Hi. This is Paul Zellizer, and welcome to the AwarePreneurs podcast. On this show, we dive deep into wisdom from some of the world's leading social entrepreneur. Our goal is to help increase your positive impact, your profitability, and your quality of life. Before we get into today's topic, I have one request. If you could hit subscribe and do a review on your favorite podcast app, it helps more people learn how to have positive impact through a values based business. Thanks so much. Today, your guest is me, Paul Zellizer.

I am the host of the Awarepreneurs podcast, and we do once a month, a solo episode where I try to address one of the more current issues in the social impact business space. And our topic today is 3 challenges that social impact startup space now. Here we are. I'm recording this in the middle of March of 2024, and I'm seeing 3 significant issues that I wanted to just share some thoughts because they're coming up pretty regularly with the founders I work with and in the conversations that I'm having with colleagues and when I go to networking events. So I'm gonna tell you what these three issues are. We'll talk a little bit about them. I'll share some strategies you might consider that are helping founders navigate these issues. And when it's all over, I'd love to hear from you.

What are you doing? First of all, what problems are you seeing and what are you doing to address these issues here in 2024? So let's talk about what the issues are. Let's talk about the strategies and thanks for being on the ride. Number 1, access to funding. Pretty significant decrease in the overall funding in 2023, and I'm seeing that trend continue into 2024. What do you do about that, and how can founders navigate that? Number 2, I'm seeing a regressive social and political landscape, whether that's pushback on climate or the war on DEI initiatives, etcetera. We'll talk about what does that mean for you as a social impact startup? And number 3, building awareness and market demand when, you know, things are kind of crowded out there. If you were starting an impact startup 15 years ago, there was less awareness of those vocabularies and that type of approach to business. So there's more of a trend and more general awareness out there, But also there's more noise out there.

There's more people claiming to be an impact business, to have some relationship with the SDGs, sustainable development goals or ESG. People have heard that term before. So what do you do when there's more noise and there's more competition? How do you be skillful in that environment? So number 1, access to funding is more difficult. There is a article from Crunchbase, an organization that, you know, looks at startup ecosystem in the business environment. I'll put a link to it in the show notes. And in that article, they're quoting a 38% overall decrease in 2023 of available funding to start ups compared to 2022. The numbers they're using in 2022 overall in the US, it was 462,000,000,000 in 2022. In 2023, it was 285,000,000,000, and that is a 38% decrease.

And, certainly, when I'm talking to social impact start up founders, We're definitely hearing that it's harder to get capital and investors are asking for more diligence. It's taking longer. They're doing more homework. And also pay attention to things like your overall valuation. And if your valuation is too high, they're passing on investments that they might not have passed on before that they might have been really interested in. So what do you do when funding is it's just more of a challenging funding environment. So let's talk about a couple of strategies for that. Number 1, grow smart in the startup world, sometimes like faster and getting to bigger is better is, you know, the overall mindset.

And when funding is more challenging, I like to think of smart growth. What does that look like for you and your team? And, obviously, helping more people, creating a company that has a strong foundation and being able to really both from a business and an impact perspective, hit your goals is important. And it's important to have those goals be informed by the context we're operating in. In 2024, if you're using a, you know, different mindset, like 2022, there was a lot more money. It was just a different growth trajectory. So think about smart growth and talking to your team, talking to your mentors about how do you chart a growth trajectory that's both dynamic and feels like it's aligned with your vision, but at the same time doesn't have an old reality in terms of the overall growth, you know, trajectory. You don't wanna get out over your skis. So how do you create a growth plan and a funding plan that allows you to be in a, you know, centred place and being really smart about where you are right now on the business growth journey, and where you're headed to, and what kind of capital is going to allow you to do that in a way that is most likely to have the sustainability that when you started this venture, you were hoping for.

Number 2, I mentioned this already, but investors are pushing back on what they might consider as inflated valuations. So be both wise and just understand this context that an inflated valuation can make it really difficult to access the funding you need. Really lean into lean approaches. A lean startup is one of my favorite books. Think about growth from a perspective of being a gritty startup, as opposed to the environments where some startups in years past just had lots of capital, lots of investment, just kind of thrown their way. Be smart and be lean. And the last one is think about strategic partnerships. I'm working with several clients.

