A New Take on Silicon Valley: Why it’s Time for the Tech Sector to Embrace Social Impact
It seems hard to believe, but the Benefit Corporations (B Corps) movement started just 14 years ago. Founded by the creators of basketball apparel company AND1 in 2006, B Corps were the first triple bottom line (3BL) organization structure. The structure allowed for-profit social enterprises to commit to a ROC (return on community) through social or environmental practices as well as the typical ROI (return on investment). This provided a clear contrast to the traditional structure of for-profit companies that relegated doing good to often underfunded and unsupported corporate social responsibility departments. Since its founding, the B Corps movement has helped lead the way toward a new concept of business ethics, in which corporations are increasingly expected to generate a net positive impact on the world, alongside their financial returns for owners and shareholders.
When the B Corps certification was launched, there were zero companies that officially embraced its goals. Today, there are over 3,300 Certified B Corps in 71 countries across 150 different industries, including well-known brands like Patagonia, Ben & Jerry’s, Warby Parker and Allbirds. This momentum represents a true revolution in what business can be.
Now, as smartphone proliferation has made the internet accessible to previously unreachable communities, the business sector’s shift toward social impact is increasingly reaching the technology industry. As I’ll discuss below, it’s a trend whose time has come.
Tech Funders Pivot to Social Impact
With a growing number of companies designing software and technology applications that address the essential needs of newly connected communities around the world, funders are taking note. Tech investors like Techstars Social Impact and Obvious Ventures have started focusing on purpose-driven entrepreneurs across investment pillars like sustainable living, healthy living and people power. And Silicon Valley venture capitalists and startup accelerators have begun to fund young tech companies – not just in the U.S., but also from emerging nations like Nigeria, Indonesia and Vietnam. For instance, according to General Partner Eddie Thai, the 500 Startups Vietnam fund has invested close to one-third of its capital in impact investments that address matters like financial inclusion, education, decent work and sustainable food. “That one-third accounts for three-fourths of our capital appreciation,” Thai explains. “Such numbers support the hypothesis that some of the greatest opportunities are in serving the least fortunate among us.”
This investment activity isn’t being driven solely by U.S. investors, however. VC (or venture capitalist) has become a common job title everywhere in the world, as everyone has seen the successes in Silicon Valley, and many countries have worked to generate similar results on their home turf. India, China, Russia (and nearly every major country) have started to fund novel or lookalike technology (think Google competitors like Baidu in China, or Yandex in Russia) to address their own local needs and challenges, and to tap into the VC model that’s been successful in other parts of the world.
The Nonprofit and Public Sectors Take Notice
This attention and funding has led many large nonprofits, NGOs and other international development organizations to start taking notice of the amount of positive impacts these tech entrepreneurs and their companies are having on their local environments. The rapid pace of scale, the number of new jobs, and the innovation and outcomes they have provided have been impressive – and their tech-fueled approach is gaining traction. For instance, if you’ve watched Inside Bill’s Brain, you’ve seen how the Bill & Melinda Gates Foundation takes the world’s hardest problems – from disease to clean water and climate change – and puts a team of entrepreneurs and technologists to work in combating it.
Governments have also taken note, and have begun to fund bottom-up innovation of their own through venture funds, startup accelerators and direct investments. For instance, the European Union has started a grant program that will award nearly EUR 80 billion of funding by the end of 2020. And Canada has subsidized in-country software developers with a research and development tax credit. Major players across sectors are now looking at tech startups as a way to help propel their countries forward, especially in regions that need more development.
To take just one example, MEST is an Africa-wide tech entrepreneur training program founded in 2008 by The Meltwater Foundation. Since that time, it has expanded to create an internal seed fund, and hubs offering incubation for technology startups in Accra, Ghana; Lagos, Nigeria; Cape Town, South Africa; and Nairobi, Kenya.
According to Veronica Mulhall, Head of Marketing at MEST, “In MEST’s 12 years of providing critical skills training, funding and support in software development, business and communications to Africa’s tech entrepreneurs, we estimate 50% of the startups we work with are socially focused. As startups continue to see other 3BL startups scale, we only expect that percentage to increase.”
Tech Startups’ Impact on the Ground
The tech startup scene has exploded in practically every corner of the world, and along with its growth has come major social change. Bottom-up innovation has produced countless new opportunities for the people involved – both employees and customers.
For example, SweepSouth has created over 20,000 new jobs in South Africa, a country which has close to 30% unemployment. They are expanding to Kenya and beyond this year. “A pure profit-driven approach to entrepreneurship is incredibly outdated, particularly in emerging markets where societal progress is key to the sustainability of businesses and the economy,” says Aisha Pandor, CEO of SweepSouth. “We believe it’s a no-brainer to do good while doing well, and are hugely encouraged by the increase in the number of investors and funds available to help support companies that promote positive social impact.”
Samasource is another well-known example. Founded by the late Leila Janah — whose life mission was to build a successful business that lifts people out of poverty, not by giving them money but by giving them work — the company helps to connect thousands of digital workers to the international business scene by hiring them to train and validate datasets for machine learning and artificial intelligence. The approach is working: According to Samasource, 25% of the Fortune 50 use its services to deliver data training and validation for the world’s leading AI technologies.
Another company that has delivered results at scale is d.light, whose solar energy products and opportunities are empowering over 100 million people and reducing carbon emissions by 23 million tons, with help from investors like Acumen and Nexus Venture Partners.
As COVID-19 continues to reshape the global economy, these sorts of tech-fueled approaches will become even more vital, uniting investors, startups, nonprofits and governments to solve all sorts of problems. Many challenges are ripe for tech disruption, as the pandemic transforms needs like universal basic income, remote education and flexible distributed work from “nice-to-have” goals to essential priorities – in addition to the clear need for tech breakthroughs in healthcare.
If it wasn’t clear before, it is now: The tech sector needs to build upon this momentum and fully embrace the movement toward social impact in business. Our future may well depend on it.
Tristan Pollock is Head of Community at CTO.ai.
Photo courtesy of Megan_Rexazin.