A Three-Part Formula for Fueling Start-Ups

For instance, when looking for human and social capital, entrepreneurs … For example, once a venture secures backing from a well-known VC, the …

Securing the necessary resources involves much more than just getting a VC to say yes.

According to psychologist John Gottman, six factors, such as whether a couple immediately use a harsh tone when discussing a conflict, can predict divorce with 86 percent accuracy. However, few couples could save a failing relationship just by learning about these factors. The key is to understand the processes and steps involved in resolving the differences that will inevitably crop up during a marriage.

Similarly, to best understand how a new venture can succeed, it is important to go beyond correlations. While it is undoubtedly helpful to know that entrepreneurs who do (or who are) X tend to obtain Y results, appreciating the intermediate steps and processes that lead to these results could propel us forward. Currently, these steps and processes remain a kind of black box.

In our paper Turning Lead into Gold: How Do Entrepreneurs Mobilize Resources to Exploit Opportunities, my co-authors David Clough (from the University of British Columbia), Tommy Pan Fang, Andy Wu (both from Harvard) and I reviewed 150 leading empirical papers on how founders secure the various forms of capital they need to launch their start-up. While the purpose of our paper was to suggest a path ahead for future academic research, our work allowed us to recap what is known – and yet unknown – on the subject.

The three steps to mobilise business resources

One of our key insights is that mobilising resources is itself a process involving three successive steps.

Step 1: Search for resources

To execute on an opportunity, entrepreneurs need much more than just financial resources, such as cash, VC money or bank loans. They also need to gather human capital, usually co-founders or employees. Their success will also depend on their social capital, i.e. the social ties, networks and connections that grease the wheels of business. Beyond those, they may still need to worry about increasing their legitimacy as founders and building a compelling narrative for their ventures.

With so much to think about, many budding entrepreneurs don’t know where to start. The very first step consists of identifying who has the required resources. Where to find suitable employees? Where to get funding? How to build connections, fast?

According to our review of the literature, only 20 percent of papers examined the art of searching for business resources, leaving new entrepreneurs with much to figure out on their own. That is regrettable, because the research has shown that too many entrepreneurs remain solely within the confines of the world they know.

For instance, when looking for human and social capital, entrepreneurs tend to limit their search to their immediate social networks, such as family, friends and former co-workers. As a result, individuals who start from privilege – thanks to being born in a wealthy family or having received a top college education – tend to do better than average.

Not all is lost for the less privileged entrepreneurs, but they must compensate by becoming proactive networkers. They can’t rely on serendipity to form new, helpful connections. Another avenue consists of first building a large portfolio of organisational accomplishments. Research also suggests that entrepreneurs with higher initial aspiration levels are less likely to be satisfied with their original set of options and therefore more likely to seek new ties with indirect contacts and strangers.

If you are a new entrepreneur, you may want to ask yourself:

  • Am I proactive in my search for resources, including new social ties?
  • Am I limiting myself to what I know exists or do I seek help in exploring the wide world of available options and resources?

Step 2: Persuade those with the relevant resources to come onboard

Once you have probed the full menu of potential resources for your venture, the next step consists of acquiring those you feel are the best fit. This is the most abundant stream of research in our review, accounting for some 55 percent of papers. In this loot, we found an (over)abundance of research on how entrepreneurs can secure financial support. However, accessing resources means a lot more than just making a successful pitch before a banker or VC. For instance, a crucial task may be to persuade potential employees to join your new company – a huge challenge for many start-ups in the ongoing “war for talent”.

It may also involve forming an alliance with an established company in order to piggyback on their social capital. In fact, connections and affiliations with any high-status people or entities act as endorsements. For example, once a venture secures backing from a well-known VC, the remaining resources, such as employees, partners and additional financial support, tend to come more easily.

If you are struggling, do not underestimate the power of word-of-mouth in attracting the right resources. Your new board of directors may be able to refer great employees or partners, just like the VCs you meet may have suitable co-founders to recommend.

