The concept of social impact is becoming an increasingly popular topic among entrepreneurs, investors, and start-ups. Creating social economic and environmental impact is no longer a trophy for success–it has become an integral part of corporate strategy. This article seeks to explore the ways social impact is influencing the startup ecosystem and how entrepreneurs are using startup resources to address global challenges.
What is Social Impact?
Social impact is the affect that an activity, organization, or institution has on society. The outcome of this activity can range from positive to negative and anything in between. Companies can create social impact through their work, products, or services.
The concept of social impact is becoming deeply embedded in the startup world. Companies are now specifically forming with the main purpose of having a positive social impact and solving some of the world’s most pressing issues. This idea is commonly referred to as the “impact economy.”
How Social Impact is Evolving the Startup Ecosystem
The modern-day startup ecosystem is beginning to prioritize initiatives with a social component, and in new and innovative ways. Here are a few of the ways social impact is transforming the startup ecosystem:
- Sustainable Business Model
Sustainability is becoming an integral component of startups. Companies are looking for ways to use their resources and profits to solve external challenges such as malnutrition, access to clean water, poverty, and healthcare. Instead of looking for ways to optimize returns on investments, companies are now seeking out projects that help create positive social change.
- Impact Investors
Impact investors are a new class of investors with a focus on making an impact. These investors provide funding for companies that focus on social and environmental issues. Impact investors are usually mission-driven and are looking to make a profit, but have a long-term goal of making a sustainable, positive social impact.
- Collaboration and Engagement
Startup ecosystems can now leverage the power of partnerships to create a greater impact. Startups are engaging with local, national, and global communities to let their resources and influence be felt across multiple domains. For example, a startup may work with a local government to develop a solution to a pressing problem, or collaborate with a global company to make their services more accessible in multiple countries.
- Supportive Tools
Startup ecosystems are once again receiving a boost from supportive tools. These tools include platforms where entrepreneurs can share their ideas and collaborate with other entrepreneurs, as well as initiatives that support entrepreneurs through the startup journey. These tools are often tailored to specific needs, such as access to funding, mentorship, and industry contacts.
Social impact is quickly becoming a priority for many startup ecosystems. Companies are now finding new ways to harness their resources and profits to create a positive social impact, and investors are looking for socially-driven investments. This shift towards social impact is creating new opportunities for entrepreneurs, and instances of collaboration and engagement are becoming more common. There is no doubt that social impact is evolving the way the startup ecosystem operates, and for the better.
