Entrepreneurs who are just starting out often ask me, “What did you do at the beginning of launching an impact-driven business that contributed to your current success?”
This is a tough question as SoLo Funds has accomplished a lot. Yet I’m probably most proud of us becoming the only Black-owned certified benefit corporation fintech in the US and Canada in December of 2021. By doing this, we made a commitment to showing up and making a real impact for everyone by using business as a force for good as we operate and scale. I wanted to drive positive change in the fintech space.
Building a successful impact startup doesn’t happen overnight, and tech companies should expect a steep learning curve. Our journey wasn’t easy by any means, so if you’re thinking about doing the same or are curious if it’s worth it, here’s what you should know first.
3 Steps to Building an Impact-Driven Startup
- Define your problem.
- Dream big.
- Brace yourself for scrutiny.
Define Your Problem
Before you bring your business to market, you have to discover a cause or problem that is personal to you or that you’re passionate about. What’s the impact you want to make? You have to answer this and map it out clearly. If you don’t care about the issue that your startup hopes to solve, then you’re setting yourself up to fail.
My co-founder and I used our personal experiences with money growing up to address an issue our communities faced. We wanted to close the wealth gap and provide ways for people both to access capital when they need it as well as to grow it when they have enough to invest.
When you uncover a strong motivating factor for your business, the work you do feels more inspiring and meaningful for everyone involved. You have to believe in your purpose; it can’t be just anything.
Along with finding the why behind your business comes identifying your target audience and their core pain points. Do research. Don’t just guess and create something without fully understanding the needs and nuances involved. You have to grasp who your ideal customer is and find ways that your organization can alleviate their needs.
How do you plan to connect and engage with these people? Look into doing focus groups and local activations. Knowing your customer is crucial if you hope to sustain and grow your business. All of this should be a part of a solid business plan that outlines your impact goals. Keep in mind that this work is completely separate from income and profit milestones you aim to reach.
Dream Big
Tech companies have a responsibility, especially if they’re impact-driven, to right the wrongs and fix the systems that have successfully underserved certain communities and kept real change at bay. Now is the time. Our country is experiencing overlapping economic, racial and environmental crises. Startups whose whole mission is to revolutionize or democratize outdated industries and create a better world for future generations are the ones that will come out on top.
That said, building this kind of company is going to be a lot of work, so it’s important to go after a problem that has a massive market opportunity. To be clear, impact doesn’t mean not-for-profit. I believe you can do good and do well financially at the same time. Actually, the idea that you can’t is a common misconception that prevents more impact-driven startups from actually happening.
You should aim to deliver meaningful impact to large groups of people by transforming social issues. You might have to do what we did and create a new category of product or service and structure your organization to meet the needs of underserved communities.
Doing this can be exhausting at times as you have to constantly innovate, but innovation only scratches the surface. You have to continually provide proof and documentation of your startup’s commitment to the cause it claims to support. Be prepared to show partners, sponsors and investors in-depth information on all your activities. It’s a ton of extra work compared to running a regular startup.
Brace Yourself for Scrutiny
You need to have thick skin if you’re going to launch an impact-driven business. Driving systemic change means you’re disrupting a powerful legacy system. There’s a lot of baggage that comes with this disruption, and it’s not all positive. Be prepared for attacks coming from all sides, not just professionally, but personally too.
One way to get ahead of the fray is to be ready at all times and complete the necessary due diligence that goes beyond just financial records. It’s natural to feel protective and even defensive when you’re being grilled or even doubted about your startup. You’re not alone in these types of reactions. This adversity will become your reality very soon, however, as the doors will open for criticism directed at the foundation that you’ve worked so hard to build.
At SoLo, we’re always proactive in addressing concerns, whether when we’re raising a funding round, reaching out to customers, hiring talent, or dealing with the government. Being a leader requires you to be emotionally intelligent and balanced. Don’t act on impulse and try not to underestimate how much attention others are paying to your business. It can feel like you’re under a microscope at times, but don’t let this ruffle your feathers. You have to remain extra vigilant from the get-go and try to not do or say things that can be misconstrued. This is a hard lesson to learn, but one you have to put into practice immediately.
It’s easy to fall into the trap of becoming another tech company that gets consumed by success versus its purpose. It’s hypocritical for “purpose-driven” tech startups who are playing a large part in both the good and bad things happening in the world to continue with the performative rhetoric and put profits above purpose; they should be equal. There is nothing more satisfying than knowing that your life’s work is creating a positive difference in the world. Change can be scary, but it’s necessary, and it starts with you.
