If for-profit social change sounds unusual, that’s because it is. Purists may think that profit and social change can’t coexist, but a new Chicago-based accelerator program called Impact Engine disagrees. The 12-week crash course offers support ($20,000 in seed capital worth of it) to companies taking on societal and environmental issues with for-profit business ideas. Program Manager Elizabeth Riley says, “We believe for-profit business solutions are crucial to solving problems [such as climate change and poverty] because they have the potential to be sustainable,” unlike governments and not-for-profits, who frequently face resource shortages.
[ibimage==18234==Large==none==self==ibimage_align-center]Yesterday, Impact Engine announced the eight companies that comprise its inaugural class, known as Impact 1. The class, which takes off in September, is varied in its details, but a current of societal improvement runs through each company. For example, Ithaca Education offers a challenging but individualized literacy curriculum via its online platform, CERCA. POMS allows users to transfer funds in real-time, directly to the recipient’s mobile phone. And Raise5 matches micro-volunteering with fundraising, allowing participants to exchange a small task for a $5 donation, all on their online platform. See the rest of the list here.
The caliber of these companies speaks to the strengths of Impact 1, but that’s not to say putting the class together was an easy task. Explains Riley:
After Impact Engine launched in October 2011, we spent a lot of time engaging with entrepreneurs through our "Start Your Engines" event series. This gave us the opportunity to share our vision while getting to know potential applicants. We began accepting applications in May and received just over 175 in two months. Each application was rated on the overall idea, team, profitability, and potential for impact. After narrowing down the applications to 30 finalists, we spent four days interviewing candidates. Then we had to make some really tough decisions. The process was really inspiring for all of us. It's great to learn about people's passions and how they want to change the world.
Working out of 1871, Impact 1 will have access to mentoring, user-centric design training access to investors and, of course, seed capital. That access should allow the companies to do what Impact Engine hopes they will: Prepare for the next step in the growth process. “The incoming companies are at varying stages and have different needs,” Riley says. “But the ultimate goal is to get each one prepared for the next step, whether that's raising a round of capital, establishing a product-market fit, or solidifying the distribution model.”Will Impact Engine’s for-profit approach to social change work? The real question here is: Why wouldn’t it? Putting social enterprise organizations through the same rigorous progress other companies go through may help them perform at the same level. Certainly, though, Impact Engine will face its fair share of obstacles. “This space is still very new. One of our biggest challenges will be educating the traditional entrepreneurial and investment communities on impact investing and why it's important,” Riley says.
Still, lofty goals bring with them hope for the future. As Templeton said when announcing the class, “It is inspiring to be around entrepreneurs who use business principles to address the societal and environmental challenges we face. To see people building business models around water purification, sustainable employment, or services for the underbanked is seeing capitalism at its best.”