How mission driven business and corporates create social value
According to a recent report by the Department for Business, Energy and Industrial Strategy and NESTA, over 50% of all accelerator programmes in the UK are now corporate-backed.
We talked to Dirk Bischof of Hatch Enterprise to find out how "mission driven" businesses can have a mutually beneficial relationship with corporates.
Starting and growing a business is no easy thing. Thank goodness then for the support incubators and accelerators offer.
Social innovation foundation NESTA’s Good Incubation report, defined the work of incubation as “a collection of techniques that can be used to prove an idea, develop a team and de–risk ventures for later stage investors.”
Incubator programmes often provide space in exchange for a monthly fee and offer more long-term (business) support. They are often publicly funded and attached to a university or are stand-alone business or innovation centres.
Accelerator programmes on the other hand are highly selective, cohort based and usually of limited duration (three to 12 months).
Their support comes in the form of workshops, lab time and one-to-one assistance with developing a business plan, building investor pitch decks and product or service prototypes.
A notable example is the US-based Y Combinator, responsible for accelerating businesses like Dropbox, Reddit and Airbnb.
In the commercial world, the short-term engagement via accelerators is usually funded through equity participation in the various ventures that are supported.
They are generally backed by venture vapital (VC) funds which pay for both programme delivery and the early-stage investment in return for equity (anywhere from 6% to 10% stake in the businesses supported), with the amount invested ranging from £10,000 to £100,000.
There is another model though. Hatch Enterprise in south London is neither publicly funded, nor does it take equity. Instead, it works with corporate partners to support their start-up programmes.
And it's not alone. According to a recent report by BEIS/ NESTA, over 50% of all accelerator programmes in the UK are now corporate-backed.
What's in it for the corporates?
Hatch has three offers for different stages of business development: the Launchpad, Incubator or Accelerator programmes. They are funded by Deutsche Bank, JP Morgan (via the JP Morgan Chase Foundation) and Rothschild & Co.
All ventures benefit from business model validation support, mentoring via a corporate mentoring programme, access to subsidised workspaces and post-course opportunities, such as free legal support and monthly workshops.
CEO of Hatch, Dirk Bischof, explains that large companies may choose to sponsor or subsidise such a programme for “broader strategic reasons including internal innovation, culture change, marketing, corporate social responsibility (CSR) or public relations.”
Another Nesta report Winning Together: a guide to successful corporate-startup collaborations suggested other reasons that corporates might want to get involved. These included:
• Testing and solving their business problems more quickly and at lower risk
• Expanding into future markets by accessing new capabilities or channels
• Rejuvenating corporate culture to create an entrepreneurial mindset among
• Creating an innovative brand that attracts customers, business partners and future employees
• Direct social or environmental impact by bringing new partners into their supply chain
There are obvious benefits for the entrepreneurs and start-ups as well, such as accessing resources and opening up supply-chain opportunities with established players in their industry.
Often these relationships need to be brokered, as the corporate businesses may not consider working with such early stage ventures. This is where Hatch comes in.
Not all of the businesses Hatch supports are social enterprises; instead Bischof prefers the term “mission driven businesses”. They include food recycling business Snact (featured in Pioneers Post Quarterly issue 7) and eco-bike lubricant company Green Oil.
“The entrepreneurs Hatch supports are generally not interested in starting high-growth tech businesses, but rather ones that are locally rooted, often addressing a societal or environmental challenge through a social business model,” says Bischof.
So is such participation just ticking a CSR box for the corporates? Bischof thinks not: “At present, the corporate businesses that have, and will continue to, fund enterprise programmes that support mission-led businesses are those which are looking for more engagement with civil society.”
Now Bischof has created a new event that aims to foster more of this collaboration, with the ultimate aim of helping more mission driven businesses grow. The Beyond Good Business aims to further explore the opportunity afforded by collaboration between corporates and social ventures.
Bischof believes such collaboration is not yet happening to the degree that maximises current opportunities. "We want to explore what all sides in this equation can get out of working together and why collaborating is a more effective solution to address some of the pressing societal and environmental problems we are faced with.
"We also want to show existing case studies and bring people together to have an open and honest exchange on what is and isn't working."
To find out more about growing a mission driven business and corporate-startup collaboration, attend Beyond Good Business on 23 May at the Royal Institution, London. To explore the programme and book tickets, visit www.beyondgoodbusiness.co.uk
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