By Chuck Templeton (@Ctemp), founder of OpenTable and Managing Director at Impact Engine
As a transplanted entrepreneur from the San Francisco Bay Area, I have seen tremendous growth in the technology and entrepreneurship ecosystem in Chicagoland, and Illinois in general, over the past 10 years. All obvious parts of this ecosystem are working to build entrepreneurship and innovation in our city, from increased sophistication among investors and state programs that support entrepreneurship to tech support from universities and community acceptance of higher risk startups.
The one missing piece that is starting to grow, but at a much slower pace, is social or impact entrepreneurship. An Impact Entrepreneur is an entrepreneur that understands that business as usual is dying. They see major challenges in the world that need to be addressed, but governments and NGO’s just can’t get it done. They know that capitalism is a powerful tool, and if they can address these issues profitably, by providing market-rate returns to investors, they will be able to attract capital.
As the Impact Entrepreneur finds business models where none previously existed, they will need a welcoming ecosystem that understands their needs. Linda Darragh and Jamie Jones, both clinical professors of entrepreneurship at Northwestern University’s Kellogg School of Business, founded Impact Engine in response to this missing ecosystem to act as a galvanizing force in the community. Impact Engine, is a 12-week venture accelerator that provides companies with access to world-class mentors, lean startup and user-centered design training, startup 101 courses, office space, startup capital, and more. But it’s more than this; Impact Engine is also a center for community education and change. Impact Engine runs investor workshops and community events, while exuding thought leadership to a broader ecosystem of Impact Entrepreneurs.
Impact Engine just graduated its first cohort, and it was an impressive class. Portapure makes money by providing a simple but effective water filtration solution to Haitians. Collaborative Group creates sustainable employment opportunities for artisans in developing countries. And Azadi develops sanitary napkins for women and girls in India who lack access to these basic products. Impact Engine’s eight companies span the globe and are in diverse industries, but they all have for-profit models with integrated missions. (Follow Impact Engine at @TheImpactEngine, and find out more at www.theimpactengine.com)
While we are in the early years of impact investing in Illinois, we have a great ecosystem emerging. There will be ups and downs, successes and failures, lessons learned and lessons forgotten, but the trend will be up. We’d like to see two things happen. First, because we think that impact companies can achieve risk-adjusted, market-rate returns (or better), in the near future you will see investors asking each other, “Why did you invest in that company; it only makes money?” Investing for impact will become the only logical option. Second, if an entrepreneur wants to build a competitive business in the future, they will have no choice but to become an Impact Entrepreneur.
Did You Know?
Number of benefit corporations, top states, 2013
A benefit corporation is a legal innovation that promotes impact entrepreneurship and social capitalism. Last year, Illinois became one of only twelve states to allow companies to incorporate as benefit corporations, and 2013 saw the first filed applications in Illinois. In less than a month, 15 local companies have already registered as benefit corporations, making Illinois’ number of benefit corporations the highest of any state in the Midwest and the South.
Watch and Listen:
- Illinois Task Force on Social Innovation, Entrepreneurship, and Enterprise
- The Social Enterprise Alliance – Chicago Chapter
- Illinois’s Benefit Corporations Act
- Frequently Asked Questions regarding the Illinois Benefit Corporations Act
- Panzanzee, Chicago-based social enterprise incubator