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Venture philanthropy might not be a household term, but it’s taking place in our own backyard. Arch Grants, a non-profit organization providing $50,000 of equity-free funding, support and services to startups through its competitions, is one such example. To learn more about venture philanthropy, we turned to experts Laurna Godwin, Board Member and Chair of the Arch Grants Governance Committee and Jamie Froedge, Vice President of Acquisition Planning and Development at Emerson, who also serves on Arch Grants’ Board.
Laurna Godwin, Jamie Froedge
How do you define venture philanthropy?
LG: I define venture philanthropy as supporting high-potential startups that want to experiment at solving a local and/or global problem. It goes beyond writing a check. It involves a deeper relationship between the donor and the recipient where the donor plays a more active role in making sure benchmarks are being met and progress is being made.
JF: Giving back to the community and making things better where we live and work has long been a core Emerson value and a huge part of our culture. Venture philanthropy is one way to accomplish this goal by investing money, time and talent in a non-profit way to develop people and their innovative ideas.
Venture philanthropy is about trying new approaches to create economic and social change. By providing funding and other forms of support, venture philanthropy is a way to get entrepreneurs, philanthropists and the broader community to work together hand-in-hand over the long term to develop talent and great ideas to rejuvenate St. Louis.
Arch Grants is one approach to venture philanthropy that is making a real difference in St. Louis.
What role has it played in shaping St. Louis so far?
JF: Even though venture philanthropy is relatively new to St. Louis, it has accomplished a lot in a short period of time. For example, over the past four years, more than 60 companies have received funding through Arch Grants. The number of jobs at Arch Grants recipients has quadrupled over that time. Cumulative total revenue from Arch Grants recipients is approaching $19 million and more than $50 million of capital has been invested in these startups.
Success cannot just be measured in the near-term numbers. We want to be able to do this consistently over a long period of time in order to build a critical mass in new ideas, innovative people, creativity, entrepreneurial spirit and innovation.
Research indicates that cities that support these types of programs benefit economically as 100 percent of net new job creation comes from new businesses (Kauffman Foundation).
Culturally, cities with economic growth fueled by entrepreneurial spirit become exciting places to work, live and visit. Over a long period of time, this can lead to sustainable progress and opportunity for people across the economic spectrum of a community. When you marry St. Louis’ philanthropic spirit with the desire for revitalization, we can create transformative change for our region.
How have Emerson’s contributions to Arch Grants benefited the companies? Any specific examples?
JF: The financial contributions [Emerson makes] help these talented entrepreneurs explore their dreams in St. Louis as they develop their ideas to become reality. Additionally, we have been collaborating with a number of Arch Grants Recipients and the list is growing daily.
The engagement we have with the companies and their people is mutually beneficial. In some cases we’re providing feedback on their product and how it may best fit with a customer. In other cases, we are introducing them to someone in Emerson who may have an interest in their product, or sometimes we are providing feedback on a range of business issues. In all cases, we learn a great deal from each company.
We watch the way they attack problems in new, creative ways. We gain inspiration from their passion and they challenge us to think about how we may want to organize ourselves to approach new opportunities.
Two specific Arch Grants companies we have collaborated with are Observable Networks and Tallyfy. Observable Networks, a talented St. Louis-based startup company focused on cybersecurity, has helped us gain valuable insights into our own security practices. We brought in Tallyfy to apply their capabilities to our internal business processes.
Have you seen an increase in other companies participating in the startup ecosystem this way? What will it take for more companies to get involved?
JF: Yes, but more involvement and help from others is needed from companies of all sizes so we accelerate the development of this ecosystem and more quickly realize the benefits that it delivers.
The best way to get more companies involved is to have measureable success. I think the success that Arch Grants and other venture philanthropy efforts are having in St. Louis is starting to get noticed and we want to keep the momentum going.
This is one of those grassroots efforts. The more we put into it, the more we get out. It takes investment, of capital, but also of time: people volunteering to be judges, to invest in the startups, to sponsor a table at the Arch Grants Gala, etc.
I would encourage other business leaders in St. Louis to pick someone on their team and get them involved in a venture philanthropy effort like Arch Grants. Once they do, they’ll see how this idea sells itself and they will see the difference it can make in their own organization.
What trends have you noticed in venture philanthropy since you joined the Arch Grants board?
LG: I feel St. Louis philanthropists are looking for measurable results and that applies to whether they are donating locally or globally. Venture philanthropy models generally provide more transparency for donors who seek measurable results.
Arch Grants was founded to rejuvenate the St. Louis region through job creation. When I look at what our organization has achieved since it opened in 2012, it is amazing: more than 275 jobs have been created and Arch Grants recipients have generated nearly $19 million in revenue.
We report our results quarterly because donors demand it, and because the metrics are essential to Arch Grants’ ability to broaden its base of donor support and prove that our model is working. And it is working!
This blog was created in collaboration with Arch Grants, a member of the EQ Partner Network.