If we zoom out the numbers get big fast, with larger institutional early adopters like NAB and HESTA hot on the heels of pioneering impact investors.

At the big end of town, BlackRock CEO’s $6T demand for “a positive contribution to society” has made investors worldwide sit up in their nice leather chairs and take notice.

A rose by any other name

Startup founders I spoke to are happy to self-identify as putting purpose before profit in private, but are less willing in public. The fear reportedly lies mostly in potential harm to fundraising activities, or an undermining of the seriousness of their technical innovation.

Many are sidestepping the debate entirely.

Chuffed’s CEO, Prashan Paramanathan calls this growing business class “shadow social enterprise”, and they’re quietly building huge value and impact.

“Look at all the startups over in the Cicada Innovations portfolio doing technically proficient, scaleable work without going anywhere near the label ‘social enterprise’,” says Paramanathan.

“Health, bio, education and agritech are growing, popular, and finding capital. They create impact, but none of these companies are social enterprises.”

Startups are diligently working on long-entrenched social and environmental problems. But don’t call them social enterprise.

Definitions be damned

Startups are implementing much of the intent and mindset of the third sector, while consciously eschewing its legal structures and nomenclature.

Startup founders — notorious for their trajectory obsessions and 16-hour work days — don’t seem to have time for definitional debates. At the same time they’re thinking much more broadly about stakeholders, beneficiaries and the longer term ramifications of their work.

Kate Cornick, LaunchVic CEO says: “We’re seeing start-ups entering our programs with a clear social impact focus, but they’re not trying to seperate impact from their other activities, and they benefit from the same mentoring sessions, founder education and support that our other startups do.”

Abena Ofori, Social Impact Manager at MAP spoke about a recent cohort at their pre-accelerator, Social Velocity: “Very few of our impact focused startups refer to themselves as social enterprises. We’ve noticed that the entire cohort of founders (whether for profit or for purpose) is sensitive to their potential impact, whether positive or negative.

“They’re not calling themselves social enterprises, the language isn’t there, but there’s a change in intent, mindset and appetite.”

The road to good intentions

And while this theme seems solid amongst many in the startup world, there still seems to be a lack of true collaboration with the social sector.

Ofori says this may be the result of a lack of interaction and expertise-sharing with the for-purpose sector: “[Our startups are] not sure who to talk to for advice. There aren’t that many people putting their hands up to help startups who identify as purely commercial. Potential mentors, peak bodies and support mechanisms can be very explicit about only providing help to their particular definition of social enterprise or impact.”

Cornick echoes this sentiment, but from the other direction: “There’s a whole sector around social enterprise. Social procurement is important. For example, the catering we use for all LaunchVic events comes from social enterprises and we supported Social Traders in our first round of funding.

“But on the whole, because the Victorian government has a specific social enterprise strategy with funding attached to this, our focus on this particular sector tends not to be as explicit.”

The actual actions, results and impact of said government social enterprise strategy will be the focus of another article in this series.

Collaboration or stalemate?

From what I can discern, both sides of the social impact / startup debate are happy to collaborate, as long as it’s done on their terms.

Whether it’s a language, business model, or fundamental mindset difference, the schism may not be as easy to close as some would hope.

As less daintily put by one understandably anonymous startup CEO I interviewed, with deep roots in the not-for-profit sector: “[Aussie startups] just get the work done. They don’t suffer the rhetoric because there’s a bunch of wankers in the social enterprise sector who make a living defining social enterprise. You can quote me on that.”

All considered, startups are trending towards designing for lasting impact, and it’s a wonderful shift. With unilateral support and fewer small kingdoms, our hometown trickle could swell to a purposeful flood.

As Dan Madhavan, newly appointed CEO at Impact Investment Group, describes the growth of new-school social enterprise: “We’re one punch into a 10 round bout. We’re barely getting started.”

About the author: Will Dayble is a teacher, and founder of the Fitzroy Academy, an online social impact school. The academy works with students and educators to teach people about entrepreneurship and social impact. Will is at once a loyal supporter and fierce critic of of both the startup and impact ecosystems.

This is the first in a regular series of articles for Pro Bono News exploring impact, education and startups. Please do reach out with advice, commentary, criticism or ideas: will@fitzroyacademy.com.