Venture capital investment firm Giant Leap has released Australia’s first impact calculator for startups, helping founders, VCs and investors measure the positive affect of a startup on people and the planet.
Speaking to SmartCompany, Giant Leap partner Adam Milgrom says that while it was easier to calculate financial opportunities, impact opportunities were never alike.
“It’s very hard to compare the impact that a waste management company would have, compared to a healthcare company,” he said.
“We wanted a tool to compare and contrast startups which have different impacts. It also helps us compare whether the impact would be big on a small number of people or more global on a broad scale.”
According to Milgrom, Giant Leap wanted to understand who the beneficiaries of a startup are, how long the change will last, whether the solution is good and how much it will change the beneficiaries’ lives.
“We wanted a way to compare deep impact with broad impact,” he said, adding that based on the Impact Management Project’s globally recognised framework, the firm worked on a calculator that could measure, assess and report on impact.
“As the prevalence of startups addressing our most pressing problems increases, this calculator is a good first stop for mission driven founders seeking to better understand their business’ relative impact,” Milgrom said.
To aid in understanding impact, Milgrom pointed to the five dimensions of impact accounted for in the calculations. These include the problem the startup is trying to solve, who the beneficiaries of the intervention are and how underserved they are, how much help or change the startup will create, what contribution it may be making and the risk of a negative impact.
Startups will have to fill out a five-minute questionnaire, and will receive a score out of 300.
“From the companies in our portfolio, we’ve seen minimum scores of 140, average scores of 187 and maximum scores of 252,” Milgrom said, adding that Giant Leap only invested in companies that met at least the average score.
When asked what would give a company a bad score, Milgrom points to the possibility of a company that has too many risks to its impact, or when its impact isn’t of sufficient score to help people.
The startup may, for instance, not help as many people or there may be a high risk of negative outcomes. These negative outcomes could be as simple as requiring the mining of copper for a solar initiative.
“It’s not suited for the venture capital world we’re working in, but different investors or founders may look for different things.”
“We shared this [calculator] because we would love other people using it … to help them discern between the problems that are more worth solving than others,” Milgrom said.
“For founders this could mean thinking about how they can change their business models or approach to have the most positive impact.”
Gazala Anver is a technology and startups reporter at SmartCompany.
