Millennials helping drive growth of social enterprise
AWESOME ASSET: Social Enterprise Greenhouse CEO Kelly Ramirez, who sees millennials as a major factor in driving the growth of social enterprise, says students and faculty at Rhode Island's 11 colleges and universities are generating great ideas.
Kelly Ramirez sees growth in the number of people who want to create a positive social and economic impact in Rhode Island.
The trend works well for the CEO of Providence-based Social Enterprise Greenhouse, an accelerator comprising a network of businesses, community leaders and investors, focused on supporting social entrepreneurs and organizations.
Beyond its crash courses on how to start and grow a successful organization, Ramirez also sees SEG as the ultimate networker, connecting the startup world with one another and with the resources needed to flourish.
"What we have found … is that people like to convene," she said. "They really value it."
The nonprofit runs three accelerators focused on different industries. And while dedicated to helping other organizations grow and thrive in the Ocean State, SEG is also looking to do the same internally, constantly trying to find new ways to do better.
What is Social Enterprise Greenhouse?
We are a nonprofit and network of now 250-plus businesses and community leaders who are very engaged volunteers that help SEG develop services to support entrepreneurs and work directly with them and their businesses. We now have a portfolio of 240-plus do-well, do-good businesses that we support through our menu of services. It's about half nonprofits that have created revenue-generating businesses and half for-profit businesses. One trend we're seeing is more and more for-profit businesses coming to us to seek our services. Our menu of services includes workshops on basic business, as well as specialized topics. We run a 12-week intensive accelerator program that's a blended model. The curriculum is online, offered through Brown [University's] online learning platform. We do face-to-face workshops and then each entrepreneur gets a coach who works with them for the 12 weeks. Also, they get access to our whole network of advisers. The accelerator is a little bit like a mini-MBA. We're now running three accelerators. One is specifically for local health and food ventures, one is for health and wellness, and one is our general, catch-all, impact accelerator.
What do you mean by do-well, do-good business?
It's any business that creates jobs and makes the world a better place. We have become over the last few years more inclusive about what we consider a social enterprise.
What about running an accelerator is challenging?
One thing that is challenging – as any nonprofit will say – is funding. We think a lot about funding for the businesses that go through the accelerator. Many accelerators have prize money attached to them. Many accelerators make equity investments in their businesses. We have a pay-it-forward model, so we charge $500 upfront and then if mutually agreed-upon revenue targets are met, the businesses are expected to pay back the full value of the program, which we value at $2,000.
What's your success rate?
We just started doing that last year, so it's early to say, but we have had some businesses that went through our accelerator who are now multimillion dollar organizations. It's about community-building more so than it is about the money. One of the things that we have seen is that entrepreneurs often move from accelerator to accelerator because they're trying to get the prize money, so we're trying to prioritize whether we can fundraise for prizes to ensure that our businesses can get some startup capital when they participate. Related to that is pipeline. We are looking for entrepreneurs who are really committed, coachable, have a good idea and have the time and capacity to really participate fully in the program. We're still exploring whether there's enough of a pipeline to justify these three accelerator programs, or add more.
How's the pipeline right now?
So far, so good. We have a good pipeline for food and impact. The impact will launch in January and the food in February. I think, though, if there was prize money attached to the accelerators, there would be a more robust pipeline, to be perfectly honest.
Is it difficult to raise the capital needed to fill that pipeline?
I've lived here for seven years, and there's been a much greater focus on entrepreneurship and this access-to-capital question in the last year or two than there was in previous years. As an example, at SEG, we are thinking a lot right now about access to capital for our entrepreneurs. We have a loan fund, which has been really small, but really successful, and we're batting 100 percent. We just got some funding from [R.I.] Commerce [Corp.], and we did a raise from individual donors last year, so we're more actively letting businesses know that the loan program is a possibility. But we know we need to do more. If we could somehow offer prize money, or small, early-stage grants, or equity investments and have the loan program as just one piece of the capital-access pie, we'd be better positioned. In 2017, one of the things that we plan to do is to have a capital-access educational series and start bringing stakeholders to the table who're interested in impact investing to see if we might be able to build up a community of individuals that would like to look at deals.
So, like a social enterprise-oriented angel group?
Maybe that's what it could eventually turn out to be, but we don't really know right now, as we're in an exploratory stage. But we do know we attract those types of people and impact investing is a relatively new, but again a very rapidly growing field, and I think that people need to learn about it before they commit to doing those types of investments.
