Jeff Cherry is transforming his Conscious Venture Lab startup accelerator into a nonprofit in order to raise more capital and teach more entrepreneurs how to build socially conscious companies.
Baltimore-based Conscious Venture Lab will now be a program of the Novella Center for Entrepreneurship, a nonprofit named after Cherry’s mother, Joyce Novella Cherry. The shorter, hybrid program plans to teach companies the principles of stakeholder capitalism with the hopes of creating sustainable companies that serve the greater good as much as the bottom line.
“Funding the accelerator as a for-profit was a very difficult thing,” Cherry said. “The accelerator itself is not set up to make money. It's really set up to be a training organization to help entrepreneurs.”
Conscious Venture Lab is technically licensing its intellectual property to the Novella Center, Cherry said. The legal arrangement allows Conscious Venture Lab to run training programs and other work for private-sector clients. The new nonprofit status will also not impact Cherry’s efforts to raise a $50 million venture capital fund through his Conscious Venture Partners.
The Novella Center has raised around $500,000 with a goal to raise eventually raise $4 million, Cherry said. The nonprofit's main source of revenue outside of traditional donations is a pay-it-forward model. Companies that graduate from the free program and later receive investment from Cherry’s Conscious Venture Partners give back to the accelerator, Cherry said. The combination of $4 million in seed money and the contributions from successful cohort companies will provide enough capital for the accelerator to last 10 years, Cherry said. The center's corporate partners include Baltimore Development Corp., Baltimore Peninsula developer MAG Partners, Brown Advisory and the Howard County Economic Development Authority.
Conscious Venture Lab is also taking several steps to become more accessible to entrepreneurs including expanding the number of cohort companies from 5 to 10 companies to 20 to 25. The program will also be 12 weeks, four weeks shorter than the old program.
The nonprofit accelerator is a hybrid model, where companies outside of the area spend two weeks in Baltimore at Conscious Venture Lab’s Baltimore Peninsula office and the rest online. Local companies can attend all the sessions in person.
A focus entirely on shareholders is a losing battle for many companies, Cherry said. At a time when companies are struggling to hire employees, CEOs need to be aware of the working conditions of their staff and how the company sees the world.
“If you're in a war for talent, and the only weapon you have is pay, you're fighting a losing battle,” Cherry said.
There has been a backlash to ideas intended to create more social consciousness in the business world such as the environmental, social, and corporate governance (ESG) goals that try to create more sustainable businesses, Cherry said. The difference between his project and ESG is that Conscious Venture Lab tries to get businesses to focus on how the company impacts their employees, not just if the product itself is beneficial.
“I’ve seen companies, particularly in my consultant days, that were very focused on their environmental footprint, the process and procedure of corporate governance, and [providing] products that are aligned with social needs, that were miserable places to be because they were still operating with this command and control mindset,” Cherry said.
