Stanford Social Innovation Review

Stanford Social Innovation Review is an award-winning magazine covering best strategies for nonprofits, foundations, and socially responsible businesses. Published quarterly by the Stanford Graduate School of Business.

Subscriber Login



Auto-login on future visits

Forgot your password?
Obtain a login

RSS Feed

Related Opinions

Browse by Categories

Startup Funding in One Business Week?

Other articles on: • 
Posted: November 14, 2006 02:59 PM
Author: SSIR Editor

BY PERLA NI
Foundations, listen up: Venture capital firms are making it easier than ever for entrepreneurs to get seed money.

image Everyone in the nonprofit world knows what a slow grind it is to get funding from foundations. It can take up to nine months. Since foundations are frequently compared to venture capital firms because they supposedly take risks, I hope they are paying attention to the ways in which venture firms are making it easier than ever for entrepreneurs to get seed funding to prove concepts and launch.

Earlier this month, Charles River Ventures announced its QuickStart program, offering rapid $250,000 investments to startups. And by rapid, they mean they’ll get back to you in one business week. 

The firm’s website reads, “the process of raising seed capital can consume precious time that can be better spent actually building out your idea.” Wouldn’t it be nice if foundations agreed?  There seems to be a conflict between foundations’ stated goal of supporting innovation and the long-winded application process to which they subject entrepreneurs.

Once a nonprofit has submitted a Letter of Intent, it takes four to six weeks just to get a reponse. Then, it’s another couple of weeks before the foundation staff reads your proposal, and another couple of weeks, if not months, before the board votes on the grant. If the grant it approved, it takes a few more weeks to dispense the money.

The Ford Foundation claims its process is so long because they receive 40,000 grant applications a year.  But Charles River Ventures received 1,000 emails on the first day of their QuickStart program, and they managed to respond to all of them within one business week.

Obviously, there are many differences between venture firms and foundations. For starters, in the venture capital world, $250,000 in seed is considered puny. And Charles River Ventures is happy to attract a crowd of entrepreneurs to their doors—a status that no foundation wants.

There are many areas in which the venture model doesn’t translate to philanthropy. And I am critical of many behaviors that rule the venture capital world. But in a sector that claims to support social innovation, providing easy, fast, and friendly access to seed money would make a worthy goal. (Then, of course, comes the battle for sustained funding from foundations.)



image

Perla Ni, founder and former publisher of the Stanford Social Innovation Review, is the founder and CEO of GreatNonprofits. She is also a co-founder of Grassroots.com.

Chat Bubble Comment

I was looking for seed capital to do a development on a piece of property in which my organization own. Of course, it tooks quite awhile for funding to happen for a non-profit. I was wonder about this funding within one week, in the website.

»» Posted by: LaTonya Finley on November 14, 2006 06:12 PM

Chat Bubble Comment

Hi Perla,

Thanks for the recognition.  We are excited by the response of entrepreneurs.  I am happy to come by and talk to a select audience to help them understand what we are doing and why we are doing it and how it works.

Also, since we are venture investors, the CRV QuickStart program is focused on for-profit capital-light startups that are commercial in nature.

Sincerely,
George Zachary

»» Posted by: George Zachary on November 15, 2006 03:15 PM

Chat Bubble Comment

One update, I did see today that the Knight Foundation’s 21st century News Challenge promises to respond to proposals within 2 weeks. 

Way to go!

»» Posted by: Perla Ni on November 17, 2006 03:08 PM

Chat Bubble Comment

Would CRV Quickstart support a Healthcare related initiative. Our group is in the process of seeking funding for a Healthcare simulation center that would service the US Western Region.

