Purpose-Over-Profit Movement Gains the Respect of the Investment Community The single-minded focus on profits is proving to be poor business. Social purpose is where the money is.
By Marsha Hunt Edited by Dan Bova
Opinions expressed by Entrepreneur contributors are their own.
The desire for having a socially conscious company to buy from started with consumers and businesses that realized they had the power to influence the basis for why companies were in business.
From corporate social responsibility…
Of course, businesses need to make a profit in order to sustain themselves, but it doesn't have to be the primary reason for being. In recent years, more corporations are seeing the value of putting social good before their balance sheets. This has done considerable good for the communities served, the environment and society, in general. It's led to a serious shift and created a movement that is going beyond individual companies taking up a purpose for social good.
This change has also led to some exciting new business models with social good at their core. For example, two brothers formed an insurance business model with a customer-first philosophy that has become a benchmark for creating socially conscious service businesses that look toward people over profits. In the long run, they have proven that you can actually become more profitable simply by not focusing on it.
Related: The Findings of This Massive Global Social Entrepreneurship Study Will Surprise You
To organizations with a purpose…
Now, organizations and groups are forming to help other businesses move toward this philosophy in how they operate. For example, groups like Fashion Revolution Week have developed a global movement, consisting of fashion designers, marketers, writers, policymakers and more that are collaborating on how to make business decisions that are directed at social issues and concern for the planet and each other.
Related: How One Man Made It His Business to Give Back
To investors with socially-charged priorities…
With these changes taking place all around them, investors are sensing that this shift to purpose over profits has potential that deserves their attention. This is due, in part, by the millennial entrepreneurs they are coming into contact with that are seeking their funding and sharing their business ideas. This new breed of business developer, owner, and leader is focused on purposes rather than making money.
It's a perspective that presents a unique challenge for investors who have always been about the return that they would get from funding a business. Now, like corporations, they are considering what it means to first look at solving a problem and making significant impacts on social concerns, and from what they can see, it has potential -- not to mention, it feels good to be doing something that has such an impact and still provides that return as a result.
Now, universities are expanding their entrepreneur programs to include accelerators funded by companies and organizations that recognize the value of focusing on a purpose and social need rather than seeking out those ideas that just deliver the profits and return everyone wants.
One such program can be found at the University of Missouri-St. Louis where Dan Lauer, a long-standing successful entrepreneur and Founding Director of UMSL Accelerate is passionate about the opportunity to create an enhanced corporate partnership model. The Ameren Accelerator is powered by a partnership between Ameren, an energy utility, University of Missouri System, UMSL Accelerate, and Capital Innovators. "We believe we are the first University driven, corporate accelerator that adds to the ecosystem with subject matter expertise from faculty, student engagement as interns and licensing opportunities through tech transfer capabilities."
Similar to the collaboration noted above in the fashion industry, universities, corporations, and the local investor community are coming together to take a different tact for their roles in funding and growing startups. As Brian Dixon, COO of Capital Innovators, noted, "There have been a plethora of corporate accelerators that have developed in recent years. However, they aren't focused on solving some of the biggest problems facing the future of humanity. Energy is one of the most important industries that requires ongoing innovation to sustain the success of the global population and we're so excited to partner with Ameren Accelerator, UMSL Accelerate, and The University of Missouri System to work towards shifting the energy landscape."
In addressing the need to improve how energy is delivered to consumers and businesses in a way that addresses the needs of the environment, protecting and sustaining natural resources while minimizing the adverse effects of climate change, these types of accelerators are seeking out startups that can deliver the necessary solutions that work for social good.
"The Ameren Accelerator is our first corporate initiative through UMSL Accelerate – which is designed to foster entrepreneurialism and innovation in and outside the classroom," said Dr. Tom George, Chancellor of the University of Missouri–St. Louis. "We look forward to tapping into our strong contingent of faculty, student and alumni connections to make this program a success for all involved."
Related: 6 Traits That Make Millennials the Best Social Entrepreneurs ...
This is just one of many examples that illustrate a dramatic change among the investor community, signaling just how far the "purpose over profits" philosophy has permeated the global business environment. It's a good feeling to see so many now working for the good of all. Karma works both ways, and it's sure to deliver the necessary sustainable rewards for putting people and the planet first.
