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NYC BigApps Big Build Mentor Session - Is my civic app for profit or non profit?
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NYC BIGAPPS!what am i?!
for profit, non profit, or something else?!!
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jen van der Meer!@jenvandermeer!
jenvandermeer.org
@jenvandermeer
BIGAPPS 2014
• Choose your own adventure: solve a civic challenge, improve the lives of New Yorkers.
• Solve a Big Idea challenge: how tech can make NYC a better place to Live, Work, Learn, or Play.
• AKA, do good.
Idea Team App Money
questions for hackfest/competition entrants:• Is my app a business?
• Am I a for-profit or non-profit?
• Am I a consultancy or a product company?
• How do I start a business but keep my vision intact?
• Am I scalable or is scalability going to kill my dreams?
• What am I? Do I quit my day job? How many months till I can pay rent?
agenda
• For vs. Not for Profit
• For profit
• Non profit
• Get out of the building
for profit, non profit, or something else?
you used to have to pick a lane
Non profit Do good
For profit Make money
“The social responsibility of corporations is to increase profits.” - Milton Friedman, 1970
now it’s a paradox of choiceS Corp
LLC
C Corp
B Corp
Coop
Social Enterprise
Social Impact
501 (c) 3
501 (c) 4
501 (c) 7
501 (c) 9
Social Business
you no longer have to choose
Non profit with sustainable revenues
For profit out to change the world
key differences
Non profit • Defined to fulfill a mission • Tax exempt • Does not retain profits • Does not distribute ownership • Assets belong to organization • *Cannot use funds other than for the
mission for which it was formed
For profit • Pays taxes on profit • Can distribute ownership to
employees and investors • Assets belong to the owners • *Can have a capital exit, benefitting
the owners of the company !!
both require money (and love) to sustain and grow
Non profit with sustainable revenues
Fon profit out to change the world
for profit
for profit funding sources
SBIR Grant
Growth Capital
Friends+Family
Angel
Seed
Series B, C, D…
Public Company Bootstrapped
Self Sustained
Acquisition
Corp VC
Acquihire
Government Grants
Crowdfunded
IPO
are you a startup, or a scalable startup?• “A startup is a human institution designed to deliver a new product or service under
conditions of extreme uncertainty.” – Eric Ries
• “A startup is a company designed to grow fast.” –Paul Graham. Y Combinator.
• For a company to grow big, it has to make something a lot of people want. To reach and serve all of those people.
• “A startup is a temporary organization designed formed to search for a scalable repeatable business model.” – Steve Blank. !
• Most startups change their business model multiple times.
• A scalable startup is a special class of startup – world class team, large vision, large target market, passionate belief and a reality distortion field.
http://www.venturegiant.com/news-channel-396-when-should-an-entrepreneur-start-looking-for-investors.aspx
stages of investment capital requirements
Consulting 29%
Services: Other 17%
Technology: Internet
14%
Real Estate 14%
Service: Business Service
13%
Retail Store 13%
Source: Kauffman Foundation Legal Zoom Startup Environment Index 2012
not all new companies are growth startupsTypes of new companies formed 2012!
for profit hybrids• Social enterprise: social or environmental purpose,
may be willing to limit scale opportunities to meet more local goals, or directly serve the need.
• B-corps are a type of social enterprise that also agrees to transparently share financial results.
• Social businesses (Yunnus): for profits that re-invest to meet a social need.
• Social impact growth: aiming for scale and for social/environmental outcomes, and high growth returns to investors.
http://www.ssireview.org/articles/entry/in_search_of_the_hybrid_ideal
non profit
non profit funding sources
Membership
Foundation Grants
Government GrantsCorporate Giving
Services Revenue
Donations
Crowdfunding
Bequests
scale is all the rage in non profitsThe average founding year of the 10 largest U.S. nonprofits is 1903.
Not for profits are one of the US’s fastest growing sector, which grew 60 % to more than 1 MM organizations from 1999 to 2011.
How more recent organizations got big:
1. Developed funding in one concentrated source rather than across diverse sources
2. Found a funding source that was a natural match to their mission and beneficiaries
3. Built a professional organization and structure around this funding model.
http://www.bridgespan.org/Publications-and-Tools/Funding-Strategy/Why-More-Nonprofits-Are-Getting-Bigger.aspx#.U6RblY1dU7s
!
“The jury is out on whether scaling organizations will translate
into scaling impact. There is an emerging set of questions about
how such scale links to local community engagement, which may be the linchpin of lasting
social change.” !
-Bridgespan Group
where the money comes from
http://grantspace.org/Tools/Knowledge-Base/Funding-Resources/General/How-are-nonprofits-funded
i still don’t know which way to go what do I do first?
where to start: customer discovery• Lean startup, lean launchpad
• Form a hypothesis about how you will grow
• Define your total addressable market, or the size of your total addressable beneficiaries
• Business model canvas
• Validate your early hypotheses
• Test and learn
get out of the building
Get out of the buildinglisten
Get out of the buildingobserve
Get out of the buildingSolveask what they need
Thanks! !
@jenvandermeer
further questions
• To add to resources and tools, contact Jen van der Meer: @jenvandermeer
• www.jenvandermeer.org
• jd1159 at nyu dot edu