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How do you expect incubating for-profit orgs to differ from AIM's experience incubating charities, and what do you plan to do to execute well despite these differences?
How do you expect incubating for-profit orgs to differ from AIM's experience incubating charities, and what do you plan to do to execute well despite these differences?
Someone should do a betting market on this for sure @Nathan Young
Agree that this seems useful! Hope these seem like they're getting to interesting possible disagreements.
good on you for doing the thing i couldnt motivate myself to do ❤️
Hell yeah this is awesome
Executive summary: The post introduces Ambitious Impact's (Charity Entrepreneurship) new "Founding to Give" pre-incubator program, which aims to help participants launch high-growth companies and commit to donating a significant portion of their earnings to highly effective charities, addressing funding gaps and diversifying funding sources.
Key points:
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Hi AIM-Team,
I completely agree, that using high-profit start-ups can generate extraordinary high donation potential. However, it must be assured, that money that is invested into these for-profit stat-ups isn't coming from investors/institutions that would have invested into your newly founded NGOs instead. There is no guarantee that this new idea is developing into a more effective way in doing good than the start-up NGO.
Wouldn't dragging money from effective NGOs to a for profit organization that might have REAL for profit and dominating shareholders something "net bad" with a high risk? Even if 4/10 of your for-profits are successful you might drag money from effective NGOs with all 10 of them.
How do you mitigate the risk, that the effects of the donations from the successful for-profit founders could smaller than
PLUS
PLUS
So: Did you do an extensive analysis of the opportunity costs? How do you mitigate these risks?
Wishing you all the best for founding a great number of unicorns!!
TLDR: This post introduces you to Ambitious Impact's (Charity Entrepreneurship) new program: Founding to Give. It is a pre-incubator program that will help you launch a high-growth company to donate to high-impact charities. You can apply via this joint application form.
Our analysis reveals that pursuing this career path could yield an average donation potential of $1M USD per individual annually, aligning with findings from similar analyses. Comparable to the nature of entrepreneurial ventures, the distribution of outcomes is heavily skewed, yet even the median donation capacity of $130K per year situates this career choice within the same range as other impactful roles. Moreover, a successful venture in this direction can have other benefits like enhancing funding diversity and mitigating the mid-stage funding gap, topics we will delve into in a subsequent section. A more in-depth exploration of our methodology can be found in the report.
Founding to Give is a new pre-incubator program run by Ambitious Impact (previously Charity Entrepreneurship). It aims to help you launch a high-growth company to donate to high-impact charities.
At AIM Founding to Give pre-incubator, we’ll help you with:
We want you to go from a simple idea to a strong co-founding team that can pitch to the best incubators or investors in the world.
The program will run January-March 2025, and you can apply by April 14, 2024, via our joint application form below:
Apply nowOr sign up here to join us for a special event with the Founding to Give Program Managers on March 26, 2024, 6 PM GMT, to learn more and ask any questions you may have about this program.
We don’t care about making money for ourselves. We care about making the biggest difference in the world. That is why we do not take any equity, ask for board seats, or hamstring your company's growth in any other way. Instead, we ask that participants commit to donating a minimum of 50% of their personal exit earnings above $1m to effective charities, similar to what the signatories of the Founders Pledge or the Giving Pledge are doing.
Many established, highly impactful charities (in particular global health charities) have significant room to absorb more funding effectively. New effective charities can have significant funding gaps, too, which may prevent them from scaling up and improving the lives of millions. That is why the funds you will raise could have a huge impact.
If you’re excited by the entrepreneurial career path, look to find or refine your business idea, if you have not found the right co-founder, or if you want to test out for-profit entrepreneurship as a path to make a massive positive difference - this program is for you.
We look for:
Companies that can compete & scale in traditional entrepreneurship pathways (such as getting into YC) an combine this with positive flow-through effects, e.g., in the areas of:
Our model shows that this career path can be very impactful, with an average of $1M in GiveWell equivalent donations per founder per year (or similar standard in other cause areas). Exit values of companies are highly power lawed, which means that entrepreneurship is a somewhat “hits-based” strategy. However, the median exit is still sizable and the upward potential is very large (95th percentile of $3.7M per year), making this career path competitive with other high-impact options.
Over the last couple of years, many new, highly impactful charities have gotten started to solve the world's most pressing problems. However, as we have previously written about, there are still significant gaps in funding for these charities, which pose a significant risk to their survival and impact over the long term. Even many established highly impactful charities (in particular global health charities) have significant room to absorb more funding effectively (see AMF room for more funding as an example). We believe money raised through this program could be hugely impactful.
More than simply increasing the total amount of funding available, we believe that through programs like these, we can help diversify the funding sources for highly effective charities. At the moment, funding for effectiveness-minded charities is concentrated in the hands of a few large donors. However, diversified donor bases are good for the health of individual organizations to avoid being overly dependent on any one donor. Effective projects can still be missed by effectiveness-focused funders. This leaves room for other donors to fill in the funding gap. We hope this program, alongside some of our other programs (such as Effective Giving Incubation) and other actors such as Founders Pledge, can contribute to this funder diversity.
