Great post! Follow-up funding and founders is so important!
I want to challenge some thoughts or get your clarification on the numbers.
You write: “I don’t believe that it is a career path that can absorb a high number of people (my guess would be less than 5% of people are actually suited to founding a nonprofit). It is my opinion that other career paths, like for-profit founding or policy, suit a much larger percentage of people (maybe 20%)”.
I’d like to understand why you think four times more people can be succesfull for-profit founders than non-profit founders? My personal experience (might be totally off!) is that far less than 20% of people can be a succesful for-profit founder. I’d put potential for-profit founders at around 5%, and of those 20% are also going to be responsible for 80% of the success.
For moral compass founders in the for-profit space, I have found quite a lot, but my sample is probably dirty since those who approach me usually have a strong moral compass since I’m an impact founder myself (with Profit for Good model). I can understand why it might be very different for non-profits. I do have the feeling that founders with a moral compass might outperform those mostly in it for money reasons. Those who have a why to live for can bear almost any how, and with founding being as hard as it is, money alone is not going to be as effective at keeping founders going as long and as hard as is needed. A good why is.
You might want to talk to for-profit founders and VC’s and see if they think it’s 20% or if they also think it’s less.
Why are more people a fit for for-profit? I think for-profits require many of the same skills but far less focus on impact (even if the founder of that for-profit aims to donate their earnings). I think the M/E and fundraising requirements of an NGO are harder than the equivalent in the for-profit space.
Why 20%? It’s not a deeply considered number. I can easily imagine it being 10%, although the stats I saw suggested the current population was somewhere between those two numbers. I think one could argue both that too many people are doing for-profit founding relative to population, and that tons of people still do not consider it. It might also be worth considering the pool we are in, e.g., what % of EAs might it fit for.
VC’s view: I think the VC market is very unicorn-focused and I definitely would not claim that 20% of people succeed in their ventures, or would end up with high valuations, or would even get VC funded (although 20% of EAs seems a lot more plausible).
I agree M/E and fundraising are harder for NGO’s or even impact startups who have concessionary returns, I’ve seen that a lot. I’m not completely sure how that translates to more (difficult to get) skills being needed by NGO entrepreneurs than for-profit entrepreneurs. There are certainly skills an NGO entrepreneur need that for-profit entrepreneurs don’t need, but I think that goes the other way too.
Thank you for the view on the 20%. I guess it depends on what you think “suits” means. To me that’s people who enjoy being a founder and have higher than average odds of being a succesful founder, and with that in mind I think the number is close to 5% than 20%.
I’m very happy CE exists, because it enables people who care to start NGO’s that solve problems they think are important. I think there are a lot of potential founders who want to start NGO’s or impact first businesses, but don’t because the organizations, people, information and infrastructure that’s out there for them lacks a lot compared to those who want to start a for-profit.
Great post! Follow-up funding and founders is so important!
I want to challenge some thoughts or get your clarification on the numbers.
You write: “I don’t believe that it is a career path that can absorb a high number of people (my guess would be less than 5% of people are actually suited to founding a nonprofit). It is my opinion that other career paths, like for-profit founding or policy, suit a much larger percentage of people (maybe 20%)”.
I’d like to understand why you think four times more people can be succesfull for-profit founders than non-profit founders? My personal experience (might be totally off!) is that far less than 20% of people can be a succesful for-profit founder. I’d put potential for-profit founders at around 5%, and of those 20% are also going to be responsible for 80% of the success.
For moral compass founders in the for-profit space, I have found quite a lot, but my sample is probably dirty since those who approach me usually have a strong moral compass since I’m an impact founder myself (with Profit for Good model). I can understand why it might be very different for non-profits. I do have the feeling that founders with a moral compass might outperform those mostly in it for money reasons. Those who have a why to live for can bear almost any how, and with founding being as hard as it is, money alone is not going to be as effective at keeping founders going as long and as hard as is needed. A good why is.
You might want to talk to for-profit founders and VC’s and see if they think it’s 20% or if they also think it’s less.
Short responses here:
Why are more people a fit for for-profit? I think for-profits require many of the same skills but far less focus on impact (even if the founder of that for-profit aims to donate their earnings). I think the M/E and fundraising requirements of an NGO are harder than the equivalent in the for-profit space.
Why 20%? It’s not a deeply considered number. I can easily imagine it being 10%, although the stats I saw suggested the current population was somewhere between those two numbers. I think one could argue both that too many people are doing for-profit founding relative to population, and that tons of people still do not consider it. It might also be worth considering the pool we are in, e.g., what % of EAs might it fit for.
VC’s view: I think the VC market is very unicorn-focused and I definitely would not claim that 20% of people succeed in their ventures, or would end up with high valuations, or would even get VC funded (although 20% of EAs seems a lot more plausible).
I agree M/E and fundraising are harder for NGO’s or even impact startups who have concessionary returns, I’ve seen that a lot. I’m not completely sure how that translates to more (difficult to get) skills being needed by NGO entrepreneurs than for-profit entrepreneurs. There are certainly skills an NGO entrepreneur need that for-profit entrepreneurs don’t need, but I think that goes the other way too.
Thank you for the view on the 20%. I guess it depends on what you think “suits” means. To me that’s people who enjoy being a founder and have higher than average odds of being a succesful founder, and with that in mind I think the number is close to 5% than 20%.
I’m very happy CE exists, because it enables people who care to start NGO’s that solve problems they think are important. I think there are a lot of potential founders who want to start NGO’s or impact first businesses, but don’t because the organizations, people, information and infrastructure that’s out there for them lacks a lot compared to those who want to start a for-profit.