Research also shows that storytelling matters a lot for entrepreneurs. Building a compelling narrative can go a long way towards persuading investors that a founding team can execute on a given idea. While this is true for all start-ups, social or hybrid ventures face a special dilemma: Should their story emphasise the potential for financial or social returns? What we know is that women founders may particularly benefit from talking about their proposed social impact.

Here are some questions that may require your careful consideration:

  • If I decide to rely heavily on family members, am I clear on the pros and cons of this approach? They may be able to help strictly based on solidarity, but this may come with hiring expectations down the line.
  • Have I considered getting formal qualifications and certifications? By signaling an entrepreneur’s quality, they can help dispel uncertainty about the venture in the mind of potential backers.

Step 3: Deploy the acquired resources

Even after resources are agreed upon in-principle, entrepreneurs may face issues in deploying them. For example, financial backers may have their foot on the brake if they worry about founders ceasing effort or overpaying themselves after receiving an influx of cash. A variety of governance mechanisms can mitigate risks of opportunistic behaviour and reduce friction.

Such mechanisms can be based on formal contracts and authority, but also consist of informal arrangements. About 31 percent of the papers we reviewed dealt with that resource-deployment step. (Note: The percentages add up to 106 percent due to some overlap.)

Like it or not, nascent entrepreneurs are often far more dependent on resource holders they work with than the other way around. The good news is that this power imbalance can help with the transfer of resources, as it naturally lessens the concerns that the entrepreneur might try to take advantage.

The downside is that founders can sometimes be vulnerable. For example, tech founders are often wary of accepting investments from corporate VCs that occupy a similar product space, as their intention might be to quash the up-and-coming competition. Getting a high-status VC to also come on board may help keep such threats in check.

Here is some additional food for thought:

  • Have I carefully aligned my incentives with those of the resource holders who have agreed to participate in my venture?
  • Am I aware that founders are more likely to be replaced when they sell large portions of their equity to investors?

The founders’ long quest

For a venture to take off, entrepreneurs must first spot a good opportunity. Just as critically, they must then mobilise the resources required to execute on that opportunity. Our bird’s-eye view of the research on entrepreneurs’ resource mobilisation shows that it is a three-step process. Getting financial capital, often seen as the holy grail of the operation, is only the middle step. First, a proper founding team must coalesce. The venture is also more likely to get funding if it already has some initial ties to suppliers, customers and strategic partners. Founders must orchestrate a proper search for all of these resources, casting their net as wide as possible. After securing the required resources, they need to ensure that trust flows in both directions so that resources can be deployed smoothly. It is a long journey, which, by comparison, can make marriage seem like a walk in the park.

Bala Vissa is a Professor of Entrepreneurship at INSEAD. He also directs the INSEAD Leadership Programme for Senior Executives – India and the Certificate in Leadership Effectiveness, both part of INSEAD’s suite of executive education programmes.

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$25 Million in XRP: One of Largest Crypto Gifts Ever Made to a US University

As for the “Lam-Larsen Endowed Chair in Financial Technology“, this will “focus on research and learning at the intersection of finance, data science, …

On Thursday (March 4), San Francisco State University’s business school announced that it had received from Ripple Co-Founder Chris Larsen, his wife, and Rippleworks one of the largest crypto donations ever made to a U.S. university.

Chris Larsen was born in San Francisco, California, and got his bacherlor’s degree (B.S.) in accounting and business administration in 1984 from San Francisco State University (SFSU). In 2012, he and Jed McCaleb co-founded FinTech startup OpenCoin, which got renamed to Ripple Labs a year later. In February 2018, Forbes named him “the richest person in cryptocurrency”.