Related to the above - because of limitations in philanthropic funding in certain cause areas, only so many effective charities can be started annually in this space. In for-profit routes, however, lack of funding is much less of a constraint. We hope that if we can build our knowledge base on impactful entrepreneurship, we can create paths to impact for many more people.
We have very little available rigorous quantitative assessment of the positive flow-through effects of for-profit companies. AIM takes rigorous evaluation of impact seriously and is looking to work with field-leading experts in the field of M&E to build better measurements for for-profit impacts. We feel this process and data could also be cross-applied to understand for-profit as a vehicle for impact. We’re hoping that the companies that are founded through this program will serve as case studies that we can assess going forward.
You can learn more about our reasoning, theory of change, and the case for Founding to Give in our report below:
Founding to Give is an excellent opportunity for a highly impactful and rewarding career, that will significantly build your career capital and has the potential to help millions of humans or animals have better lives.
We highly encourage everyone interested to apply by April 14, 2024:
Apply now
As someone who has been a huge believer in CE and the theory of change, I'm honestly just not really seeing it for this.
A few thoughts:
All that said, I am rooting for you!
Hi Kyle, thanks a lot for your thoughtful comments. I think you highlighted some of the key assumptions this program hinges on. Here are some thoughts on the points you mentioned.
One of the main value add of the current incubation program, which applies to this one as well, is matching participants with a talented, complementary and value-aligned co-founder. This would probably be pretty hard for a single person to do, going through thousands of applications, picking the top 15 or so and spending 4-5 weeks working with them to find the best match. The co-founders are often regarded as the chief ingredient of a startup, and I think CE has a solid know-how in this domain. Moreover, a lot of incubators look for projects/companies a bit further down the line (post-cofounder and post-idea), and this program aims to fill the gap between zero and this stage.
One key advantage of working with EAs or EA-adjacent people at this early stage is that we could expect considerably higher pledged percentages and donation effectiveness. Of course, we need to balance this with the lower number of companies of this approach compared to the Founders Pledge on, but I think both approaches have their merits.
Indeed, I think you are right that by adding constraints to the ideas we are considering, we are somewhat reducing our chances. However, by looking at the list of YC's top companies, not a lot struck me as blatantly net negative. My sense is that most of those companies have a neutral direct impact (using the EA definition of impact), and some even have plausible positive flow-through effects (like Wave). Of course, assessing flow-through effects is pretty hard, so all this is to be taken with a grain of salt.
There you have it, here are some thoughts. I hope that they can shed some light on some of the rationales. This program is definitely hits-based, but I don’t dislike our chances and I think we have a pretty good shot. And thanks for your support!
Nice one Kyle, I begrudgingly largely agree with you, and like you I think CE are incredible.
I lije that they have put out that 40 percent number though, as they can now measure success easily. Even though like you I don't quite buy the value proposition here, I almost trust CE that they have done their research well and are seeing upside here that we can't.
One important point they make though is that they they only really need one incubated business to go moderately big in three or four rounds of this to make it all make sense.
Excited to see how it goes!
Citation needed on this - I’m not sure what net-bad unicorns you’re thinking of (and I’d be interested to know), but I think at the outset they probably mostly looked like not-making-the-world-worse ideas and by the time they’re getting to unicorn status the original incubator has very little influence over what they do.
Perhaps, although as the post says you don’t need to found a unicorn to have a very promising exit and give a large amount to charity. I’m one of the people who became a software engineer back when 80K recommended it as a promising career path. I think more of us should start EtG startups - and suspect there are many like me who don’t feel themselves a good fit for direct work (or just like tech) and would make good founders.
I think that promoting startups which offer what CE calls "flowthrough effects" is probably a large part of CE's value add here, so it would be nice if some of the analysis of fields and the potential for impact within them looked a little more developed in future. I can see some value in EA founder-matching, but I think the existing startup funding ecosystem provides a lot of information on how to get into accelerators and what a high growth business model looks like etc already.
Despite sharing others' scepticism about the 40% into YC and implied unicorn exit projections, I can see the numbers working purely because I think the 50% of founder share value CE is asking to be donated will tend to work out as a greater percentage of share value than a typical accelerator or angel takes (and so even a modest acquihire potentially represents ~$1m to effective charity, for relatively little initial input).
But I think it's a little disappointing that CE seems to be writing off the "double bottom line" space in between pure charity and VC-funded moonshots. It's true that those sort of companies don't tend to become as big as the outlying VC-funded successes, but that's not really the point: since they're not asking for philanthropic capital to sustain them and can generate recurring moderately positive impact, they're still potentially a very efficient use of their founders time and initial resource input. Some of them operate in niches much larger than some of the charities CE is incubating too, and whilst "ethics" isn't a big "buy me" signal to VCs and acquirers, it can be to consumers. I'd have thought CE's focus on quantifying impact worked well in this space too.
If CE is looking to broaden what it incubates goals and work with the for-profit sector, it would also be interesting to see what it could do with corporate partners with some of its purely impact driven ideas too: in particular the SMS-reminder ideas feel like something that could be advanced most effectively in partnership with a mobile telecoms provider