The activist economy: 3 Austin startups chasing major social change

 

Even in today's checkered tech startup landscape, most B2C revenue models fall into one of two buckets: Give away something cool and support it with ads or create a marketplace and take a cut of every transaction.

 

Then, there are social impact startups.

 

These for-profit companies mix the ambition of most entrepreneurs with the well-intended idealism of solving the world’s problems. They’re after what’s called the triple bottom line: people, planet, and profit.

 

And these altruistic enterprises are popping up so fast that Austin tech veteran and venture capitalist Bob Bridge recently formed the Southwest Angel Network for Social Impact specifically to support them. He’s not sure where all the activism is coming from, but he wants to see more of it.

 

“One idea is that millennials want to impact the world directly rather than give back by donating money,” he said. “Another idea is that people are looking for alternative social impact leadership models. Government programs feel broken, and many big non-profits have high overhead and seem so impersonal.”

 

Speak Social’s Brad Bogus agreed.

 

“Social impact startups get things done faster, and often better, than the other two options available: policy and non-profit organizations,” he said.

 

Recently, several of these companies competed in the Austin+SocialGood fast pitch contest, which awarded a crowdfunded $5,000 prize to the winner. Two of the finalists are using software to meet the needs of underserved groups simply by connecting them with people who want to help.

 

 

Banzu, loosely translated from Chinese, means help. And that’s exactly what the company aims to deliver to two parties: People who can’t afford a lawyer, and the lawyers who want to help anyway.

 

“There’s a lot of attorneys out there who want to provide this help,” co-founder Laurel Naughton said. “Especially new legal graduates who can’t find work yet but want to get valuable experience.”

 

Legal Banzu targets what it sees as a glaring justice gap in the U.S. that affects people who can’t afford lawyers but aren’t poor enough to qualify for free legal aid. According to the U.S. Census Bureau, one-third of Travis County residents qualify as low income. And according to the Texas Access to Justice Foundation, the state also ranks dead last in the U.S. for access to legal aid lawyers, a problem exacerbated in recent years by budget cuts forcing legal clinics to lay off staff.

 

Over the next couple months, Legal Banzu plans to roll out a crowdfunding tool for users paying reduced legal fees to cover those costs.

 

 

Another Austin+SocialGood finalist was Prepify, a startup that connects low-income, high-achieving students with opportunities at prestigious universities by offering them free prep courses for standardized tests.

 

The company’s social mission is to address undermatching, a rampant problem in American higher education caused by the stratification of higher ed along class lines.

 

74 percent of students attending top-tier schools like Harvard and Stanford come from families in the top tier of income. Meanwhile, only three percent of students attending competitive schools come from families in the lowest 25 percent of incomes.

 

Prepify was born out of personal experience. Co-founder Rena Pacheco-Theard grew up in rural Idaho. She did well in school, but lacked access to the expensive test prep and admissions counseling afforded to other students. 

 

Now, she’s in grad school at MIT and wants to give a boost to students who face similar challenges.

 

We asked Prepify if it’s getting easier to start a social impact company. Co-founder and CTO Keith Pattison, a computer science graduate from Texas A&M who also co-founded AskU to improve students’ college experiences, paraphrased software pioneer Alan Kay: 

 

“We’re at a time where tech isn’t the differentiator often,” he said. “Now the limits of what you can do with a computer is really what you can do with your imagination.”

 

Pattison mused that Austin might be a more friendly environment than other markets.

 

“It doesn’t seem like this is the kind of company that would thrive in the Valley, based on my experience,” he said.

 

And Pattison said Prepify needs to thrive.

 

“If we aren’t making money, we aren’t really having the impact we need to have,” he said. “If we aren’t connecting kids with colleges, we aren’t succeeding at our goal.”

Some companies' goals are even loftier.

EarthBenign CEO Tapan Bhargave (pictured right) wants to use his new financial tech platform to sustain agricultural supply chains by changing the way farmers finance their operations and selling goods to consumers through conscientious retailers.

 

Easy, right?

 

The company’s plan is to upend the debt economy that weighs on farmers who rely on loans to produce goods that take a long time to grow and sell. EarthBenign wants to be the next logical step in microfinance, a concept which won the Nobel Peace Prize in 2006.

 

Instead of loans, EarthBenign would source capital from customers who are passionate enough about local and sustainable products to pre-pay for them through a variety of alternative currencies, vouchers, or memberships.

 

Retailers that are closely involved with their supply chains and transparent about them would broker the deals. Think Whole Foods, whose 2014 annual report claimed that 24 percent of its procurement is local.

 

And Chief Business Officer Prashant Joshi says the company doesn’t just benefit farmers with cash flow problems.

 

“A consumer who cares about local goods gets their own altruistic way of supporting a local food producer instead of a big conglomerate,” he said. “There’s an emotional and rational component.”

 

For now, the company is focused on fundraising and finding retail partners.

 

“We define ourselves as a fintech platform for sustaining supply chains,” Joshi said. “The outcome of our efforts will have a social impact, but how do we go about it? It’s through fintech.”

 

In order for these companies to survive long enough to have noticeable impact, though, they’ll have to navigate the same hurdles facing every other startup: smart business plans and access to capital.

 

Bogus says that’s where Austin+SocialGood comes in.

 

“Sometimes the desire to do good outweighs the consideration of a strong economic model and business plan that investors can sign off on,” he said. “We see a lot of common problems to work out: business model and community stakeholder mapping are the hardest concepts for them to grasp at the beginning.”

 

It must be working. Austin+SocialGood is planning to double its offerings with a second accelerator program each year. They’re also considering extending each program by two weeks to give teams more time for pitch prep and business planning.

 

“Our finalists that haven't won have still achieved great success,” Bogus said. “As cheesy as it sounds, everyone who participates really is a winner.”