Why the new breed of entrepreneurs looks beyond making a profit

Big tech is broken. From Uber’s sexual harassment scandal to Mark Zuckerberg’s Congressional testimony and Elon Musk’s Twitter meltdown, tech disillusionment is definitely starting to set in for many people.

It’s a shift that’s perceptible everywhere. Last month, at SXSW — normally an unabashed celebration of new tech — Elizabeth Warren, one of Big Tech’s biggest enemies, was one of the main speakers.  

A growing number of people in the industry dares to ask the hard questions: What do we do about privacy? How do we keep AI in check? Can personal data be harnessed to do good? At the same time, there’s a growing consensus companies should serve a societal purpose as opposed to mainly making profits.

At the same time, consumers have changing preferences, too. According to recent research, over one-third of consumers prefer to buy from brands with clear social and environmental goals. Another study shows that nine in 10 consumers expect companies to do more for the world than make a profit.

That times are changing is also reflected in social entrepreneurship. The number of startups founded to solve social and environmental issues has been growing steadily. A 2016 report by Global Entrepreneurship Monitor (GEM) shows that globally, about a third of all startups now aims for social good.

What characterizes this new breed of social entrepreneurs?

#They’re young

Although the average age of entrepreneurs is between 25 and 45 years old, the people starting companies are becoming younger and younger. Looking at (operating) social entrepreneurs in particular, in the age group 18 to 34, there are more social entrepreneurs than commercial entrepreneurs in every global region, except for Latin America and the Caribbean.

Younger entrepreneurs also seem to have slightly different priorities. A large-scale study of 3,700 business owners across 11 countries, commissioned by HSBC Private Bank, showed that people in their 20s are more likely than those aged over 50 to focus on having a positive impact in society. In addition, while business owners of all ages are motivated by amassing personal wealth and being their own boss, the younger generation feels these factors are less important.

In this year’s Chivas Venture — a global competition that gives away $1 million in no-strings funding every year to the hottest social startups from around the world — 15 of the 20 founders who reached the Global Final are in the millennial age group (millennials are born between 1981 and 1996).  

Take Matthew Piper, co-founder of South-African startup Khula, who’s 25 years old. Piper started his social entrepreneurship “career” while he was still in high school, where he founded a peer tutoring group connecting disadvantaged schools to the top students in that region. “Growing up in South Africa, a country with one of the highest rates of inequality in the world, I have always been bothered about the lack of equal opportunity,” he adds.

Khula offers a digital platform for farmers, connecting them to buyers. Because they can respond to orders collectively, small local farmers can increase their volume, allowing them to provide produce for bigger clients. The app gives further support through group buying inputs at a lower cost, connecting with local experts, and offering lower-cost logistics.

#They’re diverse

Another interesting statistic of social impact startups: They tend to be more diverse and inclusive than their more commercial, profit-driven counterparts. A 2015 survey of over 1,100 social enterprises in the UK, for example, found that 40 percent of social enterprises are led by women, 31 percent have directors who are non-white, and 40 percent have a director with a disability. In Australia, social enterprises employ twice the rates of people with disability and female managers as mainstream small businesses.

And diversity in companies definitely pays off. Diverse teams are better at solving problems and make companies more profitable, research shows. This is especially true for leadership teams. As key decision makers, leaders have a major impact on how a business performs. A lack of diversity in leadership will halt innovation and hurt business growth.

Ha Trinh, general manager of Vulcan Augmetics, believes her team’s high level of diversity is one of its key strengths. The Vietnamese startup, which makes affordable, modular robot arms for amputees, not only employs people from different backgrounds and cultures — Trinh is Vietnamese, her co-founders are British and Indian — but also looks specifically for engineers with disabilities to join the team.

Vulcan Augmetics’ modular robot arms click together, like Lego, and are targeted at the 38 million amputees currently living in developing countries. Because standard prosthetics are not suitable for all physical tasks, limiting blue-collar workers mostly, the company designs specialist hands that serve specific job-based functions. This way, lower income amputees can reenter the workforce and regain financial independence.

#They may be entrepreneurs by accident

Sure, there are business owners who’ve dreamed of Silicon Valley stardom ever since they were little. But many of them didn’t set out to become entrepreneurs, they just sort of… did.

According to a study by The Recruit Venture Group, one-third of business owners never planned on starting their own company.

Gergana Stancheva is one of these ‘accidental’ entrepreneurs. Schooled as an illustrator and designer, she never thought she would own a business someday. “Working in print houses, I became aware of the environmental issues associated with printing,” she explains. “The glossy top layer used for magazine covers, posters and menus, is normally made of plastic so not degradable.”

Stancheva came up with a biodegradable laminating film and founded Lam’on, which is based in Bulgaria. Lam’on isn’t more expensive than current solutions and print houses don’t need to buy any specific equipment to use it, making it extremely competitive. “We can make print ethical and harmless for everyone involved,” Stancheva adds.

From personal problems to big businesses

In many cases, accidental business owners are also “user entrepreneurs;” people who came up with a solution for a personal problem, discovered others have the same problem and built a business around this idea. According to a 2015 study by the Ewing Marion Kaufmann Foundation, this group launched more than 46 percent of US startups that lasted five years or longer.

This is definitely true for Tey el-Rjula, founder and CEO of Tykn. A Syrian born in Kuwait, el-Rjula’s birth certificate got lost during a bombing in the city in 1990. As an adult, El-Rjula found a job in Dubai which later allowed him to legally work in the Netherlands too, where he became a software trainer.

But when his work permit expired in 2014, “invisible” el-Rjula was forced to live in Syrian refugee camps in the Netherlands for two years. Here, he met a number of Syrians who, just like him, had lost ID documents or were unable to verify them. And so the idea for Tykn emerged: paperless identities on the blockchain. “Our identity platform can validate the existence of invisible children by allowing midwives to digitally sign parent IDs,” he concludes.

Want to support Khula, Vulcan Augmetics, Lam’on, Tykn or any of the other 16 social startups in the Chivas Venture? Chivas is putting an initial $100,000 of their prize fund into your hands. Vote for your favorite Chivas Venture Global Finalists here – the winner of this public vote will be announced at the Global Final, held at TNW Conference, on May 9th.