The startup world often flaunts explosive growth and billion-dollar exits. However, for founders identifying as socially and economically disadvantaged individuals (SEDI), the journey to success might require a more robust approach. Facing unique challenges in the funding landscape, SEDI-led companies must prioritize building strong foundations and sustainable growth over rapid expansion fueled by external capital.
When this grit is rewarded with targeted funding, the way is paved for success stories such as these three TEDCO-backed Maryland companies: VirgilHR, Escalate and NasaClip.
The challenge of uncertain funding
SEDI founders often encounter a funding landscape less forgiving than their counterparts. While traditional investors might be drawn to high-growth potential, SEDI companies may struggle to secure funding due to varying factors including limited access to networks along with the common issues of first-time founders learning how to be a start-up, and how to raise money at the same time.
"With uncertain funding futures, SEDI founders are often forced to spend resources building the foundations of the business and are unable to pursue the growth at all costs model that many investors have pushed in the past," said Jean-Luc Park, TEDCO's senior director, Social Impact Funds.
This reality necessitates a different approach — one that emphasizes building a robust, self-sufficient business rather than chasing quick exits. The “fake it, until you make it” model that can exist in some communities may be denied as a pathway for others.
Building a sustainable foundation
The "unicorn" business model, where companies achieve billion-dollar valuations before profitability, is not readily achievable for many SEDI companies. However, this doesn't equate to a lack of success. In fact, it can foster a more sustainable approach.
"The robust businesses are rewarded in times of difficulty," says Park. "Because they are able to survive when funding dries up and are surviving off revenues." This shift in focus requires building out all aspects of the business — sales, marketing, finance, human resources — creating a well-rounded operation that can weather external challenges. It may require that companies create back-up systems to ensure the business can survive the loss of any individual. But resources locked up in robustness are resources that cannot be used for accelerated growth.
Case studies: SEDI-founded companies leading the way
These Maryland companies, supported by SSBCI funding, have embraced this approach to achieve sustainable growth.
VirgilHR: Founded by CEO Jocelyn King, VirgilHR provides HR consulting services via a SaaS solution built by HR professionals, for HR professionals to make smart, compliant employment decisions in real-time via a smart chatbot. The company received investments from TEDCO’s Social Impact Funds in 2022 and 2023. These funds help startups reach meaningful milestones and become healthy companies. Companies are also provided resources like hands-on executive support, peer-to-peer mentorship/collaboration and networking opportunities.
“Just as VirgilHR empowers HR teams to focus on their core mission and strategic impact areas by helping them regain valuable time back from compliance tasks, TEDCO is empowering our company with this funding and mentoring support,” said King.
Escalate: Co-founded by Sienna Daniel and Sean Segal, Escalate is on a mission to minimize the turnover of frontline employees through their proprietary support platform. Leveraging artificial intelligence and machine learning, Escalate identifies a company’s most overlooked incumbent workers, then provides skills training powered by automated coaching, facilitated community and on-demand champions — all designed to reduce absenteeism and increase retention.
After a round of pre-seed funding including Social Impact Funds from TEDCO in 2023, Segal announced “Escalate is focused on solving the current talent crisis that we are seeing in frontline positions across the nation. Thanks to TEDCO’s investment we are able to continue growing our company and work to support our mission.”
NasaClip: ER pediatrician Dr. Elizabeth Clayborne, founder and CEO of this Baltimore business in Baltimore, has created a revolutionary hands-free, FDA-registered device for quick and effective nosebleed treatment for use anywhere. SSBCI and Social Impact funding from TEDCO in 2023 allowed NasaClip to meet growing demand and scale revenue by onboarding B2B customers and launching reusable and subscription consumer product lines.
“Thanks to TEDCO’s investment we can continue our efforts to provide a more timely, efficient and cost-effective solution for patients, allowing them to get treated from the comfort of their own homes,” said Clayborne.
Rewarding resilience
These companies set the example that building a resilient business over a rapid-growth, high-risk model can position founders to overcome challenges, weather economic turbulence, and achieve long-term success.
TEDCO recognizes the unique challenges faced by SEDI founders and provides crucial support for advancing resilient businesses. By fostering a culture of strategic growth and resource allocation, Maryland companies can continue to thrive in all stages.
TEDCO, the Maryland Technology Development Corporation, enhances economic empowerment growth through the fostering of an inclusive entrepreneurial innovation ecosystem. TEDCO identifies, invests in, and helps grow technology and life science-based companies in Maryland. Learn more at tedcomd.com.
Tammi Thomas is the chief development and marketing officer with TEDCO. She is primarily responsible for the overall strategic direction, leadership, execution and management of TEDCO’s marketing and fundraising strategies designed to broaden awareness of and resources for TEDCO and its various programs; this includes the development and implementation of the organization’s brand, marketing, and communications strategy.