There’s no doubt the startup economy is thriving with 660,000 new companies registered in the UK in 2018 – a 5.7 per cent increase on the previous year and a record high. Many startup businesses are built on a founders’ passion, and increasingly we’re seeing entrepreneurial businesses that have a clear, socially responsible purpose baked-in from the start.
Some, like hydrogen cell-fuelled car River Simple are explicit in their ambition to challenge the status quo and change the world for the better. Others, especially Direct to Consumer (DTC) brands like Harry’s or SMOL, have a more implicit approach – building competitive advantage by giving customers a better experience, at lower cost – by going direct.
Skating Panda has worked with both large corporates and non-profits for over a decade, using our knowledge and experience from one world to benefit the other. But the fastest growing area of our business is our work with startups. And the key question they ask is how do we retain our purpose, and passion for positive change as we scale, with the challenge that presents?
Purpose as a magnet for talent
The entrepreneurs that power the startup economy, purposeful or not, say their three biggest challenges are accessing funding, finding the right talent and delivering fast growth.
The first and last of these are obviously business critical. These are the things more likely to keep entrepreneurs awake at night than worrying about purpose…
But the second challenge – finding talent – is where a defined purpose with positive impact can help, by attracting people to a startup business. Many of the charities and NGOs that Skating Panda works with, and that used to be the natural career destination for people who want to ‘make a difference,’ tell us they are experiencing a brain-drain. The entrepreneurial economy is attracting Millennials like no other generation before – with tech, disruption and innovation being used as forces for good.
Protecting purpose as you scale
So how do you hang on to your original purpose and passion for positive change? How can you use it a magnet for talent, at the same time as scaling, becoming revenue positive and delivering the growth your investors want? These are Skating Panda’s key learnings – so far.
Think like an NGO
Yes, really do this. What societal issues does your innovation help to address – directly or indirectly? How can it accelerate change on the key global challenges today; sustainability, climate, gender equality, financial inclusion, ethical AI…? Asking and answering these questions, codifying your values, standing for something and creating a practical framework for your business to guide decision making and behaviours will enable you to be consistent as you scale, aligning profit with purpose – and attracting talent that shares your vision and values.
Fortunately, there are enablers in the start-up economy helping entrepreneurs to do this. Organisations like investment house The Craftory, the self-styled “home of challenger brands” who say ‘Trad VC is done. We are Cause Capital’. Or UnLtd who work with social entrepreneurs “to create a future where enterprising people are transforming our world for good.”
And there’s the Unreasonable Group who say they “back entrepreneurs positioned to bend history in the right direction.” They work with growth-stage entrepreneurs to solve the world’s “BFPs.” Unreasonable has 168 companies in their portfolio, and have raised $3.6bn to date but perhaps their most inspiring metric is the estimate of the 350m+ lives they have positively impacted to date as a result.
Act like a corporate
Not in terms of structure, hierarchy and culture, but in planning ahead for the long term and doing things today for the business you want to become tomorrow.
For example, a much-quoted quote from Sir John Hegarty, adland royalty and now advisor to startups through his incubator The Garage, is “don’t start a business, build a brand.”
Turning your idea into the brand you want to become in time helps in so many ways. In the short term, it can create consistency and distinctiveness and a strong platform on which to build fame for your innovation. In the longer term, it guides smart decision-making as you grow, weighing up short-term financial opportunities against the bigger, long-term goal.
Again, there is help available for purposeful start-ups that want to access the experience, thinking (and resources…) of the corporate world. For instance the Inclusive Economy Partnership, a Cabinet Office Initiative, is bringing together innovators and corporates to collaborate on three critical issues in the UK today, financial inclusion, mental health and transition to work for young people. Already their convening of industry, government and start-ups is bearing fruit. Since launching in 2018 the IEP has made 230 introductions between social innovators and corporate partners – with 100 of these introductions resulting in “high impact partnerships.”
Move like a start-up
Of course, this ought to be easy if you are a start-up but entrepreneurs should demand that their growth partners can do it too. Agencies, consultancies, suppliers and enablers like those highlighted above need to be as agile and adaptable as start-ups are. Entrepreneurs benefit from working with like-minded businesses that can move like they do, rolling with the pivots, pricing with the start-up’s funding in mind. As a result, new agency models are emerging to better serve the start-up economy. This is a commitment we make to the start-ups we work with too – like Toya, an innovative games developer creating games designed to inspire and motivate young girls to realize their full potential.
Pursue Positive Growth
Entrepreneurs have always been catalysts for change, using their ideas and innovation to disrupt and challenge established business. And with the rise of purposeful start-ups, they are challenging established business in a new way – setting new standards in the alignment of profit and purpose for corporates to follow.