For most companies, the main goal is to maximize profits. But at some businesses, profit and purpose go hand-in-hand.
Often referred to as "social impact" companies, they aim to do more than simply make a buck, as they work to create a positive impact on the world. Social impact startups in Chicago hail from a number of industries, including finance, education and healthcare, and all of them have set out to make a difference.
Though Chicago has a growing group of companies that are aiming to make the world a better place, several cities outpace Chicago when it comes to the best cities for launching a social impact business. Last month, Halcyon, a Washington, D.C.-based incubator, ranked Chicago No. 11 on a list of the top U.S. markets for impact entrepreneurs. Boston came in at No. 1 with San Francisco and Seattle placing in second and third, respectively.
But Chicago could soon see a significant bump in social impact startup activity thanks to a milestone made by a local venture capital firm.
Chicago-based Impact Engine closed its second fund at $25 million earlier this month. The firm closed its first fund, which held $10 million, back in 2016. So far, the firm has invested in nine companies from the latest fund, including two Chicago-based startups: Cancer IQ, a software startup that helps healthcare providers identify patients who have a genetic predisposition to certain cancer, and Fixer, a startup from former Grubhub co-founder Mike Evans that provides on-demand handymen.
“People really believe that the next wave and the next generation of successful entrepreneurs are going to be the ones that are actually really mindful and are intentionally creating a positive impact," said Tasha Seitz, a co-founder and partner at Impact Engine.
There’s also the skeptics, though. Raising social impact funds can be more difficult because investors sometimes don’t believe social impact companies can provide the returns that other businesses do.
But Seitz said impact investors look for the same business attributes as traditional investors, including a marketable product, sustainable business model and dedicated leadership.
“We want to see big market opportunities because we want companies to become worth hundreds of millions and billions,” Seitz said.
And unlike some other companies, social impact startups have competitive advantages in a lot of ways, especially when it comes to attracting and retaining top talent, Seitz said. Working for a company that has a positive impact on society is often a major selling point when companies are trying to lure prospective employees, especially when it comes to younger workers.
Below are five notable social impact startups making a difference in Chicago.
In 2017, Percent Pledge launched to be a platform for individuals to donate money to charitable causes, but soon after, shifted its focus to corporate giving. Now, the startup focuses on working with companies to let their employees donate a small percentage of their monthly pay to causes they care about.
Percent Pledge, founded by CEO Joel Pollick, pairs donors with charitable giving portfolios filled with various nonprofits that serve causes like women’s empowerment, healthcare and veteran support. Users can enter their budget or salary information and determine how much money they want to give to charity every month. Donors can choose weekly or monthly reports that update them on the progress of the charities to which they have donated.
Percent Pledge's clients include 1871, SpotHero, Yello and Visibly, according to its website. The startup raised a small seed round last year.
Mission Measurement set out in 2005 to help nonprofits evaluate the impact their philanthropic initiatives were having on society. Now it works with foundations, companies and even government agencies to help any organization participating in social change measure their impact.
In 2014, Mission Measurement launched the Impact Genome, a tech database platform that allows companies to understand their outcomes and standardizes outcomes for social impact initiatives. Mission Measurement tracks impact categories like college accessibility, food insecurity and homelessness.
Mission Measurement helps companies decide where to put their philanthropic dollars and gives them data afterwards that reflects the impact those dollars had.
“So many people were doing all these cool things in social impact, but nobody knew if they were making any difference,” said Mission Measurement CEO Jason Saul.
Founded in 2016, Packed With Purpose is a startup selling gift boxes, themed by occasion, that are filled with products from social impact vendors. The startup offers corporate gifts as well as personal gift boxes.
Founded by Leeatt Rothschild, Packed With Purpose has doubled its revenue year over year since launching, and has grown its list of gift purveyors to more than 100. Vendors include Aspire Coffeeworks, a coffee company whose coffee is made by people with disabilities, and Bare Soaps, a soap maker that supports economic development in Uganda and India. In each gift box, Packed With Purpose includes information on each vendor that tells their unique social mission and story.
Rothschild, who was previously a Peace Corps volunteer and later worked at Mission Measurement, said Packed With Purpose is projected to ship out about 30,000 gifts by the end of this year.
“In working with a thousand+ companies across the States, we are often helping them achieve their business outcomes, whether it’s recognizing employees or thanking clients for referrals or for another year of business with them,” Rothschild said.
Debate it Forward is an education nonprofit that promotes healthy discourse in youth through play-based programming to foster kids’ confidence. The startup was founded by Josh Aaronson and Leah Shapiro, who were both honorees on Chicago Inno’s most recent 25 Under 25 list.
In 2018, the startup came in second place at the University of Chicago's College New Venture Challenge and participated in the Polsky Accelerator program. This year, Debate it Forward won first place in UChicago’s other student startup competition, the Social New Venture Challenge, a globally-recognized accelerator program that focuses on launching social enterprises.
Now, Debate it Forward has nearly 30 teachers traveling to Chicagoland schools, hosting enrichment classes during school hours and a 10-week after school program. Additional offerings include summer programs and private tutoring.
In October, Aaronson was named one of four 2019 fellows that were awarded $25,000 by the Rustandy Center for Social Sector Innovation at UChicago's Booth School of Business.
Founded in 2013, Edovo provides tablet-based education to prison inmates in an effort to reduce recidivism. The startup helps inmates learn vocational skills, academics, life skills training and other useful knowledge that could help reduce their chances of returning to prison once they are released. The startup also helps facilitate communication between inmates and their loved ones.
Last year, Edovo raised $9.8 million in a Series A round from several social impact investors, including Impact Engine, the Lumina Foundation, Sustain VC, the IDP Foundation, Series Change Investment, Evolve.Foundation, Kapor Capital and Ekistic Ventures.
