One of the key drivers of how much social impact a startup will create, is how well impact is managed by the startup (often called impact practice). Impact practice also tends to drive organisational performance more broadly. As this is an emerging area, we often get asked what good looks like. Across our investments, we have approximately 125 impactful startups that are contributing to solutions across a broad range of issues. Here, we share a few examples of startups in our ventures portfolio that are leading the charge in impact practice and how this helps drive results.
Clarity of impact thesis inspires stakeholders and partners
Good impact practice often starts with a clear understanding and articulation of the problem you’re trying to solve, how you’re going to solve it and the impact of that (what some refer to as a theory of change/impact thesis). One startup in our portfolio that’s leading the way in this area is Oyster. Oyster is building a software platform that enables employers to offer remote jobs to candidates simply and cheaply. This aims to connect the huge demand for knowledge workers, concentrated in a few capital cities, with the growing skilled workforce across the globe.
Oyster recently put together a comprehensive document articulating their social impact thesis. The clarity and space given to unpacking the thesis as well as the use of evidence to back it up, makes it a strong case. For example, by facilitating better matching between roles and candidates, Oyster hopes to reduce unemployment outside of major cities. It cites academic evidence demonstrating that unemployment has a negative effect on health outcomes to the tune of 10% compared with those in employment. This helps stakeholders truly understand what Oyster is trying to do and gives it confidence in the impact that could be achieved. Doing this enables Oyster to quickly build up a coalition of support for their business, whether that’s investors, partners or advocates.
Accountability drives customer acquisition
A good thesis is not enough. It’s also important to measure performance against the thesis and manage any unexpected deviations. One example of good accountability in our portfolio is TalkLife. This startup builds global peer support communities that offer safe and engaging places for people to get mental health support anytime and anywhere.
Despite being early stage, TalkLife has several research partnerships to help it better understand the problem it’s trying to solve and how effective its platform is at solving that problem. For example, in partnership with Microsoft, TalkLife is using predictive modelling to identify the most opportune moments to introduce cognitive interventions within conversations. More broadly, this dedication to measurement allows TalkLife to state its contribution to promoting mental wellbeing. Highlights include 73% of users saying their relationships have improved and 68% saying that they feel more able to cope with life. Metrics like these are great for accountability but also help drive customer acquisition (major Universities in TalkLife’s case) and partnership development as people trust what TalkLife has to offer.
What makes TalkLife an even better example is that many tech applications for mental health do not invest heavily in evidence. For example, of a review of 982 mobile apps related to depression, only 347 (35.3%) were clinically relevant, of which 9 (1%) provided evidence of clinical effectiveness and only 3 (0.3%) included a full citation to a published study.
Using impact data to improve product/service value
Sometimes we see data collection just for reporting’s sake. This sort of misses the point. Impact-related data is vital for helping an organisation improve its product or service and ultimately maximise the impact generated for society. Credit Kudos, another startup in our portfolio, does this well. Their platform leverages insights from financial behaviour to enable credit providers to make faster and better credit decisions. There’s a particular focus on borrowers who are otherwise unable to access affordable credit. A number of case studies highlight the extent to which they use data to improve the impact they create.
One example is how Credit Kudos uses credit outcome data. Credit Kudos links Open Banking data to negative and positive credit outcomes to build unique risk insights, score and models. Collection of outcome data isn’t just good impact measurement but is also vital to its business model as this data is used to train its algorithms and therefore critical to developing valuable products. This excites us because it demonstrates the shared value of impact practice, helping to generate higher impact but also driving financial performance.
To sum up…
Ultimately, managing impact is just like any other aspect of managing a growing startup. If you want to be lean and efficient, operations management is key. If you want to survive shocks, risk management is key. It’s no different with impact. If you want to optimise for impact, good impact management is key. At the same time, impact practice also drives broader organisational benefits. We recognise that not all startups will have a huge amount of time or resource to dedicate to this in the early stages, but we hope these examples show what is possible in a proportionate way that still drives value. As the venture ecosystem matures, impact practice will likely evolve and we look forward to continuing our journey in building impact know-how in the venture sector.
If you’re doing something exciting in impact practice (or know someone who is), please do get in touch, we’d love to feature as many examples of good practice as possible.