Social Entrepreneurship: Is It Right For Your Company?
By Candice M. Hughes, PhD, MBA
A new type of corporation is rising in prominence in the United States (US) and globally, the B-corp or Benefits Corporation. At least 24 states currently allow B-corps in the US, including my own state, Connecticut, which recently approved the B-corp form (May 2014).
What Is a B-Corp?
Ever since learning of B-corps several months ago, I have been intrigued by the concept of a corporation that shares equal focus on a social mission and profit. You may also be wondering if this B-corp format has any significance for your startup. The B-corp strives to incorporate the best of both the business and non-profit worlds, recognizing that while non-profits are needed, they are not sufficient by themselves to achieve all the needed goals of society. Within society, there are market gaps that can be filled profitably while moving society forward. External audits ensure that B-corps achieve their stated social mission.
Could Your Startup Gain from the B-Corp Structure?
As entrepreneurs, we are constantly thinking about ways to burnish our startups. Using my company, AdapTac Games, as an example to help you think about B-corps, here are some pros and cons. First, is there a fit? AdapTac Games fills both a societal and market need by helping kids learn through games to address behavioral health concerns (like ADHD). Check one- our stated mission is a natural B-corp fit.
But could becoming a B-corp negatively affect fundraising efforts? Since AdapTac is designed to be a high growth tech company, outside investor funding will eventually be needed to achieve that growth. Recently I attended a presentation a panel of entrepreneurs who are running socially-minded startups. While only one had received investor funding, most of the panel did not believe that the B-corp structure would prevent a startup from receiving funding. Some felt the entrepreneur might need to seek out impact investors, who would be more attuned to and excited about B-corps.
The benefits these CEOs found from being a B-corp included: positive brand identify with their customers, ability to more easily enlist help from non-profits and other groups and the ability to join socially-minded groups such as 1% for the Planet, which focuses on environmental causes. Affiliations such as 1% for the Planet are particularly interesting because they are a win-win situation where the member corporations donate 1% of profits and 1% for the Planet helps promote and showcase member companies to their customers/members. I can envision a similar type of organization for healthcare causes, although I haven’t located one. (Maybe another startup opportunity!)
The Future of B-Corps
What is especially exciting is how non-profit groups such as ReSET in Connecticut are starting to foster B-Corps. ReSET even offers a grant for B-corps. Another social startup accelerator is Impact Engineoffering seed funding, mentorship and training. Groups like these are giving social entrepreneurs the leg up they need.
I am continuing to find ways that my company can make a positive impact in behavioral health for kids and in my local and extended community while pondering B-corp structure. The concept is intriguing: both to make a good profit and to do good.
CandiceM. Hughes, PhD, MBA, is a neuroscientist and serial entrepreneur who founded AdapTac Games, an award-winning startup developing a game for teens with attention deficit hyperactivity disorder (ADHD). @candicemhughes
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