What does Social Entrepreneurship Look Like in Austin, Texas?

by tuftsigl
Aug 25
Tom Chalmers is in the class of 2015 and is a member of the combined degree program between Tufts and New England Conservatory. At Tufts he is an empower fellow and is pursuing a BA in economics and international relations. At NEC he is pursuing a BM in jazz performance.
Throughout this summer, I have worked as an empower fellow at UnLtd USA, an  organization located in Austin, Texas that provides funding and support to local entrepreneurs who are working to solve pressing social and environmental problems. With UnLtd, I spent much of my time creating and filling a database of information on each of the 80 entrepreneurs who applied for support from our program, a sample that was then narrowed down to the 43 applicants who submitted to us detailed financial information. This information serves a valuable purpose in determining the types of social entrepreneurs who apply for support, the types of support that they are seeking, and the ways in which UnLtd may match its funding and mentorship to the needs of each entrepreneur. I am excited to share a very shot snapshot of this information here, as it provides a good window into the state of social entrepreneurship in Austin. 
UnLtd USA applicants conform to two broad trends that have been observed among social entrepreneurs throughout the rest of the United States: they are relatively young, and they are overwhelmingly educated. Over 80% of the applicants are under the age of 40, and roughly one third of them are under the age of 30. Over 90% of the applicants have attained at least a bachelor’s degree, and the group as a whole follows a 60-40 male-female split in gender.
The majority of applicants also represent small ventures: over 60% of them represent organizations of only 1 to 2 full time employees. 60% of these organizations are registered as nonprofits, while the rest are for-profit. Additionally, over 50% of those organizations have only been in existence for one year or less – many entrepreneurs were establishing their legal and financial structures alongside their applications for support from UnLtd USA.
Entrepreneurs in Austin are committed to solving a broad range of social and environmental issues, and no single industry or area of impact captured a majority of the ventures that applied to our program. Rather, entrepreneurs most commonly choose to work with issues in education (20%), economic development (23%), the environment (21%), poverty (12%), civic engagement (9%) and health (9%). Additionally, many entrepreneurs anticipate expanding their ventures nationally, as the social and environmental problems they have identified are not just constrained to Austin itself. 
Applicants who are in the early, idea-based stages of developing their ventures hold in common several attitudes towards the entrepreneurial process. First, when developing their financial models, they are often hesitant to issue equity or debt. Only 40% of the applicants anticipated issuing some form of equity in the future, and almost none of them considered any form of debt to be a viable method of financing their operations. Because many of them are developing new business models and are catering to new types of demand, they find it challenging to estimate the initial investments they need as well as the ways in which their revenue streams will emerge from the demand that they intend to capture. Second, when considering financing, many applicants identify a gap in availability between small sources of initial investment and the much larger options of venture capital and angel investing. They point out that there exists a much broader and more flexible system of venture capital and angel investment for technology-based ventures in Austin, but not so for social enterprises in other industries. Many of them view grants (such as the one provided by UnLtd USA) and crowdfunding as ways of bridging this gap. In particular, grants often play a dual role in the applicants’ models as either a source of revenue or as a method of financing operations. Third, nearly every early-stage entrepreneur made a conscious habit of participating in as many incubation programs, events, seminars, and networks as possible. Regardless of outcome, they view this process of participation as a means of better defining and enabling what it is that they want to do.
The later stage ventures who applied to UNLTD USA’s incubation program also possess several common attitudes. Having clearly defined their impact models, many late stage applicants are interested in scaling their ventures through two methods: building better networks in Austin and replicating their models in other cities across the United States. First, they believe that in order to deepen reach and the effectiveness of their businesses, they must establish stronger relationships with relevant industry experts, more sophisticated professional services, and other actors in their field. Second, they view the replication of their business and impact models in other cities as the primary means by which they could expand nationally or internationally. In order to accomplish this, they most often propose direct hub-based replication, the licensing of practices and branding, and free dissemination of ideas. Late stage entrepreneurs who applied to our program thus view replication as a means of improving the scope of their services in other cities, and network building as a means of improving their reach within Austin itself. 
By speaking to social entrepreneurs across all sectors and stages of development, UnLtd USA gained an unprecedented look into the ways in which Austin’s entrepreneurial community functions. The information we have gathered thus far matches what is occurring in many other parts of the country: social ventures in the startup stage are small and leanly run, but are built with the expectation that they will be scaled to match the problem that their founders have identified. They make use of creative sources of funding and prioritize building internal sources of revenue, but many of them do not shy away from becoming nonprofits. On a personal level, each entrepreneur is educated, powerfully motivated, and increasingly connected to other actors in their field. Above all, the constant patterns of interaction and change between social entrepreneurs in Austin point to an important insight on what creates a successful entrepreneurial community: the process that entrepreneurs go through in order to build their ventures is often more important than the success or the failure of those ventures themselves. UnLtd USA is lucky to be one of many actors in Austin who shape this process, and is uniquely suited to continue cultivating it and studying it.