They're building relationships and have access funding by forming relationships where an existing business or one that's in an adjacent space or doing something slightly different, heard about the startup and they're actually funding it. The founder of the business or the business that might be, you know, a 100 times the size of a start up. They have capital. They have relationships. So you're gonna hear me mention partnerships and collaboration a lot in this episode, and that's one of my primary strategies of helping clients. When you can find somebody, if there's a values fit and they're further along in the business development journey, there's ways in which they might be able to open doors for you, which can help you get access to capital. That if you didn't have those partnerships, wouldn't be available to you. So those are a few ideas there.

Let's move on to the next one. The second situation I'm seeing social impact start ups face is a regressive social and political landscape. Give you two examples. One would be climate. Right? And for example, there's an article. Again, I'll put it in the show notes. It's in The Economist, and the article is titled the global backlash against climate policies. And it is an October 2023 article and still see that very much alive.

We're seeing an organised, strong, well funded resistance to things like ESG approaches, to accounting and acknowledging things, like how much carbon a business is responsible for, and there's a tax on that approach. There's a tax on other things related to climate solutions. So that article will give you an example. Another example, I'll just mention, if you're in the impact space, you probably have noticed there's an all out kind of war on diversity, equity, and inclusion, DEI initiatives. For example, I'll put a link in the show notes to a CNN article from January of 2024. The title of that article is DEI efforts are under siege. Here's what experts say is at stake. Again, that was published in January, 2024.

I don't think anything has changed. In some ways, as we record this in March, it might be worse. It seems to be gaining steam. So by definition, many social impact startups are looking at problems in the kinds of arenas, whether it's climate or, you know, working with people from marginalized communities or dealing with, you know, sustainable agriculture and all of the benefits, including carbon offsetting benefits and carbon sequestering benefits. These are the kinds of businesses that listen to this show. Right? And we're seeing pushback and general questioning of it. Is it even valid? Or, you know, some real outright attacks, it's not valid, and somebody's doing this to make money or to undercut competition. Some, you know, really harsh attacks on the kinds of impact areas that the people that listen to this show are passionate about, that I'm personally passionate about.

So, what do you do about that? Well, here's a couple of thoughts. First of all, I think it's really important for us as impact leaders to have support, to have other people in the space who can a number 1, just say, Hey, you're not crazy. Yes. This stuff has some, you know, real traction and it's getting brass and it was different 10 years ago or even 5 years ago. It wasn't seen as a threat to more traditional ways of doing business. So it's kinda like, oh, yeah, you impact folks. Just go do your thing over there. Leave us on you know, we'll leave you alone.

Just go away. And now there's some well funded, very organized pushback to these impact areas. So having support both on an emotional and heart level so that, hey, you're not crazy. You know? Yes. This is happening. And we can work with the emotions, being a human being, trying to have a positive impact. And then on top of it, dealing with some of this undermining or even outright attacking behavior, Super, super, super important to have support. Also with that support is, you know, smart people are finding ways to navigate in each space.

There's no one size fits all. Hey. Everybody in every impact area do this 1 or 2 or 3 strategies. No. We're having to be thoughtful and learn as things are popping up, and people in the DEI world are having, you know, they're coming up with solutions of how to work with things and people in the climate space and people in the regenerative agriculture space. It's not one size fits all. So it's super important to understand your space and to connect with people who are leaders and are able to maintain traction when something like this comes up. If you are isolated and you're early in your journey and you don't have support, it can be a scary and B, there can be intimidation and threats that can take you down.

So I can't emphasize enough how important it is to have support both on the heart level and on the strategy, legal, you know, PR kind of levels. Another suggestion is to really work to build resiliency among your team and let them know that, you know, this is a certain issue in landscapes that many of us work in. You might run into this. You didn't do anything to necessarily cause this. It's just part of the landscape that we operate in. And how as a team can we make room to acknowledge and do that same kind of, you know, heartfelt support for each other as humans doing this important work, as well as finding strategies, trying strategies, being in touch with networks, and then applying them as an organization, as a start up, as opposed to 1 person at a time and everybody fracturing if you do run into any of this pushback. So those are a few thoughts on that second issue. When we come back from a break, I wanna talk to you about the 3rd issue, which is about building awareness and market demand for your start up.

