The Richard King Mellon Foundation announced the winners of its first-ever startup pitch competition, awarding a cumulative total of $1 million to its top three finalists and an additional $2.39 million split across 13 other startup companies.
According to Sam Reiman, the foundation's director, a total of 108 for-profit and social impact-driven startup companies pitched their business model to a panel of 51 judges. Reiman said these pitches proved to be so impactful that the RK Mellon Foundation's board opted to approve additional funding beyond the originally planned top three finishers so that more companies could get access to capital and further build out their services.
"We looked at what we had available and funded, and then we asked the question, well, how could we distribute this across these companies in a way that's going to be impactful," Reiman said. "We wanted to make sure that this wasn't going to be like so many competitions that we've seen that usually if you're in a competition and you're not a winner in the top three, you get nothing. This is one of the rare examples of you didn't win, but your consolation prize is you won."
Philadelphia-based Fabric Health came in at the first-place spot, earning a $500,000 investment as a result. The 10-person startup co-founded by Courtney Bragg and Allister Chang provides access and information on local health care resources by meeting with families at laundromats while they wait for their clothing to finish being washed. It plans to use the funds to expand into Pittsburgh and southwestern Pennsylvania.
In second place, the foundation awarded a $300,000 investment to Butler County-based Gus Gear Inc. A two-person startup founded by CEO Sarah Palya, Gus Gear specializes in the manufacturing of medical devices and supplies aimed at helping patients, primarily children, live safer and more active lives while they are undergoing treatment for various medical conditions. The startup will use the funding to subsidize a significant discount on its products to those who are facing financial hardships. It'll also allow the company to establish a distribution center and hire employees from financially distressed communities to help run it.
Coming in at third place, the RK Mellon Foundation awarded a $250,000 investment to Pittsburgh modular housing startup Module. The homebuilding company manufactures individual sections, or modules, of a home in a climate-controlled factory, which allows it to deliver a new home to its customers faster than the traditional on-site home building process, and at a price that's more affordable, too. Module, a five-person startup based in the Garfield neighborhood of Pittsburgh, contracts the physical manufacturing work out to modular home factories, but with this funding, efforts will begin to pursue the building of its own facility to do such work. The company is also looking to create a modular construction-focused job training program that will aim to provide advanced manufacturing jobs to those in the region as a result of this funding.
Module shows off its latest home in East Liberty
As for the other startups receiving investments, the foundation awarded $200,000 investments each to nine startups, $150,000 each to three startups and $100,000 to one startup. All the startups receiving investments from the foundation can be found here.
The pitch competition funding endeavor comes as part of the foundation's new Social-Impact Investment Program (SII), an effort that Reiman said is looking to invest up to $50 million over the next 10 years into for-profit startups that are aimed at addressing societal problems at the core of their business models. For the most part, the investments into the winning companies come in the form of convertible debt, which will be transformed into an equity stake in the startup should it move onto another phase of funding. Any exit the foundation gets from a startup will then be reinvested into the SII program.
Reiman said the winners come from different backgrounds with regards to race, ethnicity, gender and education level. The winning founders are also committed to furthering the same social-driven goals as the foundation, Reiman said, but they are looking to make the world a better place through entrepreneurship instead of through philanthropy, the foundation's specialty.
"That's what got us most excited," Reiman said.
Additionally, the foundation partnered with Menlo Park, California-based Draper Richards Kaplan Foundation, Silicon Valley-based global entrepreneurship platform OneValley and East Liberty-based incubator Ascender to help with the competition's selection process. OneValley and Ascender will also offer subsidized office space and support service access to these 16 winners should they want it, the former doing so at its new Roundhouse in Hazelwood Green facility.
Last month, the foundation appointed Bobby Zappala, a local startup community veteran and one of the judges in the competition, to serve as a program officer to help lead the initiative going forward. According to Reiman, the foundation hopes to launch another similar pitch competition within the next two years.
