Raising Money for a Thoroughly Unreasonable Venture

This nonprofit organization helps budding entrepreneurs jumpstart social ventures
Content Creator/Speaker/Consultant, Alpha Dogs Media Group
February 03, 2012

A couple of years ago, Tyler Hartung, Daniel Epstein, Teju Ravilochan and Vladimir Dubovskiy had a very, well, unreasonable idea. The three, all in their twenties and University of Colorado at Boulder grads, had worked in businesses with social missions and knew how hard it is to jump start a social venture. So they decided to launch The Unreasonable Institute, a Boulder-based not-for-profit that takes its inspiration from the well-known tech incubator/accelerator, TechStars. The name of the organization comes from a George Bernard Shaw quote: "The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man."

The idea was to gather 25 social enterprises in Boulder for ten weeks, give them access to mentors, networks and the opportunity to raise capital, and watch them take off. The criteria:  “The ventures need to address the root cause of an environmental or social problem or need," says Hartung. Plus, all candidates must have sustainable revenue models. In the Institute’s first two years, the founders encouraged both for-profit and not-for-profit ventures to apply. This year marks a major shift, with the requirement that all must be for-profit businesses. “We were seeing for-profits take the most value out of the Institute,” says Hartung. The change also made it easier to attract mentors and capital partners who could potentially invest in the ventures.

But the most interesting aspect of The Unreasonable Institute is how its "fellows" are chosen.  This year, there were 306 applicants from around the world and 100 were deemed promising enough to advance to the second round, which involved a phone interview. Of those, Hartung and his co-founders chose 46 candidates from 25 countries whose ventures are featured on The Unreasonable Institute’s marketplace for 50 days (you can check them out on the Institute’s website until early March. That’s where individual donors fund their favorite entrepreneur’s $10,000 tuition fee, one donation at a time. Tuition goes toward transporting and supporting the fellows for six weeks, plus transportation costs for mentors. The first 25 finalists to raise $10,000 in 50 days become fellows and spend six weeks in Denver, starting in June.  To insure that deep-pocketed friends and family don’t tip the scales unfairly, maximum donations are set at $10 for the first week, then increase incrementally each week.

Currently featured in The Unreasonable Institute’s marketplace are, for instance: Quetsol, which is developing energy solutions for poor families in Guatemala; Waste Enterprises, which is tackling the crisis of waste collection and treatment in Africa; and Praki Design, a maker of charcoal stoves that decrease fuel consumption and smoke emissions.  They, and 43 others, are hoping to be among the 25 companies that will gather in June to live with one another and the mentors who will help them evaluate, improve, and scale their companies.

Hartung says that all but a small fraction of The Unreasonable Institute’s fellows from the previous two years are still up and running and that 66 percent of first-year fellows who were seeking funding received that funding. Among the Institute’s alumni success stories: Solidarium, a Brazilian company that connects local producers with big retailers, such as Walmart and J.C. Penney; and Eco-Fuel Africa Limited, which makes organic charcoal from agricultural waste and whose founder, Moses Sanga, was selected as 2012 TED Fellow. Sanga’s company also received a $20,000 investment after his participation in the Institute. That may not sound like a lot, but it’s a fortune in Uganda. “His trip to Unreasonable was the first time anyone in his village had been on a plane,” says Hartung. He’s hoping for similarly dramatic results from this year’s class.

Pictured: Co-founders Daniel Epstein (second from left) and Tyler Hartung (third from left)

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