Everyone in the nonprofit world knows what a slow grind it is to get funding from foundations. It can take up to nine months. Since foundations are frequently compared to venture capital firms because they supposedly take risks, I hope they are paying attention to the ways in which venture firms are making it easier than ever for entrepreneurs to get seed funding to prove concepts and launch.
Earlier this month, Charles River Ventures announced its QuickStart program, offering rapid $250,000 investments to startups. And by rapid, they mean they’ll get back to you in one business week.
The firm’s website reads, “the process of raising seed capital can consume precious time that can be better spent actually building out your idea.” Wouldn’t it be nice if foundations agreed? There seems to be a conflict between foundations’ stated goal of supporting innovation and the long-winded application process to which they subject entrepreneurs.
Once a nonprofit has submitted a Letter of Intent, it takes four to six weeks just to get a reponse. Then, it’s another couple of weeks before the foundation staff reads your proposal, and another couple of weeks, if not months, before the board votes on the grant. If the grant it approved, it takes a few more weeks to dispense the money.
The Ford Foundation claims its process is so long because they receive 40,000 grant applications a year. But Charles River Ventures received 1,000 emails on the first day of their QuickStart program, and they managed to respond to all of them within one business week.
Obviously, there are many differences between venture firms and foundations. For starters, in the venture capital world, $250,000 in seed is considered puny. And Charles River Ventures is happy to attract a crowd of entrepreneurs to their doors—a status that no foundation wants.
There are many areas in which the venture model doesn’t translate to philanthropy. And I am critical of many behaviors that rule the venture capital world. But in a sector that claims to support social innovation, providing easy, fast, and friendly access to seed money would make a worthy goal. (Then, of course, comes the battle for sustained funding from foundations.)
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