At Solve Innovation Future, we know that many founders start companies because they want to make our world a better place, yet the system of entrepreneurship today is still largely driven and built for high growth companies and fast profit generation. We recognize that as for-profit entrepreneurs seek to focus on social and environmental impact, they need to reflect on key questions to better align and balance profit and purpose
We developed our For-Purpose Entrepreneurship (FPE) concept to be a resource for Founders who want to build companies that align internal systems to accelerate impact. We encourage Founders to consider seven concepts to build companies for maximum internal and external impact. While a founder can explore any of these components independently, there is synergy in using a holistic approach to company building.
This is a guide for entrepreneurs looking to build purposeful, profitable entities. Explore the following resources to help navigate the intersection of purpose and profit:
FPE Considerations and Key Questions - A simple visual guide to understanding key elements of building a purposeful business.
Podcast Series - A podcast focused on FPE case studies and business models for social enterprises.
Resource Library - Research offering guidance and strategies for building and growing companies, while aligning strategy and purpose.
The FPE Considerations and Key Questions can be used to self-assess your alignment of mission and values, regardless of where you might be on your entrepreneurial journey. Strong leadership skills are the foundation of FPE, with business and financial concepts as key pieces to growing your enterprise.
Are you considering the questions below as you build a sustainable social enterprise?
Are you driving systemic change through partnerships, including private public sector relationships (formal or informal) as critical to achieve sustained impact?
Have we aligned a long-term governance and ownership plan that prioritizes impact and values diversity of experience and perspective?
Are my sources of capital aligned to my mission and will allow me to grow sustainably / built to last?
What is the appropriate business model to achieve our mission that aligns with our values?
Am I investing in my emotional, physical, mental, and spiritual health and growth? Am I using strength-based and situational leadership to lead by example and deeply embed my values in our work?
Do we have a clear definition of purpose that addresses a specific problem affecting a large population or the most underserved, considers externalities, and helps to achieve a sustainable and equitable future? Is that purpose measurable?
Are our values reflected in our day-to-day work, including processes for recruiting, on-boarding, decision-making, and governance?
Entrepreneurs around the globe are solving the world’s most pressing problems. We believe that social entrepreneurs should have easy access to innovative, best-in-class tools and information when making financial, legal, and internal structure decisions to scale impact-focused entities. The Solve Innovation Future team has collected the following resources to help entrepreneurs and their teams to scale their businesses.
We have started with a few topics critical to building purposeful companies:
Mission and Purpose-Driven Leadership
It goes by many names:conscious capitalism, shared value, stakeholder capitalism. In sum, it’s inculcating impact as a part of your core business.
- The Dual Purpose Playbook (Harvard Business Review; Julie Battilana, Anne-Claire Pache, Metin Sengul, and Marissa Kimsey)
- Engaging All Affected Stakeholders (World Economic Forum)
- The Purpose Playbook (FSG & Shared Value Initiative)
- Systems Practice(Acumen)
Select Case Studies:
Legal and Ownership Structures
There are myriad legal structures (e.g., sole proprietorship, corporation, partnership, cooperatives, nonprofit etc.) and ownership structures (e.g., employee-ownership, stewardship ownership). We have collected a quick overview of some of the more common structures. *Please note, this section is primarily focused on structures used in the U.S. Every country has its own policies. This resource guide is not intended to be seen or used as legal advice of any kind. Please consult counsel when evaluating legal and ownership structures.
- Choose a Business Structure (U.S. Small Business Administration)
- State of Alternative Ownership in the US: Emerging Trends in Steward-ownership and Alternative Financing (RSF Social Finance and Purpose Foundation)
- B-Corp Certification (B-Corp) versus Public Benefit Corporations (Cultivating Capital)
- Guidelines for Equitable Employee Ownership Transitions (The Democracy Collaborate, Soros Fund, and Open Society Foundations)
Select Case Studies:
- Fogo Island Inn / The Shorefast Foundation (Watch this to learn more about founder Zita Cobb, the Shorefast Foundation, and the Fogo Island Inn you can watch a For-Purpose Entrepreneurship webinar hosted by Solve Innovation Future featuring Zita here)
- Danone and the B Economy (B Lab) about how large and multinational companies can join the B Corp movement
Investment Financing and Fundraising
Finding financing that is both mission-aligned, and best suited for your business, requires tools. We attempt to share both insights for venture capital (VC) funding, while also introducing other types of capital structures that may be founder and team-friendly.
- Ultimate Guide to Raising Startup Capital (CrunchBase)
- Why Venture Capital Wasn’t Right For Me And 15 Alternative Funding Sources (Fast Company)
- “Bootstrapping with Audrey Chang” (Finding Impact Podcast)
- Mission Aligned Framework for Investing (Kellogg Foundation)
Primer on a sample of investment instruments:
- Simple Agreement for Future Equity (SAFE): Y-combinator primer on understanding SAFEs and priced equity rounds; SAFEs are typically used in pre-seed, seed, and bridge rounds
- Convertible notes: Overview of convertible notes (a quick primer); convertible notes are typically an early stage financing instrument which convert to equity upon a later equity round, or to debt at a certain maturation date
- Revenue-sharing agreements: The Rise of Revenue-Based Financing (it’s worth the download); revenue-based financing is often cheaper than equity, but more expensive than traditional debt. It provides working capital with repayment rates that float with the company’s revenue. Revenue-sharing agreements are best for typically for beyond Seed stage, revenue-generating companies
For case studies, take a listen to our podcast series that seeks to explore business models for social enterprises.
Visit MIT Solve for updates, or email Casey van der Stricht, Principal of Solve Innovation Future, or Narges Baniasadi, Adjunct Professor of Stanford University.
