Today’s Idea: A Social Enterprise YCombinator in New York City

Economics,New York City,Politics — Zac Townsend @ January 26, 2011 11:48 pm

My idea is to use the best elements of YCombinator as a model for funding social enterprises in New York City. I want to create a non-profit which uses a cohort or batch model to fund social enterprises. This NFP would give the fellows start up capital, weekly dinners with relevant experts, and the social support and pressure of other fellows.

Ultimately, the goal is to create many more long-lasting social enterprises addressing the City's problems. In some ways, like YCombinator or Techstars we would serve as a screening mechanism, by which philanthropists and Foundations might feel more comfortable investing if someone went through the program. But, more importantly, we would support founders in their journey toward doing both good and well. By creating an environment where experts and support can be provided to a group at once, where social entrepreneurs in the City know and reenforce each other, we can make the City a more just, equitable and fair place.

To steal Ashoka’s definition of a social entrepreneur, I mean people that “individuals with innovative solutions to society’s most pressing social problems. They are ambitious and persistent, tackling major social issues and offering new ideas for wide-scale change.” There are a ton of places to support the next big web applications, but not enough places supporting the next crop of social enterprises, more importantly, by using YC's model of funding in batches, with everyone in New York City, we get economies of scale and support that Echoing Green or Ashoka don't see.

Exemplars to look to in the City might include Geffeory Canada from Harlem Children’s Zone and Elisabeth Mason at SingleStop USA. Although the latter is now a national organization, it began with a New York focus, something we would demand of our companies. This way we can create an experience and support network which is topical, focused and relevant.

So, let’s say twenty start-ups a year. They get 100k over two years, health insurance and a great deal of technical assistance in everything from financial analysis to local politics. The twenty of them are pulled together once a week for dinner where some expert on social entrepreneurship or the City speaks for the first six month. Like others, we invest in passionate people with good ideas. We can provide the access to funders, the critical eye to improve ideas, and a lot of expertise, but we cannot replace the single-minded, driven, crazed founder who wants to make a difference. If you are not incorporated, we will pay your legal fees (or someone will do it pro bono), and for 501(c)3, we would serve as a tax-free pass through. The only requirements are that you have to be in New York City, you have to have a social purpose, and you have to be less than two years old. For companies that are non-profit we expect to be paid back within 10 years (that is, its more a loan than anything else), if they are for-profit we expect 3-5% equity like a seed-stage fund. The ultimate goal is that after some infusion of cash into the social incubator (as an NFP/Foundation), that it would be self-sustaining in the long-term.

We also want to support the people selected for the fellowship in making connections among themselves (ultimately making a alumni base that will support one another), as well as the people and institutions in New York. We want to create a central hub by which institutional and individual relationships are built and maintained on behalf of the Fellowship and its future members, so that fellows have a network of experts in the social entrepreneurship, not-for-profit, political, academic, and economics development communities to draw on.

There is one organization in the City that does work similar to this, the Blue Ridge Foundation, who give cash grants and a high level of direct engagement from Foundation staff. Fundamentally the difference is that they have ten NFPs in their current portfolio and six alumni, where this NFP or Foundation, ideally a public/private partnership, will support twice that many social enterprises each year.

To sum up: I think the most impactful thing we can do is 1) Give the entrepreneurs breathing room to work on their idea 2) Provide them technical assistance and our experts 3) Help them with fundraising, in a sense we are their board until they get one, although we wouldn't necessarily want a spot on their board and we make connections to donors and last 4) We could provide institutional access, that is, ideally we would have relationships in the City, so if they wanted to work on schools we could help them with DOE, they wanted to work with children, we could help them with ACS, etc. That is, social enterprise is more inherently political than other companies.

1 Comment

  1. Interesting idea. TerezaN's XX Combinator would probably be a better model --

    Comment by jdp23 — January 27, 2011 @ 1:19 am

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