According to an announcement by SFSU, on Thursday evening, at a celebration held in San Francisco’s Masonic Center, Universiy President Leslie E. Wong told the 400 “civic, community and University leaders” attending the event that SFSU’s College of Business had received a $25 million gift from “Chris Larsen (B.S., ’84, Alum of the Year ’04), his wife Lyna Lam and Rippleworks, a nonprofit foundation launched in 2015 by Larsen and Doug Galen which supports high-growth social ventures around the world.”

This gift will apparently “be largely made through the digital asset, XRP, and is believed to be the largest gift ever made in a digital asset to a university in the U.S” SFSU “plans to name the University’s College of Business the Lam Family College of Business, pending approval from the California State University Board of Trustees.”

The university said that Larsen and his wife are “longtime supporters” (in fact, SFSU named him “Alum of the Year” in 2004). It also notes that this donation “will support the “Lam-Larsen Fund for Global Innovation” and two endowed chairs,” and that the “focus of these funds is to support students in learning about and becoming changemakers of local and global entrepreneurial and fintech ecosystems.”

Wong said:

“This groundbreaking gift will position the College of Business as an evolving, distinctly diverse and industry-relevant epicenter of business innovation and entrepreneurshi. Chris, Lyna and Rippleworks are innovators, and their gift will inspire our students to creatively and strategically approach the business and tech landscapes to become the next generation of entrepreneurs and global business leaders.”

According to the announcement on the SFSU’s “University Development” website, Larsen said:

“SF State students have great potential because of their position. Most of the world is outside of this ecosystem, and they’re really trying to catch up. Being here in San Francisco gives SF State’s students amazing career opportunities. These funds are focused on guiding these students in becoming innovators, entrepreneurs and leaders, enabling them to become changemakers in business and their communities.”

The  two new faculty chairs permanently endowed by the “Chris Larsen and Lyna Lam Funds for the College of Business” are the “Rippleworks Endowed Chair for Innovation & Entrepreneurship” and the “Lam-Larsen Endowed Chair in Financial Technology”. which will “elevate SF State’s focus on innovation-oriented learning and professional development—such as entrepreneurship, commercial incubation, financial technologies and digital currencies.”

The Rippleworks chair “will be instrumental in inspiring and guiding SF State students in pursuing innovative careers in emerging markets, entrepreneurship and social entrepreneurship.” 

Rippleworks Co-Founder and CEO said:

“We believe that many of the world’s toughest challenges will be solved by innovative solutions led by inspiring entrepreneurs. We are proud to create the Rippleworks Chair as a direct investment in the high-potential future leaders that are in San Francisco State’s diverse community.”

As for the “Lam-Larsen Endowed Chair in Financial Technology”, this will “focus on research and learning at the intersection of finance, data science, and technology.”

 

The College of Business has also received “funding to establish the Lam-Larsen Fund for Global Innovation,” which will “enable SF State students, faculty, alumni and other experts to come together across disciplines to share ideas, think creatively, and learn all aspects of entrepreneurship,” and will “nurture a global awareness, encourage students to identify and solve problems, and will foster exceptional business leaders who know how to ‘connect the dots’ in distinctive, solutions-oriented ways”.

According to a report in The San Francisco Chronicle, SFSU received a donation of 56 Million XRP tokens in November 2018 from Chris, his wife, and Rippleworks, which suggests that at the time, those tokens were worth around $0.4464 each. Now, however, unfortunately, “those 56 million XRP buy 18 percent fewer dollars.” Thankfully for SFSU, Chris is a very kind and generous man, and SFSU will the “full $25 million.” 

Wong told The Chronicle:

“Chris, bless his soul, said, ‘Look, I’ll guarantee this.’ It will transform the College of Business, without a doubt.”

The report says that the university officials have acknowledged that the “process of accepting cryptocurrency is not for the faint of heart,” and that “to make it happen, they’ve had to convert the digital dough into actual dough — at a pace slow enough to avoid flooding the market with millions of XRPs.”

