Starting a Socially-Conscious Business: Balancing Mission and Investment

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Starting Activyst, Katie Rock faced a quandary many founders of socially conscious startups encounter: how much to give back and how much to invest in the business? Here’s how she answered this tough question. 

By Katie Rock (Founder & CEO, Activyst)

Starting a socially conscious business was not something I set out to do, but more a result of my vastly differing experiences in the private and public sector.

In the private sector as an attorney, I became well acquainted with getting things done (very) quickly and having the resources to do so. I enjoyed the fast pace of it, and growing business with new clients. However, as a bit of a (at the time, closeted) bleeding heart, I sometimes had the nagging thoughts of “does any of this really matter?” I wanted to create the proverbial “change.”

Later, I set off to create this change, working to promote reforms for gender equality in sport in Nicaragua. As I expected, I was enamored with working with governments, international organizations and non-profits. I met fascinating people from all over, researched problems girls face in the developing world, and designed programs addressing those problems. But there was a recurring issue: lack of funding. Programs could sit on hold until funding was secured (if ever). People who are very good at creating change then divert their attention to something they’re not so good at – fundraising. Fundraising, as it turns out, especially during down economic times, is very hard.

My Goldielocks Moment

I had my Goldielocks moment. Here we have companies with consistent resources and cash flow, most of which are putting it right back in their pockets. And over there we have organizations setting out to solve the world’s very real problems, but held back financially from doing so. However, a business with an integrated social mission, or the “mama bear” model, could potentially avoid these shortcomings. It could give back to communities in need, while creating real value for clients rather knocking on (often closed) doors for funding. And, with thoughtful partnerships, it could free up the changemakers to do what they do best.

Balancing Investment and Mission

That’s not to say this is a simple endeavor. Starting a business is a challenge and incorporating a simple mission adds complexities, the biggest of which is developing a sustainable business model. Usually (hopefully), a primary reason one starts a socially conscious company is to support a cause. Yet, if you allocate too much funding to the cause at first, you don’t give the company what it needs to get off the ground and your ability to deliver an awesome product is diminished; your desire to help too much at first may prevent you from helping out at all down the road.

On the other hand, if you don’t get serious about incorporating meaningful contributions into your business model early on, you may never be able to do so, and customers will certainly question your commitment. Adding to these tricky competing scenarios is the overarching complexity that, in the startup phase, there are always unknown and unexpected costs for which you must account.

Walking the Middle Road

Again here, the key is finding that middle road. With Activyst, the company I am starting which creates women’s athletic bags and funds girls’ sports programs worldwide, we’ve made it a priority to find this balance. We decided on what we agreed was a necessary and meaningful amount to donate. We played out scenarios to ensure that, even in the worst case, we could hit that amount and still give the company what it needs to be healthy. We then agreed on a higher goal number and committed to working towards it as we transition out of the startup phase, create efficiencies and approach economies of scale. These anchors give us confidence that we are supporting our partners in a meaningful way, while providing the company flexibility in its growth phase to survive and thrive.

About the guest blogger: Katie Rock is the founder and CEO of Activyst, a startup that makes women’s athletic bags and funds girls sports programs worldwide. She started her career as a corporate attorney before working with the WHO and the Inter-American Institute of Human Rights on legal reforms to promote gender equality in sport. She tackles this issue through entrepreneurship. She advises on Hustle Your Bustle and loves talking to anyone about change-making ideas.  Follow her on Twitter @HiKatieRock.

Women 2.0 readers: How have other founders of socially conscious startups handled this conundrum?