Female INSEAD Director launches Incubator Program for High Impact Social Ventures
As funding of social enterprise is found to risky by many mainstream parties, Jumpstart, a new incubator program that calls itself a seed philanthropy organisation has launched to fill the gap. Founder and CEO, Anya Navidski is former Director of the Maag Centre for Entrepreneurship at INSEAD – a top five Business School - where she was responsible for the new vision and strategy of the Centre. Not only has she mentored hundreds of young entrepreneurs, but she regularly runs workshops on entrepreneurship, having taught a course on Business Planning at both INSEAD and the Cartier Women’s Initiative Awards. Here she talks to The NextWomen about her new venture.
What is Jumpstart-Up and why did you initiate it?
Jumpstart-up provides support and funding for high impact (social) ventures at seed level. This is the idea/concept stage and too early for most VCs to even look at. Our primary focus is on education and healthcare, and scalability and replicability potential are a key part of our investment criteria. And yes, we are breaking new ground on a number of points. We are still very new and looking at our first round of deal flow, which is giving us a chance to fine tune our proprietary methods.
Why an incubator program for social enterprise?
I started off as a development economist, at the time when microfinance was just taking shape. I still believe that high impact entrepreneurship is the most effective solution to some of the world’s deepest social problems and the timing is perfect. Europe is behind the US in this space and we hope to help redress this balance and to contribute to the development of this still immature industry. The community of stakeholders in Europe is very small and we hope that with our new approach we can educate and bring in new investors and new entrepreneurs into this space. Our processes and methodology use a lot of in-house intellectual capital and access new research from our key advisors.
Seed funding is traditionally difficult even for ordinary start-ups and it is even harder for high impact ventures. Due diligence costs are very high and there are additional issues that many angels do not understand or do not have experience with. Plus, there are fewer social serial entrepreneurs – driven by impact they tend to stay with their ventures rather than exit so you are often dealing with first time venture teams and capacity building is crucial. The high impact space is far less organised and angel networks that do exists are very localised, whereas it is typical for high impact ideas to originate in one country, ventures being implemented in another and funding coming from all over. So we provide that bridge. We even have an angel network that individual angels can join so they can co-invest with us, share in our due diligence, and get experience with issues specific to this field.
How do you organise your deal flow?
We have an innovative approach to selection and capacity building of these ventures which lowers their risk and raises their potential financial return. This allows us to get them quickly to a point where they are either able to borrow growth funding against their revenues or demonstrate a track record and a proven business model, which gets social VCs interested for growth funding stage. We also have a proprietary impact assessment methodology that allows us to make consistent choices between alternative impact investments.
We are a seed philanthropy organisation - donor funded, which allows us to take these risks for the benefit of the impact that is generated as a result, but run using the best of commercial organisation approaches.
We are not an incubator in a physical sense. We are a typical modern day organisation with ventures and our team based around the world. However we do partner with local incubators as force multipliers for our investments and to help us with local issues. We fill the gap that is currently out there and are closely interconnected with the other stakeholders. The creation of an ecosystem for high impact ventures is at the core of what we do.
Do you have people involved that have a track record of incubating ventures or investing in start-ups?
Absolutely. Most of our team is young but each with an amazing set of experiences, particularly in this area. It was put together very carefully. I have been helping seed level ventures (student and alumni) while Directing the Maag Centre for Entrepreneurship at INSEAD business school. Our CSO – Wesley Cross – has been assisting SMEs as the CEO of Stratagem. One of the senior team members set up and ran a successful technology seed fund in the UK. To name but a few.
We are also in the process of putting together an Investment Committee that will provide a broader set of specific investment skills. A number of firms providing growth capital for high impact ventures that we are partnering with will be contributing fund managers to that Committee.
What are the costs for entrepreneurs who want to apply?
The most valuable thing of all – time. Our application process is extensive and is part of the capacity building exercise. Commercial companies pay good money to go through similar processes. We make this available for free for high impact ventures. Thus, even if they do not get selected for investment, by the time they finish the process they would have learned how to ask the right questions and how to go about answering them. This is a highly valuable asset for them, for this and for their next ventures. For us this is a way of contributing to the development of the next generation of high impact entrepreneurs. Of course, our investments are made on preferential but commercial terms and we use a mix of instruments, depending on what is appropriate in each case.
Can you tell us about a couple of the companies that have applied or been admitted?
We cannot talk about them specifically as yet, but we can in more general terms.
On the medical side we are looking at a few medical devices which are significant breakthroughs in their fields, have extensive applications in the developed and developing countries and which the founders wish to run as social ventures. The key there would be to help them figure out the right social vs. financial balance and to build up their business capacity. Such international organisations are not easy to run so this will be a great challenge for these teams.
