Silicon Valley’s top startup program, Y Combinator, graduated its first class of non-profit startups yesterday.
As the genre defining startup accelerator, this is a pretty big deal. YC is the same institution that brought us household names like Airbnb, Dropbox, Reddit and many more.
Traditionally they’ve been very focused on finding the next billion dollar company—and they’ve been quite good at that. So, what will it look like when they start working with non-profits? Well, now we have a few answers.
First, let’s meet the class
CareMessage: Uses SMS and automated voice technology to help hospitals and other care providers increase their engagement with at-risk patients.
Immunity: Crowdfunding their new approach to developing an HIV vaccine—and, if successful, they’ll offer it for free.
OneDegree: Basically, Yelp for social services. Aims to make it easier for individuals discover non-profit social services (like low cost dental, or job training).
Zidisha: Peer-to-peer micro-lending. Like Kiva, but with lower interest rates (achieved by keeping things p2p, instead of using local financial institutions).
NooraHealth: Trains families to care for loved ones after they leave the hospital.
CodeNow:Teaches kids in low-income communities to code through a mix of online and inperson training.
Some trends emerge
5 of the 6 are creating (mostly software) products—and the one outlier is helping kids learn to create software products. This isn’t surprising. The product focus means these non-profits will be able to benefit from YC’s core expertise of helping young software companies grow quickly.
These organizations all share super inspiring missions. But, it’s also important to note how non-controversial they all are. Who could be against creating an HIV vaccine?
Closely related is that none of them have structural approaches towards making the world a better place (i.e. advocating for schools to start teaching software dev in the classroom). Instead, they all focus on providing services. In other words, the belief that non-profits should play an important role in challenging or changing existing institutions and laws doesn’t seem to fit into YC’s selection criteria.
Donation dependent (for now).
Interestingly, most of these startups seem to depend on donations for income. I haven’t seen any their business models, but tellingly 5 of the 6 had a large donate button on their homepage. I can easily imagine that most could (and perhaps are already planning to) transition to a revenue generating approach, but it doesn’t appear to be where they’re starting from.
This is noteworthy because a big trend in the broader non-profit tech community is focusing on product based revenue generation from the get-go—so you’re not as dependent on the whims of major donors or subject to the long timelines and reporting requirements of major foundations.
I suspect that as the YC mentors gain more experience in watching their startups go through the process of raising major donations, you’ll see more of these non-profits launching with baked in revenue generation models.
What it means beyond YC
Y Combinator casts a long shadow in the tech world. So, bringing non-profits into the mix has the potential to create some really interesting change outside of the program itself.
Training Silicon Valley heavyweights to become donors
Despite it’s massive accumulation of wealth, the tech industry isn’t great at giving money away. Part of this is because there is little cultural focus on the virtues of being a donor. If you belong to a church, you’re encouraged to make a donation every week. If you’re an middle-aged executive at a major corporation, you’re encouraged to join some community organization’s board or at least host a fundraiser. Most founders and VCs have none of these influences.
YC has a huge role in setting cultural norms in SV, and beyond. It’s been great to see YC founder Paul Graham talk up Watsi (the first YC backed non-profit, which he sits on the board of) and YC partner Paul Bucheit offer a $10 donation for each person who mentioned Zidisha on Facebook/Twitter. If this level of engagement continues, hopefully you’ll see more if seep throughout the eco-system as it becomes normalized.
This has the potential to not only unlock a lot more money for non-profits, but also to create some really valuable mentors and connectors.
You can change the world with non-profits too?!
Silicon Valley is filled with really well intention people who want to change the world and make it a better place. Unfortunately, two other trends often get in the way:
- A very generous interpretation of what changing the world means (i.e. “Our photo sharing app is going to change everything!”)
- A conviction that venture backed for-profit startups are the only vehicles capable of such change.
Simply by accepting ambitious, world changing, non-profits into it’s program, YC is showing us all what’s possible and helping to blow up both of these narrow minded trends.
So, here’s to hoping this is the beginning of a new wave of big-thinking, do-gooder, world-changing startups that are solely focused on impact, not tax status.