Before we do that, just wanna take a quick break and hear a word from our sponsor. Are you facing 1 or more important decisions in your impact business? And you'd like an experienced thought partner to develop a plan about how to proceed in the complex times we're living. But you don't feel the need for an extended coaching or consulting contract that's gonna cost you many 1,000 of dollars. You're looking for an affordable, targeted, and time efficient type of support. Through paulzellizer.com, I offer a strategy session package. These packages are ideal for entrepreneurs who are facing 1 to 3 immediate decisions, like how to increase your positive impact, fine tune your marketing strategies to get more results for less effort, launch a new product or service successfully, or refine your pricing structure so it's both inclusive and provides you with a great quality of life. You can find out more by clicking below, and thank you so much for listening to this podcast. So welcome back, everybody.

We're here for our monthly solo episode with yourself, with myself, yours truly, Paul Zellizer, the host of the Weartrepreneurs and a social impact focused business coach for, gosh, 17 years now. So our 3rd and final strategy or challenge, I'm sorry, that we're gonna be talking about today is building awareness and market demand. And again, as I was saying before the break, we see so much more attention and people sort of vying to position themselves on the impact business spectrum. And you're seeing that from very large businesses, you know, multinational businesses with 100 of 1,000,000 of dollars of sales, even 1,000,000,000 of sales every year, as well as brand new startups. There's just a lot more going on in the space. So what do you do when you're a startup and you have your impact area and that's part of what you're doing? How do you gain traction? How do you let people know and do that in a context, which is a much more, you know, mature market. There's a lot more going on, a lot more noise, a lot more people claiming to be in that sector. So a couple of thoughts.

Number 1, make sure it's really baked into your DNA. Make sure this isn't just some thin veneer of impact that you're painting on a very traditional business and a very traditional business model. There's a lot of green rushing out there, and I don't think that's what you're doing. You wouldn't likely be listening to this podcast if that was your approach. But make sure you have really thought about how the impact that you're having is baked into everything you're doing. And you internally have a sense of cohesion that everybody on your startup understands there's an impact aspect that's really robust and is very much baked into the infrastructure of the business, as opposed to an add on or something that you're doing just on the marketing team. That's not going well in 2024 because there is so much greenwashing and impact washing. If it has that flavor, if it smells like that, as a mentor of mine says, you're much more likely to struggle, to get traction as opposed to folks who've done the work to really bake it into everything you're doing.

Again, not just when it comes time to post something on Instagram or send out your newsletter. If you need help with that, feel free to reach out. Once it's baked into your DNA, then to do some education of your customers or your clients. So let them know that this is something that's very significant commitment in your company, that you've thought about this a lot, how every sale contributes to more positive impact. So first, it's an internal thing. Make sure you're clear. Make sure it's designed into your mission, your values, your business model. Then you go into the marketplace, and you don't start with, look how great we are.

You start with educating your customers or your clients. And really try to both educate them on, you know, factual level, but also like help them stand in a more kind of holistic heart level as well. What does it mean that you're growing food in this regenerative way? Don't just give them a chart, but show them an example of a field that's been farmed this way. And, you know, what does the soil look like? Or what's the impact on a farmer who's now growing in an organic, you know, holistic way, as opposed to when there used to be a lot of chemicals sprayed in their community. Try to tell stories in a holistic mind, body, spirit kind of a way. Number 3, really work to build trust. Be consistent. Do what you say you're gonna do.

Try not to use hype, but really try to build trust in an ongoing way. Really try to work to be in the marketplace. If you've got an Instagram account, don't just take pretty pictures of the food, but really work to like help people understand how you're living your brand every single day. Thinking of somebody who had on the podcast quite a while ago, but somebody who's really good at this would be Johnny Crowder of Cope Notes. It's a mental health app and support system. And, you know, I follow Donnie Crowder on LinkedIn, and he's constantly telling stories about, you know, he's very out about having some mental health challenges in his history, and certain diagnoses in the mental health realm, and how he works with that as a founder of a fast growing startup, and how he's helping other founders, and what he does to help just make it okay to be dealing with mental health issues. We know that there are, you know, record numbers of mental health challenges. But what Johnny's doing really well is making it safe for people to talk about them, particularly in professional context.

So he's doing that on LinkedIn. He's doing they're doing that on social media. Johnny Crowder, founder of Cope Notes, as an example of somebody who I think is building trust really well in his space. And in terms of like market demand and growing your customer base, I really can't emphasize enough about having a niche audience, really, really having a target audience, as opposed to trying to have everybody out there. A mentor of mine, I'm thinking of his wisdom. He says, Paul, when you try to help everybody, you wind up helping nobody. So the idea of being niched in such a way that your ideal client or really recognizes themselves in what you're doing, whether you're sending out a newsletter or you're at a conference and you're speaking, you're speaking in such a way, you're presenting in such a way that helps your ideal customer, the segment of the market that's a great fit for your product or service to say, wow, I think they're talking to me. There's a whole range of cues from the language we're using to just the clothes we wear and how we show up non verbally at a networking meeting, or if you're giving a talk on a stage or you're on video on TikTok, there's ways of communicating both verbally and non verbally who were to the colors and the fonts you're using on your website, right.

