There’s no better time than now. Silicon Valley is on a tear, so it might seem like the US is teeming with startups. But, according to the National Bureau of Economic Research, the number of high-growth startups has been declining since the 90’s.
New firms make up about eight percent of companies, versus 13 percent in the 80’s. After the turn of the century, startups created fewer jobs than they did before the year 2000. That means America needs startups that are really going to innovate, thrive, and create jobs.
It’s time for a startup that benefits the world. It’s time for a purposeful startup, one so indispensable it can’t help but make a profit. That’s how the best startups are. This is your moment to make this happen.
Determining your path
The business with a big enough reach to make any sort of difference is, by its very nature, solvent—if not profitable. It’s impossible to be disruptive when you’re mired down in financial issues. Any avenue can return positive results, but some directions are more likely to be profitable than others.
The University of Alabama at Birmingham points to the healthcare industry as being ripe for disruption through technology. Tech is already playing a role in the following areas of healthcare:
- Information sharing: The industry is moving toward new solutions for accessing patient information and information about various conditions
- Self-management: Proactive health apps and monitoring apps can help patients manage their own health, and can help doctors get accurate ongoing information
- Point-of-care: Monitoring devices can help patients access healthcare solutions in a more timely and convenient manner
- Pharma-free care: It may sound controversial, but according to UAB, “While some psychological conditions are best treated by professionals, others such as cognitive behavioral therapies and sleep medicine could be administered online”
It’s not hard to imagine an app that combines information sharing, self-management, and point-of-care, in addition to providing insights by analyzing pharma-free care sources.
See Also: Five Business Technology Trends for 2017
Purpose and practicality
Groundbreaking work in healthcare serves a great purpose. If your work helps save even one person’s life, you’ve already done a lot. Several economic factors make healthcare a likely place where your startup will see profits:
- The global preventive healthcare technologies and services market is expected to reach $432.4 billion by 2024—a large share of this will be made up of early detection and screening tech
- The healthcare sector is among the top 10 sectors for startup unicorns, with Intarcia Therapeutics valued at $5.5 billion
Preventive healthcare tech that’s easy to use, with the ability to navigate the information privacy requirement stipulated by the Health Information Portability and Accountability Act (HIPAA), will be extremely valuable to the user. And, your profits will serve the purpose of saving lives.
Fast-growing fields with a purpose
In terms of viability, other fields might not be as obvious as healthcare, but the purpose they serve is admirable. Many of these fields are exciting and offer promising longevity.
One of these fields is green energy. Recently, Bill Gates established a $1 billion dollar fund called Breakthrough Energy Ventures, expressly for the purpose of investing in green energy startups. This high profile fund is exciting because it means the solution to green energy is simply not there yet. You have the chance to do something no one has done.
The Breakthrough Energy Coalition identifies five “Grand Challenges” in the fields of electricity, transportation, agriculture, manufacturing, and buildings. Each of these sectors needs technological answers to the problem of carbon emissions. Breakthrough Energy is willing to offer “flexible capital” to the startups with the best ideas.
See Also: How to Secure Funding for Your Startup (with INFOGRAPHIC)
A challenge to take on with fervor
The fact that Elon Musk’s Tesla is not on the list of top unicorns, while his SpaceX is, illustrates the difficulty of innovating and making a profit with green energy technology. Investopedia’s list of the fastest growing green startups in 2016 doesn’t reveal any Ubers of green tech, but it does reveal companies that “possess a fundamental triple bottom line, aiming to generate revenue and profits for shareholders, while also working to increase the social good and save our planet from dire environmental problems of the 21st century.” If that’s not an impressively lofty bottom line and purpose, it’s tough to say what is.
If your goal is to start a business that has an impact on climate change, greentech is a young field with a lot of room for growth—a place where your passion for the cause and your ability to develop a quality product will really show.
The first round of funding is the friends and family round. You’ll have an advantage with this round because your idea aims to actually help people (it’s not an “Uber for hamsters,” as one entrepreneur I spoke to joked). After the friends and family round comes the seed round.
Sources for funding in the seed round can include angel investors, crowdfunding sites, micro-venture capital firms, a business accelerator, an incubator, or a corporate seed fund.
According to venture capital firm Funders Club, it’s best to avoid first-time angels. Ask for any investor’s references—this is someone you’re developing a relationship with. Don’t work with a control freak, and find cornerstone investors who can help you get going quickly with larger investments. Look for individuals with independent opinions, and build relationships with them—they could end up being your series A VCs. Beyond your initial cornerstone investors, build further on a diverse group.
How to avoid post-accelerator funding failure
David Cohen, co-founder of the accelerator Techstars, points out that one-third of accelerator graduates make it past seed funding to the series A round. Getting into an accelerator is highly competitive and tough, but you should apply with full confidence.
Cohen has some important funding-related points beyond the accelerator:
- Build your network early and approach them for funding later on—build relationships with angel investors and VCs based on your passion, enthusiasm, and the validity of your cause
- Keep maintaining and building your network—it’s the journey that counts
- Approach VCs and angel investors with conviction (and a solid elevator pitch)
Funding is about engaging investors, building relationships, and being passionate with the strength of conviction. Seek out investors through social networks (such as LinkedIn), coworking sites, websites, events (such as Business Network International events), friends, family, and crowdfunding sites (such as Crowdfunder). Do your best to engage them with your personality, the strength of your idea, and your conviction before all else.
See Also: What Is a Social Enterprise?
Because the nature of what you’re doing is risky, the profits part won’t come easily. Even before you begin, it’s important to think about strategy.
By the time you’re up and going, you’ll have already spent precious hours dreaming big, nailing your brand philosophy, and thinking about how your offering benefits people. From the outset, prioritize innovation through creativity and fun. Think about how you’ll create a positive company culture the best people will want to be a part of.
Barbara Ann Corcoran is an investor, entrepreneur, consultant, and a Shark on ABC’s Shark Tank show, in which entrepreneurs pitch their ideas to industry veterans in an effort to get funding. She says, “Fun at work is the best way to build strong teams. If you conduct business as usual, the best you’ll have is a usual business.”
How to make innovation happen
Corcoran recommends budgeting for creativity by creating a “mad money fund.” In her case, the fund was five percent of sales, earmarked specifically for coming up with new ideas. By mandating innovation, she made sure it happened.
To make the job more enjoyable, she recommends organizing fun events on company time and literally searching for fun things to have at the office, such as, “free massages, manicures, soft-drink coolers, ping pong tables, yoga classes.” You’ll want to customize based on what’s fun for your team, of course. Her company had surprise retreats, where no one knew where they were going until they got to the airport, and theme parties where everyone dressed up differently each year.
Her point is that diverse activity and an overt effort to incorporate fun and creativity lead to innovation. Make fun priority number one for the people working with you on your startup. They’re the most important part of your purpose, and if you make sure they know that, they’ll stick with you.
The purposeful startup
Identify a problem the world is facing, such as growing health concerns and clean energy concerns. Identify an innovative solution. Help people solve their problems, and your startup’s purpose will go beyond your own ends and your own profits.
Use your passion and your networking skills to get funding. Create an innovative environment at your startup, with flexibility and fun built into the rubric. Throw out the rulebook and value your employees. Engage them with the overall purpose of your mission, making sure they know they’re as integral to success as you are. Your startup’s purpose will shine, and you’ll feel great about the process of making it a reality.