A cohort of new business accelerator programs in Austin is looking for entrepreneurs with ideas that can make the world a better place and make a profit. By applying the accelerator model to these startups, program directors hope to help the most promising business ideas succeed faster.
Austin has its fair share of traditional “accelerator” programs, mostly in the technology field, that help entrepreneurs grow their businesses faster with the help of mentors, education, and capital. These programs ask entrepreneurs to apply and then often charge entrepreneurs to join, either in the form of an up-front payment or by giving the program equity in their business. Success for these startups is often determined by profits and market value.
But the new accelerator programs see a value in supporting entrepreneurs for the sake of innovation, job creation, and social impact, rather than just profit. One these new accelerator programs, MassChallenge Texas, operates as a nonprofit itself taking no equity in the entrepreneur’s business and offers all of its support services for free. Mike Millard, managing director of MassChallenge Texas, says it’s a unique approach. “We derive most of our funding from corporate partners and family foundations,” said Millard. “They see a value in that they get access to the entrepreneurs and the technology they create, and it helps them understand what’s next and how to innovate.” MassChallenge operates accelerator programs across the world and has supported more than 1,000 entrepreneurs since 2000.
Another accelerator program, Techstars, which has also served more than 1,000 entrepreneurs across the world, just launched a new initiative in Austin this past week called Techstars Impact. It will seek out and support for-profit businesses that seek to solve social and environmental issues. That program takes equity in a business in exchange for offering entrepreneurs support and $120,000 in funding.
Zoe Schlag, Techstars Impact’s managing director, says the new accelerator comes from the belief that profits and social impact can work in lockstep. “In fact,” she said, “having a mission can create a competitive advantage that drives better business outcomes.” Startups that serve both impact and profits can access funding other businesses can’t, and they attract employees who are increasingly driven to work for companies that make a positive impact on the world, she said.
At Austin’s Impact Hub, Ashley Phillips is applying the accelerator model to one of Austin’s most pressing social and economic problems, affordable housing. “Most accelerators select based upon a stage in business,” she said, “What we care about is how you’re addressing the issue. It’s such a complex social issue and it demands a collaborative answer.” The accelerator is backed by local companies so that the services are free to participants.
Phillips says it can seem contradictory to think of a business that aims to solve a social problem. “As a society we’ve bifurcated charities and businesses, thinking both can’t occur at the same time. But what’s interesting is that there are market-based solutions to social problems,” said Phillips. “People, businesses, and investors want these problems solved, and when a for-profit venture can figure out how to do that they’re going to have a social impact as well.”
PHOTO: Mike Millard of MassChallenge at the organization’s kick-off event.
NOTE: This story also appeared in the Austin American-Statesman on October 27, 2017.