Up until now funding has not been an issue for SoJo, as the focus has been on proving the value of our product and the need that SoJo is filling in the market. I believed and continue to believe that if you deliver a valuable service or product, then there will be the resources or market to support that product. Rather than focus our time on securing funds, we were busy building, serving our community and validating the consumer-facing product.
SoJo's product has been validated many times over. With an endorsement from the Canadian Commission for UNESCO as a leading educational platform, an active community of over 2,000 individuals without marketing or outreach efforts, and over 65,000 pages viewed online, and incredible press coverage around the world, it’s safe to say a resource like SoJo is needed by early-stage social innovators.
Over the past 2 years, I've been monitoring the resources and funding options that are available, as I knew we'd eventually need to tap into them and also feed onto our platform. Here is a highly simplified overview of the funding landscape in Canada:
· A not-for-profit with a proven track record of managing funds or a charitable organization that has been through the hoops of receiving CRA charitable status and delivered on projects already are normally eligible for non-refundable grant money from private foundations or government agencies.
· Traditional for-profit organizations with a proven business model, built prototype and validated proof of concept and normally eligible for debt or equity financing to scale growth or build out the product further.
· The most common form of support comes from friends and family of the founders who invest in the founder and their ideas, because they want to support the individual or believe in their ideas.
SoJo is an early-stage social innovation project and when speaking with my peers we all share the same rant: there's big talk, but early-stage social innovation financing is virtually non-existent in Canada. Yes, there are many competitions and awards (which dominate the airwaves leading us to believe that this funding exists). However, the probability of getting them is less than 1%, based on the ever-growing demand for these funds and often allocated based on the bias of the grantors. SoJo was a semi-finalist in the one of the largest awards for social entrepreneurs and we gave it our all -- but were unsuccessful.
Innovation by definition is the act of making what already exists better or starting something new. Although "social innovation" funds are starting to pop up among foundations, applicants must still be either a registered charity or have a proven track record of financial management to show accountability. Although I understand the funding constraints found within these organizations, I will be honest when I say it's contradictory (and counter-intuitive) to demand applicants fit into traditional organizational structures, when innovation is all about starting something new. With no charitable number and only a few dollars in our bank account, this makes us ineligible for many of the opportunities available. We've since built strong relationships with some of the larger funding agencies and I will continue to explore and create opportunities. Umbrella organizations exist to support innovative projects, acting as a financial and legal fiduciary but they take a 10% overhead charge on all incoming funds (which is a lot of money for a tiny nimble organization such as ours) and only work with unincorporated projects - further making SoJo ineligible.
SoJo is still eligible for traditional non-refundable grants if we find our own fiduciary sponsor. SoJo partners with over 50 nonprofits and charities. I personally reached out to everyone who is eligible and not a single organization was able to help us out. Either they are applying to the same funds themselves or their Boards are not comfortable assuming the risk that comes with the added legal responsibilities. Conversations come to a dead-end, and I end up feeling like I'm 'begging', when I know that SoJo has nothing but value to add. I've spent nearly 2 months seeking out a fiduciary sponsor and have since realized it’s no longer worth my time to actively pursue this route.
SoJo has a brilliant vision for its revenue model, and it will come from its B2B Whitelabel product. This product has been anecdotally validated by various HR professionals and staff from prospective clients. However, rule #1 of business is that until you have a paying customer, your product has not been validated. Without a validation, it’s difficult to seek mainstream debt and equity funding.
This B2B product will create a market that does not yet exist. SoJo has no competitors right now on its public-facing site, and our market research shows that there are no competitors in the B2B market that SoJo will create. The price of this product can only be dictated by the market. With a market that does not yet exist, the return on investment is so speculative at this point it won't be even worth anyone's time to discuss those numbers or create a business plan. The plan is to get our pilot customer to share in the development costs, serving as validation, which will allow us to seek the appropriate funds (or generate our own revenue) to build out this product. Until then, equity or "impact investing" types of funding are not an option for SoJo.
In the interim, I've been advised to take the time to create a competitive analysis for this product which can help convince prospective investors of the potential that lies in this market; however it’s still going to be long stretch. SoJo has since hired a Business Development intern who will help with these activities.
Although the B2B has great potential, from our strategic planning emerged the importance of focusing on the consumer-facing (B2C) product. With B2B on hold for the next year, these funding options seem ever distant.
Friends and family:
Between the volunteer hours, in-kind support from partners and financial investments from the founding members (and our families) over 13,000 hours and $500,000 have already been invested into SoJo. Albeit most of this money is in-kind, it does not dismiss the significance of the investment and risk already taken by those involved in SoJo. It’s fair to say, we've exhausted friends and family and this is no longer an option.
Why does SoJo need money?
As alluded to in my previous blog post, a part-time unpaid team cannot fuel the growth that is needed to make SoJo the universal ubiquitous resource for early-stage social innovators. We have taken this as far as we could without external support, and have come very far may I add; however, we are quickly running out of steam. SoJo needs money so it can build http://theSoJo.net to the point where it can sustain itself (aka bridge funding).
I've read enough reports and heard enough people talking about the importance of supporting social innovation. Social innovation starts somewhere, and for those of us in the trenches, in our early stages and without all of the answers, the outlook does not look bright.
SoJo's vision is to be the starting point, to provide social innovators with the knowledge and emotional support needed to get started and stay motivated in the early days of their journey of creating positive social impact. With a world of ever-increasing social, environmental and political challenges, no one will deny the importance of getting more people and fresh minds involved in building and acting on creative solutions to these challenges. For social innovation to thrive, all of us in the ecosystem need to provide more support to the early-stagers. SoJo is doing its part through education and emotional support, however its time for the rest of the ecosystem to step up and invest in early-stage social innovation. Otherwise this thriving ecosystem will continue to leave brilliant ideas and incredible potential to the curbside; a shame, especially when I know the resources exist.
As I navigate through the challenges and frustrations of seeking bridge funding to bring SoJo to the point where it can be financially self-sustaining, I plan to candidly document this journey on http://SocialJournal.net, with the goal of welcoming more suggestions and the hopes of attracting more attention to this important, but overlooked issue.