Thanks

»» Posted by: Gladys on November 20, 2006 02:40 AM

Chat Bubble Comment

I am brand new at this but I have a son who is a severly injured Traumatic Brain Injury. I am looking at ways to start up a ficility for him and others like him who are higher cognitive thinking
but dependant for some or all personal cares. I want to form a facility that will give people like him a purpose and meaning for life. Also, a place of complete compassion.
respect, and offering lots of support for them and their families. I know what it is I want to start but of course I will need lots of funding for this. I was wondering if
your service would be of any help to me getting this started?
Sincerely thanks for your time,
Joyce

»» Posted by: Joyce on November 20, 2006 12:07 PM

Chat Bubble Comment

I want to start a homeless transitional housing project.  It is ment to help people that are in need of housing on a temperary bases.  How can I get funding for a nonprofit to buy a building and rehab it

»» Posted by: Janice on November 20, 2006 04:05 PM

Chat Bubble Comment

this is particularly great news for low barrier to entry ventures in the Internet space focused on positive social impact… echoing green fellowship program is also worth noting http://www.echoinggreen.org/

»» Posted by: Rod on November 23, 2006 01:50 AM

Chat Bubble Comment

I have an idea of opening a business for increasing the activity level of those not active and continuing the active lifestyle of those already active. The idea of a gym is great and all but not everyone likes to go to the gym because it is boring for some and their are muscles heads that linger around. The bases behind this facility would be to provide a place for people to be active all year around.  An indoor facility and an outdoor facility.  Various activities could include, but not limited to, are; basketball, volleyball, tennis, 1/4mile track a field the size of a football field at least, badminton.  There would not only be traditional games played for instance; ultimate frisbee or a frissbee golf course could be an option which brings lots of fun and lots of exercise for those interested in other acitvities. There are so many options and avenues we could take.  My goal is to prevent obesity in children and provide guidance for those that are overwieght.  We will also have nights that nutritionists will come in and speak, and other professionals in thier field.

»» Posted by: Greg Marchbanks on November 23, 2006 10:03 AM

Chat Bubble Comment

I want to start an organization in which single women as well as women with children can make the the transition from being on Public Assistant back in to the working sector. I at one time was homeless and the experience has spiritually changed me. I feel very compassionate about this because I have seen and meant so many women that have lost them self on a spiritual level of who they are . I realize by talking with alot of these women they have or are starting to loose all hope in what life has to offer. I have a plan and I believe in my heart it could work but I am not sure where to began. I dont want to give to much detail on line about it. Question can be reached at e-mail address.

»» Posted by: Brenda Mann on November 28, 2006 11:52 AM

Chat Bubble Comment

Good Morning,
I have been researching, in the wee hours of the morning, for assistance in forming a Foundation for women survivors of Domestic Violence.  It has come to my continual attention in my work as a volunteer DV advocate, the need for funding and resources for these women and children who are overcoming the patterns of abuse.  There are many resources for the moment of crisis, and I wish not to compete for their funding.  Their work is critical, however there are few if any resources for the independant parent who is committed to living free and raising her children free from abuse.  The statistics prove that 97% of women who leave an abusive relationship return to her abuser, or go on to a successive abusive relationship, and this due to economic reasons.

It is my goal to form a foundation that will meet a “one time need” per year, for any of these family members, or the family as a whole.  Examples:  Private counseling for mom for one year/once a week; or summer camp for children; a family vacation, or sports league, or private music lessons, dental work, moving expenses, vehicle repair etc..

If you can assist me or point me in a direction to someone who might be able to assit me in accomplishing this vision, it would only be the beginning, and most certainly, an investment worthy of your time and resources!

Thank You!

A. Lillian Bloom

»» Posted by: A. Lillian Bloom on November 29, 2006 06:30 AM

Chat Bubble Comment

I am interested in starting a non-profit business, that is geared toward empowering women to transition from public assistance back to the working sector. I would like to offer counseling in different areas. I have a building that I am looking to rent. It is the property of my church. Funding for this venture is crtically needed. If you can assistance me in this matter or point me in the right direction I would greatly apprecitate it.
Thank you,
Camille D. Beasley

»» Posted by: Camille D. Beasley on December 4, 2006 07:49 PM

Chat Bubble Comment

I think they can plan something like a window shopping like or the instant bumper lottery like things; say, they already have set goals and areas where they want to offer or grant fund; it is only the critical idea or the strength one looks at prospects..

