From Early Stage Funding to Lasting Impact: The Venture Philanthropy Approach to Funding Innovation
Wow! How time flies by when a partnership works so well. As I prepared for my final Watsi board meeting, I reflected on how much Chase and his team had accomplished and what a joy it is to be part of their quest to make healthcare accessible to all.
In July 2013, we first met Chase Adam. It was only a few days after he had pitched Watsi, the first nonprofit to be accepted into Y-Combinator. In no time, Ron Conway, Tim and Billy Draper were urging DRK to take a look at Watsi. Chase was ready to make the case for Watsi to be in the DRK portfolio, and he had a few questions of his own. From the first meeting, there was a constructive and respectful exchange because we were aligned on the end goal – healthcare for all. As a venture philanthropy firm, DRK conducts rigorous due diligence, not unlike the way in which a venture capital firm evaluates a for-profit investment. These are our key questions:
Is it addressing an important social issue?
Definitely. A large percentage of our work at DRK is focused on global health, so we know that access to medical care, especially surgical treatments, is a critical problem.
Watsi, the first global crowdfunding platform for medical treatments, leverages scalable technology to solve a substantial need for patients abroad.
Chase’s commitment to radical transparency was distinctive. From the very beginning, Watsi allowed anyone and everyone to see how the money was moving and how the patients’ treatment, with their consent, was progressing. Transparency of funding increased accountability from the moment a patient’s profile was shared to the delivery of the medical procedure. There was an elegance to Watsi that was extremely appealing.
Is the solution being proposed likely to create meaningful change?
Yes, early results were promising. In the first seven months after launch, Watsi processed more than 3,700 donations and funded medical treatments for more than 250 patients abroad. DRK has seen many success stories of how technology can enable rapid transformation of an ecosystem, and we truly believe in the power of technical innovation to make an impact on vulnerable populations.
Does the leadership team have potential?
Even though Watsi was still in its early stages, I was confident that Chase had what it takes to be a successful entrepreneur. His passion for the mission was contagious, and he was clearly a resource magnet. Chase was able to attract both financial and human capital to support his vision.
Is the solution scalable?
At the time, Watsi was already operating across 13 countries and working diligently to identify new partners to scale this model. Today, Watsi operates in 24 countries globally.
DRK bet on Chase in 2013 because we saw the potential for this model to dramatically shift the way governments and institutions fund healthcare treatments abroad, with real-time data collection and complete transparency. I had the privilege of joining Watsi’s board for those three years; DRK requires a DRK representative serve on all grantee boards. As part of DRK’s portfolio support and board service, we openly share our networks to help connect our entrepreneurs with people we believe can catalyze their efforts. In return, we ask for a three-year projection of the organization’s metrics and milestones that demonstrate the impact the entrepreneur hopes to achieve while s/he is an active member of the DRK portfolio. We also expect that the entrepreneur will regularly engage with DRK through written progress updates and in-person check-ins, as well as ongoing conversations with the board representative and, as needed, other key members of our finance, operations, and development team.
I was fortunate to be joined on the Watsi board by Premal Shah, President of Kiva (an early DRK grantee), and experienced firsthand the power of the DRK network coming full circle. In December, as my final board meeting with Watsi approached, I reflected on what made Watsi a great example of why we at DRK are so passionate about our work and strongly believe in this investment approach.
DRK was founded in 2002 by Bill Draper and Robin Richards, two highly successful venture capitalists who chose to leverage their success in the venture capital world, applying their skills, expertise, and resources to solve complex social issues. DRK’s venture philanthropy model has been shaped by Bill and Robin’s legacy – we find, fund, and support early stage social entrepreneurs whose ideas have the potential to drive systems-level change.
Since our founding, we’ve raised $110 million in private capital and funded over 100 social enterprises – and we’re aiming to double that number over the next five years. We seek out entrepreneurs with qualities that we know are critically important – vision, energy, determination, courage, passion, and empathy. Our entrepreneurs are tackling important challenges across the globe, including healthcare, education, social justice, poverty alleviation, and the environment.
In the 15 years that DRK has been involved in this work, we’ve learned some powerful lessons that we hope to share with the funding community. We firmly believe that multi-year, unrestricted funding is precious capital that nonprofits need to build organizational capacity.
We’ve also learned that handing over grant dollars alone isn’t enough. At DRK, the biggest difference we can make for our grantees is providing them with unrelenting support and serving as an advocate on behalf of their organizations. We’re one of the first institutions to believe in their vision, and we never stop asking the tough questions. As a team, we’ve developed pattern recognition from sitting on many diverse boards and have gained a deep understanding of the challenges our entrepreneurs are likely to face. However, there is always a level of risk we have to account for, and not every DRK portfolio organization becomes a successful endeavor. We are incredibly fortunate to have a supportive board and a community of donor partners that not only accept, but encourage our team to take those risks and explore new possibilities with the potential for great impact.
I can’t emphasize enough the importance of our entrepreneurs’ efforts across the globe, and I encourage you to take a moment to visit DRK’s website (www.drkfoundation.org) to learn more. For any institutions interested in exploring the venture philanthropy model, please contact us and we would be more than happy to share our learnings. We have seen the difference that early-stage funding can make for social entrepreneurs. I hope the next time your organization comes across an entrepreneur like Chase, an extraordinary leader with a big idea, you too will make that bet.
This post is part of the Funding Innovation series, produced by Foundation Center's Glasspockets and GrantCraft, and underwritten by the Vodafone Foundation. The series explores funding practices and trends at the intersection of problem-solving, technology, and design. Please contribute your comments on each post and share the series using #fundinginnovation. To view more posts in this series click here.