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Industry Hoists The Sails For Good: UnLtd Big Splash Raises $60k

Sizmek APAC commercial director, Paul Kent said: “UnLtd does a wonderful job of bringing the media industry together to help raise money for …

On Friday 22 March, the media, marketing and creative industry hoisted the sails for good at the UnLtd Big Splash regatta, generating over $60,000 to help children at risk.

The second Big Splash event saw ten highly competitive teams race head to head across Sydney Harbour on Elliott boats whilst generating much needed funds for UnLtd’s charity partners working to break the cycle of youth disadvantage.

Lead by a professional sailor on each boat, the sailors got to learn some expert tips before it was all hands on deck for a series of intense races that saw the all-female team from Quantcast sail to victory.

Whilst the sailors were working off a sweat, the guests on the spectator boat enjoyed a more leisurely cruise cheering on their teams and enjoying the stunning backdrop of Sydney Harbour.

The event was kindly sponsored by Sizmek and teams competing included: ARN, Domain, Facebook, OMD, PHD, Quantcast, Sizmek, The Guardian, The Trade Desk and Verizon Media.

Sizmek APAC commercial director, Paul Kent said: “UnLtd does a wonderful job of bringing the media industry together to help raise money for charities that have such a positive impact on many young people’s lives every day.

“Paying it forward is one of Sizmek’s key values so we’re very proud to support such a worthy cause.

“We believe it’s important to take time out of our day-to-day to focus on giving back to the community and use our combined resources and networks to create positive change for young Australians.”

Jamie Lobina, Chair Ambassador for Whitelion, one of UnLtd’s charity partners also attended the event to share his powerful story about the importance of young people having support from organisations like Whitelion and UnLtd.

UnLtd CEO Chris Freel commented: “Last week I visited Lake Cargellico and Dubbo, spending time with our charity partners in their communities.

“I saw first hand the difference we are making as an industry.

“I met with young people who come from six generations of unemployment, living in massively overcrowded housing, surrounded by violence, drugs and alcohol abuse, being given hope and purpose by some amazing charity programs that we help to fund.

He added: “We are helping to break the cycle and events like this allow us to do that. Thanks again to all involved.”

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Significance of AI to Businesses in Today’s Economy

Jean-Francois Gagné, CEO at the AI-based software company Element AI, told Via News that in what AI is concerned, “the job displacement topic is a …

Emerging technology is a word very much thrown around these days. It is especially as most of the business sector look to not only cut their expenditure but also to improve the quality of their offering. Artificial Intelligence (AI) is a leading emerging technology whose significance is growing by the day. A lot of companies are evaluating ways of leveraging the technology if not just thinking about it.

Integrating algorithms into the business model

Interestingly, there is nowhere AI seems crucial as in the entrepreneurial sector. Unlike established businesses, small businesses, which entrepreneurs run, lack stable economies of scale. It is to say that businesses are not established to deal with certain shocks, especially from the external environment. Further, they do not have the financial muscle to sufficiently deal with certain aspects of business like hiring the best talent available.

In this light, it is imperative that the entrepreneurs learn to improvise and also to make technology work for them. AI is doing just that! A lot of entrepreneurs are trying to figure out ways of integrating algorithms into their business model. Notably, this not only helps the small business maintain a lean staff but also to maximize output.

AI, alongside other emerging technological concepts like Machine Learning and Deep Learning, is defining most of the world’s business environment. However, it is clear that the new concepts are still a little bit technical for business owners who would like a go at it. In spite of that, there is an evident thirst for know-how and how to make the technology work for businesses.

“Entrepreneurs should have clear priorities and a clear framework on how the technology will be helpful.”

Vinita Bansal, social entrepreneur at Speaker City,

Clarity of purpose will unlock the true potential of AI

Vinita Bansal is a social entrepreneur who runs Speaker City, a Public Speaking startup in India. Bansal is among the new age entrepreneurs that are transforming the business environment, not just in India but globally. She finds it a blessing that AI came up at a time when she could make it work for her. Nonetheless, Bansal cautions that AI is beneficial if it aligns with your business model.