I rememebr by under-graduate macro economics paper; all the ight questions looked differnt but answers looked the same; you mauy have to start from differnt positions employment or population or income but all economic they make a merry round and finish the same..

all the social problems have such vital linkages, one may start with one problem and start solving many other problems… I think they can start providing tiny ventures to experiment and they can support on large scales; each one will have his meat/meal in e social excellence

»» Posted by: purushothaman pillai on December 8, 2006 03:48 AM

Chat Bubble Comment

Wow, thanks for all of you who responded!  It sounds like everyone is looking for early seed money.  EchoingGreen is a great suggestion.  Any other suggestions of foundations that are willing to take a risk and fund early stage nonprofits and won’t drag out the process?

»» Posted by: Perla Ni on December 8, 2006 03:57 PM

Chat Bubble Comment

Hi Perla

thanks for the suggestions thus far.

Interestingly enough, I applied to Charles River CRV and did not get accepted, although the turn-around was within two days on my application.  This was when my venture was for profit, since then I have changed my intention to make my venture a non-profit for ethical reasons.  The venture is dedicated to technology and online solutions for political professionals and citizens in order to create a more egalitarian democratic process.  That is all I can say in a public forum.  I was pleased with CRV and some of the other VCs I encountered, but now that I have left the for profit world, I am stunned at the length of time it will take me to get seed funding.

I am looking for advice for how I can raise at least $350k in seed funding to get started.  I need $4M by the end of Q2 ‘07.  Fortunately for me, I went through the thorough business planning process that is necessary for VCs and I have the whole business plan and financials figured out.  Now I am merely changing the structure to non-profit, but the business remains the same.

I would love to hear from you.

Michael

»» Posted by: Michael Melillo on December 18, 2006 01:49 PM

Chat Bubble Comment

Michael,

It also sounds like your project is in that grey area between nonprofit and for-profit.  The advantage of being in that area is that you can choose either legal form.  The disadvantage as you are finding, is that it’s not the traditional sweet spot of either nonprofit or for-profit funders.  I’ve heard that Calvert is helping to funding a new fund that invests in this area specifically?  Can someone chime in here if they have more info on that?

To answer your question about getting faster funding from foundations - I think you may need to go to friends and family is you need funding in the next 4 months.  I hope I am wrong. And if anyone out there knows of a foundation that responds to Letters of Inquiries in less than say - a month - could you please post here and share with the rest of us?  These should be recognized and applauded for their responsiveness and respect for the passionate and dedicated people who are trying to get the money necessary to find new solutions in this sector.

Perla

»» Posted by: Perla on December 18, 2006 05:13 PM

Chat Bubble Comment

I am very much interested in starting Transitional House for females 18-21 with children, who have been displace for home.  I have been thinking about this for several years.  How would I begin. I truley believe this is a worth venture. There is a great need for such a program. PLEASE Someone HELP me HELP OTHERS.  GOD BLESS YOU

»» Posted by: monita james on April 19, 2007 09:18 AM

Chat Bubble Comment

I was looking for investors in the real estate market. When searching for capital, if you not specific then a lot of companies turn you down. I know that the real estate market has soften a bit, but there is still good deals out there to make a profit, so if there is any serious interesting investors out there I would love to converse with them about my marketing skills and ideas in making money.

»» Posted by: LaTonya Finley on May 23, 2007 12:51 PM

Chat Bubble Comment

It’s nothing difficult to set up a fund managment business and get started with few millions. What counts at the end of the for businesses
is how accurate the *risk* is calculated. It needs extensive market research based on statistical analysis. So businesses, today, are
required to be exact and clear on risk managment then simply jumping to the investment without having to calculate its feasiblity in the first place.

»» Posted by: Mcgill on July 23, 2007 07:47 AM

Chat Bubble Comment

excellent story

»» Posted by: Samantha on December 15, 2007 02:57 PM

Chat Bubble Comment

I have been looking for grants to start my own Transitional Home for women with children. I need a grant to purchase a building that will allow me to place women and children in a safe and secure enviroment from 6 months to a year depending on their needs.  My business will help hurting and homeless women and their children to get their life back on track.

»» Posted by: Rita on May 13, 2008 06:12 AM

Chat Bubble Post a Comment

Name:

Email:

Location:

URL:

Remember my personal information

Please enter the word you see in the image below: