In spite of President Donald Trump’s efforts to defund Planned Parenthood, the nonprofit women’s healthcare provider saw a huge uptick in donations following the US presidential election. Now the organization wants to invest some of that fresh capital into its period-tracking app Spot On, and it’s looking to 500 Startups for guidance.
The Spot On team has enrolled in 500 Startups’ seed program, making Planned Parenthood the first nonprofit to join the Silicon Valley accelerator, and probably the oldest—it’s 100 years senior to the average enrollee. Instead of taking an equity stake as it would with any regular startup, 500 opted to make its $100,000 investment a charitable donation with no strings attached.
Planned Parenthood isn’t the first nonprofit to join a Silicon Valley accelerator—actually dozens have. By taking a page out of the Silicon Valley playbook, many nonprofits have even gone on to successfully raise follow-on funding.
Treating nonprofits like companies
Months before 500 Startups announced its commitment to Planned Parenthood, the ACLU, a legal and advocacy organization, joined Y Combinator’s Winter 2017 batch. The enrollment announcement came just after the nonprofit received $24 million in donations in the span of one weekend following Trump’s travel ban. Because that amount of funding was unprecedented for the ACLU, it sought help turning the capital into growth.
In addition to donating $100,000 to the ACLU, YC helped the nonprofit improve its new grassroots member-mobilization project, People Power, better craft its emails to members, upgrade its Mobile Justice app and migrate data to Salesforce, per Axios.
While this particular pairing generated a lot of headlines, investing resources into the nonprofit space was nothing new for YC, they have been doing it for four years.
Y Combinator’s history with nonprofits
The first nonprofit for YC was Watsi, a healthcare crowdfunding platform that joined the accelerator in 2013. In a blog post at the time, YC co-founder Paul Graham wrote that he had long contemplated funding nonprofits, expounding on his belief that they could benefit from the same techniques used to help startups.
Graham added that enrolling a nonprofit was an experiment YC wasn’t necessarily committed to. But after Watsi was deemed a success—it went on to raise an additional $5 million and has helped fund healthcare for patients in 25 countries—YC continued enrolling startups.
Kate Courteau is now the YC director of nonprofits. She joined the accelerator as chief architect to design the YC offices in 2005 and was eventually recruited by Graham to help run operations. To date, 28 nonprofits have gone through YC, including 80,000 Hours, the provider of a social impact career guide, and DemocracyOS, an open source platform for deliberation and voting on political proposals.
Other accelerators, however, haven’t been as quick to enroll nonprofits.
Techstars graduated it’s second nonprofit this month, Global EIR, a program that helps immigrant entrepreneurs obtain visas, in its Boulder class. Plug and Play Tech Center has enrolled three so far, including money transfer platform Stellar.
When it comes to investments in nonprofits, a smaller accelerator is among those leading the charge.
Founded in 2014, Google-backed Fast Forward makes investments in tech nonprofits only. It works like a typical accelerator in many ways, hosting marketing, product management and other business-focused workshops. But it sprinkles in nonprofit-specific help, too, like advice on grant writing and mentorship from a network of nonprofit experts.
In addition to 13 weeks of specialized training, Fast Forward donates $25,000 to each nonprofit. #IGottaMakeIt, a platform dedicated to teaching inner-city youth about entrepreneurship, and Callisto, the developers of a third-party sexual assault reporting system, are among the graduates of the accelerator. In total, 23 companies that have completed the program have combined to raise $26 million in follow-on funding.
If Y Combinator president Sam Altman is indeed right that nonprofits are “even more broken than startups,” which he told the Financial Times in 2015, then perhaps more nonprofits will mimic Planned Parenthood and the ACLU and go the Silicon Valley route.
[From the archives: The most active investors in Y Combinator, 500 Startups and Techstars companies]
Article by Kate Clark – PitchBook