Regarding entrepreneurs who would like to integrate the new technology into their businesses, Bansal says, “Entrepreneurs should have clear priorities and a clear framework on how the technology will be helpful.” In this sense, business owners must be clear about the outcomes they desire from their business as a result of integrating AI.

“AI has great potential in terms of increasing the productivity of businesses, especially in the entrepreneurial sense,” she says. “However, knowing how best to deploy the technology will determine if it delivers the potential optimally. Basically, entrepreneurs should first figure out how the technology will grasp the concepts they want to implement.”

Mitigating job displacement

Interestingly, the intrigue does not end there. Evaluating the potential of the emerging technology points us in a direction that is coming up as a vital basis for debate. It is apparent that AI boosts efficiency, productivity and hence, it helps businesses substantially cut operational costs. However, it is also true that AI takes up more and more jobs that would otherwise keep the world’s workforce employed.

The manufacturing industry is at the center of this debate, given the number of people that depend on the jobs for livelihood. Tripti Gupta owns AADYA Fashions, a fashion house that sources materials and manufactures clothes in a variety of designs. Gupta unequivocally says that AI will revolutionize the labor market. For manufacturers like herself, it will be untenable to settle for human plant operators that are expensive to maintain and are prone to errors. Instead, she is more likely to go for intelligent machines that can accomplish her objectives fast, cheaply and with perfection.

“The business sector should begin looking for ways to mitigate job displacement as a result of the adoption of AI before it becomes a menace and disrupts the business environment,” Gupta concludes.

Jean-Francois Gagné, CEO at the AI-based software company Element AI, told Via News that in what AI is concerned, “the job displacement topic is a fair one.” In a five to ten-year time span, we can expect “AI taking on more the responsibility on regular mundane tasks and even some cognitive tasks,” Gagné concludes.

Jean-Francois Gagné, CEO at Element AI, an artificial intelligence software company. Photo by: Via News.
Jean-Francois Gagné, CEO at Element AI, an artificial intelligence software company. Photo by: Via News.

As for businesses wanting to implement AI capabilities, Jean-Francois Gagné, explains that “the first thing to do is have a clear idea of the objective. The second step is understanding how to get an AI system to learn about the context and the signal leading to the desired outcome.”

Via News TV

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New York’s growing ‘tech for good’ community

Their plan: Use blockchain technology to allow patients to reap financial … What’s different today is that blockchain and other emerging technologies …

When Andrew Hoppin and Christopher Sealey launched their blockchain startup this year, they weren’t dreaming of becoming the next unicorn or earning gazillions trading cryptocurrencies. Instead, the co-founders—who had first worked together upgrading technology and communications systems for the state Senate—had a compelling social mission. They wanted their new company, CoverUs, to help make health care more affordable and efficient for ordinary people.

Their plan: Use blockchain technology to allow patients to reap financial benefits from their own health data rather than have it sold by brokers to third parties such as insurers, hospitals and academic researchers.

Blockchains, which are commonly described as digitized, publicly disclosed ledgers, contain batches of transactions, which are time-stamped, linked to other blocks and safe from being altered after the fact. The technology is well-suited for health care, the duo reasoned, because it could allow consumers to control which data they wish to share as well as facilitate efficient and easy-to-track micropayments.

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“Our mission is to make a piece of the world work better for as many people as possible,” said Hoppin, who serves as CEO. “We’re inspired about what blockchain technology can do and how it can upend the power dynamics of complex systems.”

Hoppin had started—and later sold—the company NuCivic, with systems for making government data more accessible to the public. Sealey, an expert in consumer engagement, helped found an economic think tank and focused on the inefficiencies and inequities of the U.S. health care system.

The partners, who plan their next moves from NewLab, a tech coworking space in the Brooklyn Navy Yard, hope to launch their first pilot in the fourth quarter of the year. So far they are still operating on the proceeds from the sale of NuCivic and raising $3 million in a seed round. They have no employees or revenue.