Is social entrepreneurship a young person's game?
It's a growing movement. Our community is age diverse, but definitely a lot of what's driving the growth of social enterprise is millennials. It's their buying decisions, it's their desire to have purpose in life. We work with all 11 colleges and universities in the state. We have a university program and we have a fellow on each campus. Myself, and several others who're involved with SEG, have done teaching of social enterprises. There's so much development because the students want it and are demanding it. In terms of the serial entrepreneurs, and the individuals who are semiretired, they're looking for meaningful ways to give back, and this is a really compelling way to do what they're good at: Mentor a really passionate social entrepreneur and potentially align their investment dollars with their beliefs.
Is there really enough of a demand here for a food-startup accelerator?
We spent about three months going out and talking to different stakeholders in the food ecosystem. We did that because we knew there was growing focus on the food ecosystem here, and also because it's a big trend in terms of social impact nationally, probably globally. One of our board members wanted to map out what was going on and see if there were any gaps in the ecosystem, and she did, in fact, identify there was a need for general business technical assistance for food entrepreneurs. We put a stake in the ground and got funding from the [Henry P.] Kendall Foundation to pilot a food accelerator. We built up an advisory group, recruited a lot of volunteers with industry expertise and started doing monthly [meetings] and have just built within our communities a subset that's really focused on local, healthy food and making our world better through that industry.
How about health and wellness?
We were the recipients of a Real Jobs RI grant through the Department of Labor and Training. We again followed the same process that we used for food and started building an advisory group, talking to them about what was needed in this space, added a few services based on specific needs of health and wellness businesses, and recruited a whole community of volunteers. In both cases, it took a lot of work in pipeline development and company identification, which is about pounding the pavement and word-of-mouth. Building that database of companies and creating a community is a huge piece of the work that we're doing that's really exciting. With health and wellness, we do monthly networking events and highlight two businesses at each event that do pitches. We've built up this great community of people who want to make Rhode Island better and view access to health care as a really important part of that.
Why aren't there more business accelerators in Rhode Island?
I think there will be. There's a need and there are groups that are thinking about it, such as MassChallenge, that have received some money from Commerce and the Rhode Island Foundation to look at the landscape. MassChallenge have been excellent collaborators about looking at where they can add in value and not duplicate. But, you know, it's a tough business model because you're working with companies that have no money. I think there are a lot of conversations about whether accelerators should be nonprofit or for-profits, and I believe there's a great push toward entrepreneurship development, especially in the last couple years, so I think there will be more.
What are the biggest hurdles to starting a business in Rhode Island?
I would say it's access to capital. There are some conversations about finding the networks, so there may be some truth to that, but I feel like we play that role. To me, finding networks is a pro in Rhode Island. The small size of the state, and people wanting to make Rhode Island better, makes access to the networks and the resources as an entrepreneur – if you know where to find them – better than in a lot of places. I do think that capital, especially for impact businesses, is tough.
Does Rhode Island have the resources to help companies develop innovative products and services?
The resources exist here. I think it's a question of finding them. I'm always shocked that when we find an entrepreneur, they say, "I didn't know you existed," and then their whole world opens to them and there's a windfall of resources, of network, of expertise. But people don't know about it. I just got a guy who wants to relocate a 20-person company here doing wave energy. I think Commerce is really starting to do a much better job. They've been such a great partner to us, and to me it feels like they're really innovating. But, of course, I'm an optimist by nature.
What industry offers the greatest potential for growth through innovation in Rhode Island?
It seems to me that it's health and wellness. Look at the universities. I don't want SEG to put a stake in the ground with just one industry, but if you look at our universities as our resources, and align them with the industries, several universities are pushing the needle on health and wellness. To me, 11 colleges and universities within a 45-minute drive is sort of a crazy-awesome asset, and I think there are great ideas coming out of those universities from both students and faculty, so really focusing on that potential, and seeing if there's something there, makes a lot of sense. I'm feeling momentum.
Looking beyond the startup world, is Rhode Island a good place to scale a business?
In the impact space, I would say yes, we're a great place to be because there's great talent and it seems less expensive than a lot of other places on the East Coast. I feel like this place – coming from outside – is so special in terms of community and access. It's really unique to be able to have access to your delegation and policymakers and universities and that just is not true everywhere, so to me it would seem like we could make that work. •