Partnering With A Non-Profit

I was explaining to someone about my experience doing a startup the other day.  I made a comment to him about being in business for almost two years.  Albeit not an extremely successful two years monetarily, but we have survived none the less. I told him I was proud of the fact we had made it that long, and that I thought in some ways; “survival equals success”.

By that, I meant that I think part of making it through the startup phase is just being able to survive and be around until something extraordinary happens. You get a big client, or you get funded. These things can push you out of the startup phase and into the next level.  Into growth, employees, etc.

After thinking about that in more detail, I realized I could attribute our success (or survival depending on how you look at it) to two specific things:

1.) Having a flexible development firm that we’ve used to outsource our team of engineers. Software Incubator, a firm in New York has allowed us to miss a bill on a tight budget month, take a small equity stake instead of full payment over an extended period, and even thrown in extra manpower from time to time when extra help is needed.  All awesome things. We wouldn’t be the same company without it. We may not even be here without it.  But I digress, I will save that story for another post.

2. ) The single biggest thing we have done as an early stage company to survive, is partner with Community Ventures Corporation, a federally subsidized non-profit housing development agency.

Through this relationship we have received free office space for a year, a large initial investment and monthly development stipend. Granted this has come with some strings, but overall the relationship has been invaluable.

Here are some of the details and reasons why this has worked:

Common Interests: CVC shared an interest in the real estate industry, and therefore the things that we were building. We struck a deal to build a product on our software platform for their market segment of the industry (housing development). Not only was this basically a enterprise level sale, but it allowed us to expand our product offering and technology. There is even a revenue share built in for us after they begin selling the product to their market segment.

No Equity: 99% of the time, if you do a deal like this you are going to give up some equity. Not with a non-profit. Because they are a non-profit their goal is unrestricted income, not holdings. We got the equivalent of a large investment, without giving up a single bit of equity.

Real Estate: They have put our small team into one of their office space developments and allowed us to work out of their for over a year. For free.  This is an added benefit of working with companies doing in the real estate development.

Culture: The culture of a company like that is perfect for the young, fragile startup . They are helpful and understanding. There is no cutthroat business practices or people out to take your company from you.  There is a level of philanthropy that exists, a willingness to work with us in a way that is helpful but not controlling.

All of this has been incredible, and have given us the stability we need in that critical first few years of business and growth from an idea to a company. Not that every company can specifically do this, but what they CAN do is get creative about ways to make their own venture work: Bootstrap with a large client, or an industry association. Charge a smaller fee, but pay it upfront to improve cash flow. Get creative.

If you  really want it to work, you will make it happen.