CoverUs is one of a growing number of New York–based enterprises for which technology empowers idealism. Like other socially conscious entrepreneurs, these “tech for good” startups aim to make both a profit and a difference—what’s commonly called the double bottom line—by addressing a wide range of social goals. What’s different today is that blockchain and other emerging technologies are making new solutions possible.

“We’ve seen an uptick in social ventures that use tech as an integral part of their business model in the New York City community,” said Sandra Navalli, managing director of Columbia Business School’s Tamer Center for Social Enterprise.

As a hub of diverse industries and nonprofits with a long tradition of philanthropy, New York is a natural fit for many of these ventures. And city-run programs, such as the nine-year-old NYC BigApps competition, which provides participants with access to municipal data sets to build tech products addressing civic issues, have contributed to the growth.

In fact, perhaps the most noteworthy feature of the tech-for-good world is its thriving universe of co-working spaces, meet-ups, hack-a-thons, like-minded professionals and startups. “We definitely see an ecosystem that’s becoming more vibrant as more people recognize there’s an opportunity to make a difference using technology,” said Bill Cromie, director of emergent technology at Blue Ridge Labs@Robin Hood, a Brooklyn-based incubator aimed at addressing income inequality.

That ecosystem could soon get a big boost if the city approves a 21-story, $250 million project to be built in the former home of a P.C. Richard & Son store near Union Square. The goal is to create a tech hub for underserved communities. First proposed by the city’s Economic Development Corp. and RAL Development Services three years ago, it’s now in the approval process.

Meet-up metropolis

For entrepreneurs including Brett Whysel, a former investment banker and the founder of financial wellness startup Decision Fish, the city’s many networking events provide an invaluable resource. His two-year-old company operates out of Impact Hub NYC, a coworking space for socially conscious ventures in Manhattan. He is beta-testing a platform intended to give middle-class users free financial planning and budgeting insights. People plug in their spending history and savings goals to develop a realistic plan. “It’s for the rest of America that can’t afford to buy this advice,” said Whysel, who is self-funding the company.

Whysel attends at least two events a week, including a recent forum held by Ideas42, a nonprofit design and consulting firm where he learned about several tech enhancements that could help his users feel safer about the privacy of their data. He hired his chief technologist after meeting him at a NYC TechBreakfast in 2016.

Blue Ridge, an initiative of the Manhattan-based Robin Hood Foundation, accepts 15 to 18 would-be tech founders every year for a four-month summer program, providing free office space in its 6,000- square-foot location on Court Street in Brooklyn. Entrepreneurs develop ideas for startups focused on moving people out of poverty by consulting with community organizations funded by Robin Hood as well as a group of 800 low-income New Yorkers who are paid to participate. Among those social entrepreneurs is Avi Karnani, who started the company Thrive to help millennials make better financial decisions. He sold it to Lending Tree in 2009 for an undisclosed sum.

“I’m focused on creating sustainable financial products for everyday Americans,” he said.

In 2014 Karnani met his business partner Paul Barnes-Hoggett at Blue Ridge, where they were both fellows. During their tenure, they interviewed about 150 people, including hourly workers, counselors and employers, about how to make commuting to work, school or day care easier and cheaper. Based on their research, the partners launched This Is Alice, a 12-employee company whose platform helps hourly workers sign up for and receive pretax benefits, such as commuting discounts and day care subsidies. “I knew about the technology and read all the research,” Karnani said, “but I hadn’t spent time in places, like Brownsville, where people lived and worked.”

While many tech-for-good startups utilize familiar platforms, such as GPS and smartphones, increasingly companies including CoverUs are turning to more emergent technologies.