On the education side we are in talks over a couple of existing proven business models which are being seeded elsewhere. These are potentially good examples of us collaborating with providers of growth funding. We take care of the seeding phase and the capacity building that is required within the team and they then take over the growth financing once the venture is ready for it.
Will you invest in the companies and if so how much? With how much capital have you started ?
There are huge differences across countries. For example, a project in the UK that we are looking at will require something around 500,000 pounds sterling in seed money. At the same time you will struggle to find a seed company in India with management capacity to absorb even 50,000 US dollars. Some of the medical device projects we are looking at will require 2-4m dollars. So the range is huge.
Like most new funds we are raising money on deal by deal basis for the first 3-5 projects. It allows us to educate investors using specific examples, making the whole seed philanthropy process less abstract for them. It also allows us to build up credibility and our own internal capacity. The last thing we want is to raise a large fund and not have the internal capacity to handle the number of deals that will be required to utilise that money. This phased approach, first 3-5 deals, then the rest of the fund, allows us to test our processes and methodologies. Most of that is new so it makes sense that we try to fine tune it before rolling out on a larger scale.
How many of your intended 500 founders investing 10,000 euro each have you signed up?
We have firm commitments. A key challenge for us is the legal and tax structure that would allow us to raise money around the world, hire employees around the world, and invest in ventures around the world. There are also tax implications for our donors and network members. Our legal and tax partners are in the process of tackling these issues so we have not yet initiated any outreach with respect to our angel network. But we are very much looking forward to doing so in the next couple of months. So watch this space!
What is your business model? Are you pre-product, pre-turnover or pre-profit? What is the current status of your business and team?
We are still very much a start-up ourselves. The first firm idea of Jumpstart-up dates to the end of August 2009, so there is still a lot to do and it is very much all hands on deck. We are in the process of trying to get Incorporated Charitable Company status and our lawyers and tax advisers are working on various details. That is also why we have not undertaken extensive efforts to raise a significant amount of money but focused on educating our potential large donors on seed philanthropy and our approach instead.
The core team is now very much in place. This is something I am personally very happy about. Although many would say that I have a rather strong personality, I am not an autocratic CEO, am very aware of my weaknesses and I do need my team to provide input in those areas. I pick the right people for the job and delegate extensively. That way I can focus on areas where my biggest strengths are. In this particular case this is the overall framework, vision, and strategy of Jumpstart-up and key relationships.
As for the ventures we work with, most of them are pre-everything. In some cases, as with certain medical devices, they are about to start FDA approval process. In others, we are dealing with individuals with no business background and no business plan. Our application process helps them go through the thinking required for that, allowing us to see how they respond and learn so we can judge if there is potential. These are really the areas where we can add the most value, finding those with potential and giving them an opportunity to realise it. This is the most rewarding part of our work.
What differences does Jumpstart experience with a woman at the helm?
You would probably need to ask my team. I am sure they have their views on this. However I would say the team is pretty balanced on that front, particularly since my CSO – who is very much my right hand – is a man and we work very well together. The core team is very close, their vision and expectations are aligned and that was part of the reason of putting these people together.
As for my personal leadership impact, one of my core strengths is facilitation of relationships and networking. Some would say this is a very female skill. And I am sure a lot of that is visible in my day to day leadership style also. My communications is certainly honest, often informal, and at times a little too direct. But I always aim to balance it out with praise and support where it is rightly due. Balance and fairness is what I strive for. The key is that there are a few absolutes at Jumpstart-up. This is a set of values and a vision that are inflexible. These define who we are and what we are trying to do. Anyone joining the organisation must feel that they resonate with them. Outside of these absolutes almost anything is possible.
We are not a hierarchical organisation and once people are up to speed on how we work and I am confident of their fit with the organisation they are given a lot of free rein. There is a lot of individual initiative and responsibility. I do work crazy hours at times but believe in some flexibility and balance overall. I trust my team, their commitment to what we are trying to do and in their abilities. And that makes effective delegation easy. There is a lot of collaboration going on and out of the box thinking is very much encouraged.
Are you targeting women-led start-ups, female advisers and female investors ?
There is certainly no gender bias. We look for the best people, whoever they are, and give them the best support we can. There are other organisations, like Astia, that are doing a great job of supporting female entrepreneurs. But, of course, it is always good to see women succeed. There is still much work to do there.
Do you have a geographic focus?
We look at deals around the world. This is part of the model, particularly in the modern world. This international dimension is a large part of our value add. We approach each project individually and help the team figure out the best country or region to start with and how to proceed from there. Our network is very international which means that we are able to bring in country specific local expertise as and when we need it. Our mentors are a great source of support there. Of course we avoid countries with socio-economic or political environments that would make the development of a venture highly improbable.
Sign Up to our Newsletter
So you enjoy The NextWomen. Why not sign up to our monthly newsletter?
You get a Letter from the CEO :-), the chance to catch up with the best of our recent articles - and some extra things we throw in once in a while.