There are a great many accelerators and incubators that nurture startups. But who helps the helpers get funding? It’s an especially urgent matter for fledgling entities run by people who may not have a lot of experience with or contacts at the grant-making organizations likely to be sources of funding.
Helping entrepreneur support organizations find grant money
That’s the issue Village Capital, an impact accelerator pioneer which runs multiple programs for social enterprises globally, aims to address with a new tool that helps such entities, otherwise known as entrepreneur support organizations (ESOs), speak the same language as grant-making organizations.
A Framework for Founders
The tool draws on a framework for startup founders seeking venture capital investment that Village Capital introduced around 10 years ago. Its premise is that many first-time entrepreneurs trying to raise venture capital funding don’t really speak VC. That is, they’re unsure of just what investors are looking for and even what they mean when they say certain things. (Think “call me when you reach a product market fit.”)
Rachel Crawford
So, Village Capital developed a tool, called Abaca, that presents eight categories or areas and nine levels, or growth stages, along with the type of funding best for that stage. “It gives entrepreneurs, especially those who haven’t been exposed to investors in the VC world, a framework they can draw on to have productive conversations,” says Crawford.
Adapting Abaca
Used by thousands of entrepreneurs, Crawford and her colleagues realized they could create a similar framework to help accelerators, boot camps and others connect with foundations and other groups that provide grants. “People who know the language of the grant world are better able to access funding from those organizations,” says Crawford.
With that in mind, around five years ago, they embarked on what turned into a lengthy process to pinpoint the stages of growth typically experienced by ESOs and the potential funders’ concerns at those different phases of development, along with the appropriate type of funding to seek. Crawford describes the current iteration as “version six or seven,” although she expects it’s the kind of project that will never stop evolving.
Specifically, the framework has eight areas of concern to funders, including the team, problem and vision, services and programs, pipeline and selection, ecosystem, operations, financial model and impact. Then there are nine growth stages—establishing the organization, setting the vision, the value proposition, validating the market, proving impact, demonstrating a path to sustainability, performance, scaling up and market leadership. For each growth stage, there are appropriate types of funding.
For an ESO at, say, the earliest stage, the tool shows that the top team-related concern to address is that it has “a strong founding team—at least two people with differentiated skillsets.” And the type of funding it most likely will seek are pilot grants.
Identifying Risks
According to Crawford, the tool is especially useful for determining an ESO’s weaknesses—areas a potential funder typically would question the most. “Those might be the problems that are holding you back,” says Crawford. “You can identify the perceived risks in your plan and how you might go about mitigating those risks.”
Village Capital, which runs accelerator programs for ESOs, will have an analyst able to help cohort members learn how to use the tool. But anyone will be able to access it online.
One critical insight Crawford and others at Village Capital learned in developing the tool was the ultimate yardstick funders were likely to use when determining whether or not provide a grant to an ESO. “They’re looking for organizations that are deeply connected to and supportive of the entrepreneurial ecosystem as opposed to investments that will give them a return,” says Crawford.