Blockchain startups, for example, are seeing a growing roster of resources to draw from. In May the city’s Economic Development Corp. co-sponsored Blockchain Week, a series of events and conferences. CoverUs got its start last year at a hack-a-thon run by the Blockchain for Social Impact Coalition, an arm of ConsenSys, a tech-consulting firm that helps clients develop blockchain systems. CoverUs also recently took part in a five-week startup incubator dubbed Startup Boost NY, which is co-sponsored by Crypto NYC, a nonprofit offering both coworking space and a support community for blockchain startups.

In CoverUs’ first phase, consumers will be paid by insurers, government agencies and others to fill out surveys about their health, Hoppin said. Eventually the company plans to establish a marketplace where consumers will securely control the sale of their data. They’ll most likely be able to use those proceeds—perhaps as much as $2,000 per year—to pay for their out-of-pocket health costs as well as other expenses.

Like CoverUs, many tech-for-good startups target larger organizations as their primary customers rather than the individuals they ultimately want to help. This Is Alice, for example, markets to employers, which then offer its services as a benefit. Companies pay This Is Alice half of what they save on payroll taxes as a result of their employees putting more of their pretax income into flexible spending accounts and other programs.

The platform is now available in “most major cities” with “hundreds of employer customers,” said Karnani, who declined to share his company’s revenue figures. His local customers include Brooklyn Roasting Co., One Girl Cookies and healthcare.com.

Lessons learned

But that B-to-B approach can mean slower growth for some tech-for-good startups, a lesson the founders of six-year-old Kinvolved learned the hard way. Alexandra Meis, previously a program manager at a hospital in the South Bronx, where she worked with parents of children with special needs, and Miriam Altman, a former high school teacher, met as students at NYU’s Robert F. Wagner Graduate School of Public Service.

After completing their degrees, the two women resolved to form a company that could improve communication between parents and schools as well as reduce absenteeism. Their five-employee startup offers an app to help teachers communicate with parents about students missing days and other problems. Realizing that the human touch is as important as the technology, the company has introduced in-person coaching for teachers and a summit with workshops for parents and educators.

“Tech alone is not going to solve our country’s deepest-rooted issues,” Meis said.

The co-founders initially decided against selling the app directly to teachers, even though they thought that would have been a quick method for acquiring new customers. Instead, they figured the best way to ensure the platform’s place as a permanent fixture was to sell the app directly to schools and districts, charging them a licensing fee to use the software.

During their first fundraising efforts about five years ago, however, they found that many investors balked at their business model. But they have persevered, trusting that patience will pay off.

“We realize that lasting change is not going to happen overnight,” Meis said. The company has succeeded in raising several rounds of funding, but she declined to disclose how much.

Finding investors is a challenge, but some female founders who aim to create a for-profit tech-for-good venture report another difficulty: Potential funders often suggest they form a nonprofit instead.

“We’ve found women would share their ideas with their network, and then as soon as they revealed it was for-profit, people would back away,” said Natalia Oberti Noguera, founder and CEO of Manhattan-based Pipeline Angels, a funding network for female investors interested in early stage, women-run ventures. “But when guys talked about that, they wouldn’t get the same reaction.”

For social investors, funding tech-for-good startups provides a way to support causes they believe in while earning a return on their investment. Liz Luckett founded Brooklyn’s The Social Entrepreneurs’ Fund in 2012 to back startups in health, finance and social services that focus on low-income households. So far the fund has supported 13 companies, with a typical investment of $1 million. After its third fundraising round is completed, it plans to invest $2 million to $4 million in the next group of social enterprises.

“This is a way to fund companies with scalable business models so they don’t have to go with hat in hand constantly asking for money from donors,” Luckett said.

But raising capital isn’t the end of the battle for a social entrepreneur. Once a business model proves successful, the next big hurdle is figuring out how to scale up the operation for maximum impact in order to accomplish its mission and generate a profit to make it self-sustaining.

Hoppin of CoverUs is realistic about how long it could take for his company to reach critical mass so that it can really make a difference for both consumers and health care providers.

“We’re trying to overturn a massive industry,” he said. “I regard this as my life’s work.”

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