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Big Buckets of Money

Sunday, April 18th, 2010 | Posted by Jon Kolko

I met with Justin Petro yesterday to do some final logistics planning for the bootcamp, and we were discussing the part of design process – ideation – where ideas start to build and evolve, and new ideas form. He described how important it was to tie these to “a big bucket of money”, even at this early stage, in order to explicitly shift the focus of social innovation from altruism (and likely unsustainable) to profitable (and therefore able to take a long view). I started thinking about what big buckets of money are actually available for social innovators to tie their ideas to, and came up with this list:

  1. Direct sales profit, product. Someone directly pays for an artifact.
  2. Direct sales profit, service. Someone directly pays for a service.
  3. Indirect sales profit, service. Transactional fees are extracted from a third-party exchange.
  4. Venture capital. Private equity, with an expectation of 5-10x return on 3M+ in 3-5 years.
  5. Angel capital. Start-up financing, with an expectation of a 10x return on <2M in 3-5 years.
  6. Foundation grant money. Large grants coming from private foundations, usually spooned off the top of an endowment.
  7. Private-sector grant money. Small grants coming from wealthy individuals, with an implicit expectation of some form of organizational control.
  8. Government grant money. Small to large grants, coming from agencies like NSF or the DOE.
  9. Government contractor money. Small to large contracts, coming from agencies like DOD or DARPA.
  10. Long-tail internet grants. Micro-grants aggregated through a service like Kickstarter, FundableIndieGoGo or ChipIn.

What other big pots of money am I missing?

1 Comment »
  • Dave Foster

    How about licensing? A product’s design, a service’s model, educational curricula or materials, or intellectual property licensed for use by multiple parties.

    Collaborative partnerships — I guess these often come in the form of grants, but working together with a company or non-profit with shared effort, rather than the traditional “I pay, you do” grant model might be considered differently. More “I pay, we do together.”