Business Models Round Table
Summary / TLDR
Funding Options - VCs, Investors, Grants, Friends and Family, Crowdfunding, Resources and Special programs like Benetech, SOCAP, connect.org Networking/Connecting with funders, mentors and advisors Options for socially-focused products to find funding Different Business Models - Revenue is important SaaS, subscription, bootstrap MVP concept and how it relates to getting funding. Need something with users to show investors that people want/need/are using it. Find people who have the need AND are willing to pay before you spend millions but it can be important to obtaining funding.
Scott - 4 years ago started encore idea network? online knowledge sharing system that earned revenue from a % of downloads of documents, SaaS for licensed libraries revenue model
Just sold it in July to a larger software organization -
Katie - works for a NPO based at a University, building student capacity around technology
Students go on to do really amazing technical development around the world. The projects that students do aren’t developed and carried on later after the students graduate and want to make these tools be expanded and funded beyond these one-off projects
For Profit serving nonprofits, privately funded, into A rounds, monthly service fee, primary revenue is from % of transactions from users of platform
accelerator for a humanitarium project/out of hackathons where people sit and work on projects together
model right now is that as things graduate from the program, the org gets a cut from it but it hasn’t been around long enough to know if they’re on the right track for funding
Stanley - after 4 years of pivoting, combo of NPO and for-profit, combine online SaaS with a wiki-type database to small businesses and individuals
The money would come from very small membership fee plus a slight spread in the SaaS services offered (open office suite, business process mgmt suite, wiki/semantic to house the community as a practice knowledge base)
Adam - part of a worker cooperative hosting with monthly web hosting business model, different levels and different services
Rich organizations tend to pay more and help fund the nonprofit organizations
Andrew - has a lot of ideas and not a lot of money
Works on a project which is a large occupy-related project with a wealth of ideas and technical solutions and wants to expand it and pull in resources at his disposal to work on this idea
Idea: involves engaging with nonprofits, touches on the CRM place, and a way for different orgs who have listings can share the information, tied into geolocation services, everyone’s got the same info in different places and want to collaborate
Dwalu - prototyped what he thought would be a simpler app and ended up building forprofit apps to support the nonprofit
for profit - location-based marketplace app
struggling to get funding when investors are funding mostly in
business models: subscription, transaction based, plus lots of behavioural data
VC/Angel might be something to look into
Willow - global tech conference: is philanthropy sustainable? if you’re constantly asking for donations, grants, funding then you’re constantly asking and to make it more sustainable then you have to get more buy-in than just money
can you make something and put it in the marketplace, or get some kind of blank collaborative funding to sustain the idea
social axis and financial return are the two axis
ie solar panels?
blended value investing concept
great resources SOCAP in S.F.
Venture capital and licensing educational opportunities at universities
Experience trying to raise funding for a socially - more action than funds here
no aggregated place for these socially responsible investors
hard to find someone passionate about your cause and accept a lower rate of return than the market is giving
freemium model -
penny gap - need to get people to pay that penny to get something more
A lot of incubators who take a percentage of the license fee and take a lot of
connect.org Stanley - here in part to determine how to bootstrap credibility (on startup #9) people don’t know him, or his capabilities, he wants to bring in co-founders and they don’t know who he is and he wants to figure out how to do a credible and sincere bootstrap process that gets funding
how do you get started when you don’t have a group of peers - suggestion: speak at conferences, you’ll get an audience and build expertise and engage with people to open doors and get media/press/bloggers talking about you for you
Makerspace - MVP idea, do something using the MVP model and make something incredible on very little and then show them if we had money then just think what we could really make
Build an advisory group, people who are aligned to you and will be a “link” on your website,
Are you in a position to start doing what you want to do, start selling it? Customers/sales is what really speaks to funders
In ’06 - built a social network for gaming and got 5K in funding and built a prototype, that got people able to use the software, got traction, plus those relationships from the top clients gave access to a much larger audience
You pretty much have to build something, get users, and then show something before you can get funding
Scott built a great system and kept growing and couldn’t keep taking care of it because he couldn’t pay for the costs needed to scale and needed funding
The roll or the challenge outgrows you/your relationships and if you want funding, then you have to out grow your ego and let others help and/or lead while you take a behind the scenes roll
Bennetch.org - nonprofit org that finds funders for projects which will deliver a submarket return.
What about the service component?
When I hear VC - they are looking for “super” market returns, they have metrics and are quite demanding.
There is a different investor model which might look at loaning you money at a modest rate of return and as a result - you might find that you may want to look at something like a “social bond”
what we needed was scale, and at scale - we would be self sustaining.
There is also a price point and ratio in that customer funnel that you’re using, and a distinct market curve where you push against a wall to keep your price point low enough that you can grow your customer base to get closer to scale/build the community
This creates a proven demand where users want and request, and need your product.
what if the pricepoint was kept low enough in order to grow the customer base enough and maybe help
Different with payment processing for nonprofits - Jonas
our project, being open source, provides value to the community: grants, investments, crowdfunding
kind of like a lottery, maybe you win it, maybe you don’t
oftentimes - it looks like crowdfunding is a presale model without a guarantee of a product
if you fund it, then we can build it. people say they’ll buy it with their money, if you build it.
donations are also like crowdfunding
looking at multiple organizations, there is a value in providing management tools for their membership and data lists in an easier way than the CMS/CRM blended models
product * service provided * open source cool tech stuff = 3 pieces
“owning your listings, large org listings and chapters”
think about how a campaign gets run for change -
crowdfunding takes off typically because a person says “donate $1” to this cause I care about and they have a large social network and they go and donate
awesome foundation - microgrant thing that’s very ad hoc and people chip in
out of this idea came awesome taxes - people signup and agree to give ongoing support by people who think this product should be a social / community thing.
all or nothing all or part in 2013 - can crowdfund in exchange for equity
What about in between crowd funding and VC’s - certainly there are nonprofits that have a similar problem and they can each put in a part of the total cost
Gist of it is - you have a proven need that someone is willing to pay for
If it isn’t a proven need that people will actually pay for then you shouldn’t try to build it