NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

When I worked at a venture capital firm in Boston, the holy grail was to find and invest in an early-stage for-profit company that would become a “unicorn” — a startup with a valuation of over $1 billion. These companies’ appeal to investors is clear: They often achieve product-market fit and are able to scale commercially and rapidly. The downside is, they have no mandate to achieve social good, and the financial value they create only benefits a few.

This approach has led to growth at all costs, which comes — at a cost. Namely, the traditional venture capital model can yield a concentration of resources and power in the hands of a limited number of companies that are established to serve customers willing and able to pay for higher-margin goods and services. Meanwhile, social enterprises working to address pressing societal issues are often overlooked by venture capitalists, given the long time horizons required for systemic change, and these companies’ no- to low-margin business models and their less-than-clear pathways to scale.

It’s time to shift resources and power to give social entrepreneurs the tools required to achieve impact at scale. That’s why 100x Impact Accelerator, the world’s largest social impact accelerator, is here — to shake things up by nurturing and celebrating future social unicorns.

What is a social unicorn?

A social unicorn is a company or organisation that, through its sales or services, is making a significant positive impact on society on a massive scale. Social unicorns can be either non-profits or impact-first for-profits, but the common feature they all share is their ability to drive widespread, positive change. While traditional unicorns focus on achieving a billion-dollar valuation, social unicorns focus on making a massive positive impact — potentially on the scale of billions of lives changed, or billions of dollars in economic impact generated in underserved communities. And if they can do this while still achieving a billion-dollar valuation, all the better.

Social unicorn founders identify a gap where markets fail to see value and governments fall short. They identify a novel and promising solution that is not being pursued by more conventional players, and commit their time, energy and money to refine this solution and scale their impact.

What makes social unicorns unique is that they are focused on making a difference not only in their immediate communities but on a global scale. To that end, they use innovative approaches that often work across borders to drive progress on some of the world’s most pressing social issues, from poverty and access to education, to healthcare and environmental sustainability. In other words, these ventures are thinking radically about a large addressable market.

Do social unicorns exist?

Social unicorns, like any unicorn, are rare. However, they do exist. Take The End Fund, for example, led by Ellen Agler. The non-profit organisation has administered 1.2 billion treatments to end Neglected Tropical Diseases (NTDs). It has accomplished that through an innovative approach to partnerships, working not only with governments but also with smaller, fragmented NTD organisations to make substantial progress towards eradicating these diseases.

Another example is d.light, which, through its off-grid solar lights, has saved $4.7 billion in energy-related expenses in communities in emerging markets. The social enterprise designs and manufactures affordable, clean energy solutions like high-quality solar lanterns for households that lack access to reliable electricity. By leveraging the power of renewable energy, d.light aims to reach and impact a billion lives, helping individuals and families to break free from the shackles of darkness and energy poverty.

VisionSpring, another social enterprise, has generated $1.8 billion in economic impact by training local individuals, known as “vision entrepreneurs,” to conduct vision screenings and sell affordable eyeglasses within their communities. Through this innovative and sustainable model, VisionSpring creates local economic opportunities while simultaneously improving the vision of underserved populations. The company has sold over 8.7 million eyeglasses to individuals who would otherwise not have had access to eye care.

The Secrets to Social Unicorns’ Success

In trying to understand how these organisations achieved such success, we found three threads that run through each one of them — and through most other social unicorns:

1. They have clarity on their endgame: Though these organisations are tackling big, complex problems, they know that scaling their organisation is different from scaling their impact. So rather than focusing on endless fundraising to achieve organisational growth, they’ve focused on strategies — like government adoption or open-source models — that help them to scale their impact. With government adoption, an organisation’s solution is adopted by the government and implemented at a national scale. For example, Harambee works with the government in South Africa to address systemic youth unemployment, helping to support 3.5 million work-seekers. On the other hand, open-source models provide a broad base and widespread access to an organisation’s solution, which amplifies the impact. Alcoholics Anonymous, for example, provides an open-source framework for overcoming addiction that any group can adopt and implement. They offer open-source materials and resources that local groups and chapters use to address alcoholism and teach proven approaches to recovery.
2. Rigorous research and evidence of impact underpin their delivery model: These organisations evolve, pivot and change course based on feedback from clients, partners, investors and other stakeholders. Through listening to their end-users and collecting data and evidence, they have iterated on their models to scale impact.
3. They have exceptional leadership: Social unicorn leaders have tremendous grit and persistence, with a remarkable capacity to listen with humility. Their commitment to the issues they are so­­­lving and their desire to build networks and collaborations around them contribute to their ability to engage others in their mission and achieve massive impact.

Of course, to become a social unicorn, there must also be an X-factor — a “special sauce” ingredient that contributes to an organisation’s ability to scale up, out and deep.

A new kind of accelerator

Underpinning 100x’s model is the need to meet founders where they are in their journey, and to partner with them to tackle the barriers that hinder social impact ventures from reaching their full potential. We approach these goals in several ways.

First, we work with social entrepreneurs to test and determine the best endgame for scaling their impact. Defining the wrong endgame often leads to a dead-end. For instance, some impact-focused organisations’ founders default to a for-profit model because raising venture capital funding can feel more straightforward than building the complex partnerships that can amplify the impact of non-profit or public sector models. However, spending that time and energy on, say, government adoption may bear more fruit in the long run.

Second, we recognise that spheres of influence matter. We aim to measure an organisation’s success based not on how much money they’ve raised after they’ve left 100x, but on how effectively they’ve surrounded themselves with the right data and people who can drive change. To help foster these connections, we are leveraging the powerhouse of resources and networks at the London School of Economics. This ensures that our cohorts of social ventures have access to cutting-edge research, data, and a pool of experts and dynamic thinkers at one of the world’s leading academic institutions.

And third, we work to elevate these leaders and the issues they’re addressing. To that end, we work with them to refine their brand and storytelling strategy, and we leverage our network to link them to the right individuals, organisations and events. For instance, our annual Summit Day acts as a platform for founders to showcase their solutions and successes to a network of philanthropists, impact investors, policy advisers and media. These spotlights matter. Stories matter. And we want to amplify these voices a hundred times.

Social unicorns can take on the world’s biggest problems, if they have the right set of resources, powering the right endgame. That’s why at 100x, we are working to supercharge social unicorn founders, encourage radical experimentation, and build an engine that can support cohorts of social unicorns for the next decade and beyond. Applications to our second cohort are still open, and we are calling all passionate and disruptive entrepreneurs who are ready to take their impact to the next level to apply before the July 3, 2023 deadline.

Leslie Labruto is the Director of 100x Impact Accelerator. 

Photo credit: Paul Bill