To really niche down in 2024, going for a mass audience and trying to get everybody interested in your topic, in what your impact area is, isn't working very well. But when you niche down and really find your audience, engage them and help them understand that you're passionate about their particular challenges, their particular desires, and you're here for them. It's much easier to grow demand for your product or service. And lastly, I want to suggest kind of what I was saying before that this is the era of collaboration and partnership if you're smart, trying to grow a startup, and when you're isolated and disconnected and don't know very many people in either the general impact space or particularly in your impact area, whether that's mental health or regenerative agriculture, or you're a DEI brand, or you have an incredible product helping housing be affordable to folks who normally wouldn't be able to afford it. Whatever your impact area is to connect and build partnerships can't emphasize that enough. I think the climate space does this incredibly well. Again, I'll use a LinkedIn example. There are a variety of communities.

A very robust one on LinkedIn is open door climate, the hashtag open door climate. And what that is is a lot of people who are already leaders in the climate space are meeting for free and doing like an office hours or just a thought partnership meeting with folks who wanna get into the climate space, but aren't yet there. So whether you have bookkeeping or accounting skills or you're an engineer or you're a marketing person, that's where your skill base is. Whatever your skills are, you can go to LinkedIn, use the hashtag open door climate. You just put it in the search bar. Right? And you'll see people posting about that saying, you know, I'm here. I wanna help if you're somebody who wants to bring your skill set. And sometimes you'll see people particularly like, if you're really good at marketing, I am.

I work in marketing in the climate space. So, you know, I'll talk to anybody in the climate who's interested in getting into the climate space, particularly if you're a marketer or an engineer or programme manager, whatever your job set, your skill set is, you'll see people being really generous. And I just share that to say, I think that is that mindset of trying to be open as much as time allows and for partnership, for collaboration is higher in the impact startup space than in many other areas. That doesn't mean every single person you're gonna reach out to is gonna be willing to meet with you for free. That's not exactly what I'm saying. But what I'm saying is the overall propensity to being open to a strategic partnership suggestion or to building relationships. Maybe it's just referrals back and forth, or, you know, can I tell you a little bit about my startup idea and are there people you might introduce me to, or could we form some sort of referral basis where, you know, if you were to send me a bunch of business, we can compensate you or bring you on as a mentor and getting a small percentage of the equity in the company for helping us grow? Those kind of arrangements go so incredibly far in this day and age. Like I said, the impact startup space is a much more robust space than it was 10 or 15 years ago.

And folks who understand that there's people who've been around for a while and have developed networks and have a reputation, both individuals and companies. And that if there is an alignment of values and impact areas that for you to be in a conversation about starting those relationships could potentially help you access somebody's network who's been working on it for 15 years. It would take you 15 years to build that network. I think it's incredibly wise approach to be humble, to see how you might find people like that, who could help open doors for your impact star. So, again, these were just a couple of suggestions. Those three areas were access to funding is decreasing, so gave some strategies for that. Number 2, we talked about the regressive social and political landscape in 2024 and some of the forces that are trying to undermine impact in certain areas and how to be skilful there. And the last one is, what are some of the challenges about building brand awareness and having market demand go up in a more mature market and gave some strategies for that.

What are you doing in these areas, or are you seeing different challenges as it relates to your impact startup? I would love to hear both any challenges you're facing, as well as some of the strategies that are working to help you get traction with your impact startup. You can send them to awarepreneurs@gmail.com and just feel free to drop me a line. This podcast is here for you. And I wanna know the challenges you're facing as well as some of the things that are working in your instance. And if you're okay, I'll pass those on to other folks. Keep any details you want confidential. Absolutely. But just trying to help get the information as we're in a different context.

Everything from funding to the social landscape is different than it was in years past. So your thoughts, your suggestions, your questions, would love to hear from you. Lastly, I wanna say we love listeners suggested Take a look at those. And if you think you have an idea, pitch us an episode there. Finally, I wanna say thank you so much for listening. Please take really good care in these intense times, and thank you for all the positive impact that you're working for in our world.