Open Yourself Up to New Solutions
In the categories:
- For Investors
Last year, we wrote about our commitment to transparency as part of a Glasspockets series on Funding Innovation. The original post is here, but we wanted to share it with our NMV community, as well.
If you’ve been following the headlines since the 2016 election, you’ve probably thought about the growing polarization in our country. You may share my worry about filter bubbles and political echo chambers, or you might have recommitted to sparking conversations with friends across the aisle. At New Media Ventures (NMV), we see the same need in the funding world. From our perspective, most people fund people and organizations they already know, moving money through referrals and established networks. But if we’re going to solve the big problems facing our world, we need to move beyond our personal echo chambers.
As a mission-driven venture fund that invests in both for-profit and nonprofit startups, NMV stands with one foot in the venture capital world and one foot in philanthropy – driving change at the intersection of technology, media, and civic engagement. When we first got started, we found ourselves sourcing opportunities in all the traditional ways – using our personal networks and attending conferences – but we quickly realized that we needed to try something different to ensure that we were actually identifying new approaches to the problems we wanted to solve. In 2014, we launched the NMV Innovation Fund with two main goals: 1) increase the number of investable projects crossing our desks (our deal flow); and 2) break through the bias for “the usual suspects” to fund more diverse entrepreneurs.
In the simplest terms, the Innovation Fund is an open call for world-changing innovations. Twice a year, we ask our network, and our network’s network, and their networks (you get the idea: we cast a wide net) to send us the best opportunities they’ve seen for how technology can catalyze progressive change. This year, in response to our “Resist and Rebuild” Open Call, we received nearly 500 applications – a new record – and we are blown away by the creativity of the applicants.
If you haven't tried an open call, you might be missing out on amazing solutions beyond the usual suspects.
While it may sound overwhelming to sort through hundreds of applications, we have developed a methodology for doing this work efficiently. This process includes recruiting a volunteer screening committee of funding peers, simplifying our application as much as possible, asking more detailed questions only to the applicants who rise to the top, and using a technology platform to easily manage all of the applications in one batch. Ultimately, New Media Ventures makes the final funding decision, but the screening committee is one of the most powerful aspects of the process – many heads are better than one – and working collaboratively with other funders allows us to leverage different domain expertise in evaluating opportunities.
Here are two takeaways from our experience opening ourselves up to open calls, and the reasons why we hope other funders will consider similar approaches:
1) Big problems require new solutions (and diversity is not a “nice to have”). Funding exclusively through referrals can limit what funders see and increase the risk of confirmation bias – one of the reasons white men are so much more likely to get venture capital funding in Silicon Valley. By having an open and transparent application process, heavily marketed to ensure we’re getting outside our own bubbles, we’ve made a tremendous impact on the diversity of our portfolio. Our website, blog, social media platforms, and partners broadcast details about the open call, allowing us to reach new audiences who may be deterred by less transparent philanthropic opportunities. We’re proud that 65% of Innovation Fund applicants have at least one female and/or trans founder, and 30% have at least one person of color on the founding team. We still have a long way to go, but by comparison 8% of venture capital goes to women founders and 13% to founders of color.
However, focusing on diversity is not a “nice to have” and it’s not just about the numbers – it’s a core part of our strategy. Our societies and systems are facing entrenched problems, and solving them will require new and bold solutions. We need all hands on deck. Women, trans people, and leaders of color have much-needed perspectives and expertise, but often lack access to capital, networks, and traditional philanthropy. For example, news platform Blavity, founded by a young black woman, has grown to reach 7 million readers by creatively combining pop culture content with thoughtful coverage of race and gender issues. We might never have identified this opportunity were it not for our open call.
2) Less control over outcomes leads to more welcome surprises. When funders issue a request for proposals (RFP), we essentially define the terms of the discussion: we’ve often developed a strategy, and we’re looking for organizations to execute that strategy. Unlike a traditional RFP, the Innovation Fund Open Call process has very broad parameters by design. We’ve found this requires us to be comfortable with uncertainty and develop the humility to stay in a learning mindset. The approach isn’t without risks. What if you open the gates for a broad range of applicants, and don’t find anything you want to fund? What if you keep your parameters flexible and only get applications that aren’t in your wheelhouse? But with careful planning and a good process, we have developed strategies to mitigate the risks, and find we gain real value from being able to scan the field and identify gaps as well as opportunities. It has paid off in delightful and unexpected ways.
For many of our portfolio organizations, NMV is their first institutional funder, and our early investment gives our grantees the validation and runway they need to go on to great things: CoWorker.org hosted the Summit on Worker Voice with President Obama; Blavity went on to participate in 500 Startups; Vote.org got into Y Combinator and scaled up quickly to send SMS voting reminder messages to more than 1 million people in swing states leading up to the election. And that’s just a few examples.
To sum it up, if you haven’t tried an open call, you might be missing out on amazing solutions beyond the usual suspects. If boosting innovation is one of your goals, we recommend starting small and collaborating with others to share the work. Consider carving out a portion of your grantmaking budget to fund projects selected through an open process, and remember that you don’t have to reinvent the wheel. NMV and other similar groups have developed deep expertise around open calls and we’re excited to partner with other funders. In fact, we did just that when we worked with the Pluribus Project on a democracy-focused open call last year.
So go ahead, open up and let yourself be surprised. It worked for us.