Can Dynamic Entrepreneurship Advance Social Progress?

A pretty standard idea in the world of productivity advice is that one should break goals and objectives into smaller, more manageable tasks. Instead of filling your to-do list with things like “get healthy,” you should identify concrete steps like, “buy kale at grocery store,” or “take a 20 minute walk.”

What if the same process was applied to tackling global poverty, or climate change, or gender inequality?

That, basically, is the idea behind “For Progress,” a recent effort launched by Founder Institute (FI), a global pre-seed accelerator. The initiative helps entrepreneurs all over the world align their startup journey—if they so choose—with the United Nations’ Sustainable Developments Goals (SDGs). It was described to me recently in a conversation with Jonathan Greechan, an FI cofounder.

“We’re trying to boil down big goals [the SDGs] into smaller, achievable chunks,” says Greechan. Those chunks get captured as iKPIs—impact KPIs—that are “baked into company missions” from the very start.

Greechan summarizes their thinking this way: “If you boil down the poverty SDG to achievable chunks, you can activate tens of thousands of entrepreneurs building businesses. If they can just pick off one iKPI at a time, they can make greater impact against the broader SDGs.”

“Impact Doesn’t Require a Nonprofit or B-Corp”

So how does it work? And how do entrepreneurs respond?

Starting at the idea stage, Greechan says, FI works with entrepreneurs to build impact into their company’s DNA. They’re not forcing anyone to take this route. But Greechan says they’ve seen that, even if a founder doesn’t want to orient their startup toward impact, they understand that the people they want to hire might “want to work for a company that has social impact.”

Greechan points to the example of Esusu, a startup focused on helping more borrowers build stronger credit histories. Earlier this year, the company raised a $10 million Series A round, which included participation from Serena Williams.

FI’s For Progress is an effort to not only make headway against the big global challenges captured in the SDGs but also address two other obstacles. One is that it is hard for any individual to contribute in a meaningful way to the fight against large-scale problems like world hunger or climate change. Or to at least feel that there is some connection between their actions and outcomes for people somewhere else.

You might recycle, buy energy efficient appliances, and donate to international NGOs. But the causal chain is pretty attenuated between those actions and SDG progress. And no entrepreneur is going to start a company with the profit-making goal of “end hunger.” There’s just no here-to-there path. For Progress seeks to alter that. If a founder can focus on “one or two metrics that they can have a positive impact on, now you’re activating this long tail of entrepreneurship for social impact.”

The other obstacle For Progress seeks to surmount is the difficulty that existing organizations have in trying to factor social impact into their work. “You can’t just take a company that’s been around for a while and reorient it toward impact,” says Greechan. “That’s mostly marketing.”

We’re seeing this today with the movement to incorporate environmental, social, and governance (ESG) factors into corporate strategies and operations. Though there are numerous efforts to quantify and track ESG and relate the factors to a company’s bottom line, significant concerns linger about effectiveness and “greenwashing.”

Impact Startups As Dynamic Companies

If For Progress helps individual companies chip away at big global problems, a related question—which Greechan and I did not discuss—is what that might mean at the level of an entrepreneurial ecosystem. Does something need to change with local entrepreneurship support organizations to work with impact-driven startups? Do we have a good way to measure what that might mean? Is there, for example, a way to compare ecosystems along the lines of social impact?

Coincidentally, the 2021 Index of Dynamic Entrepreneurship (IDE) was released last month by Prodem, a Latin American organization focused on analyzing and cultivating vibrant entrepreneurial ecosystems. The IDE, done together with the Global Entrepreneurship Network, is an attempt to capture country-level differences in the environment for “dynamic companies.” This notion “encompasses entrepreneurial projects with growth potential and young firms that have overcome the early phase of higher mortality to become (at least) a competitive Small and Medium Enterprise (SME) with the potential and drive to continue growing.”

That definition is purposefully broad; Prodem recognizes that dynamic, high-growth, and high-potential companies travel many paths. There is no fixed type.

So, how might we measure social impact from startups at the ecosystem level? FI’s Greechan might say there’s nothing extra to do. The startups they’re helping with For Progress won’t look any different from other startups—they’re just tracking iKPIs in addition to standard metrics.

Hugo Kantis, one of the creators of IDE, would probably agree. The dimensions that comprise the Index include “entrepreneurial human capital,” “business structure,” “social conditions,” and “social capital.” These could easily be assumed to include some measure of impact, or be tweaked as such.

But there still seems to be a gap here that needs filling. What needs to happen at the entrepreneurial ecosystem level to ensure that the “dynamic companies” they’re supporting are also making progress against huge, seemingly intractable problems?