Build the Largest Founders Pledge Community You Can
If you’re building a founders pledge program in your institution, you’re probably considering how to balance the components of your program with your available time and resources.
As your team works through this, I encourage you to build the largest membership community you can afford. Why? Consider “Tim,” a founder whose startup celebrated a milestone birthday.
Months into his entrepreneurial career, a mutual friend had connected us. Tim cherished his degree, and wanted to give back to his alma mater. I told him about our nascent project to engage entrepreneurial alumni who pledged to share their future wealth — if and when they enjoyed success with their ventures. I almost didn’t finish my pitch before he said “YES!”
I brought his file to a fundraising colleague, thinking this was a good little nugget — a relationship that promised to be productive with light stewardship and market success. But she looked at me with exasperation.
“Oh, come on, is that startup going anywhere?” was her response. She worried about investing time in a relationship she didn’t think would turn into philanthropy. Her concerns were legitimate — most startups fail.
“Well, give it a shot,” I said. “A little personal attention. An hour a year, tops.” Truth be told, I didn’t know if his venture stood a chance, either — but I did know that if venture capitalists couldn’t always pick the winners, university fundraisers like me weren’t in any position to say a startup couldn’t succeed.
Avoid trying to pick startup winners. We’re not built for it.
I use that moment to stay focused on serving as many alumni as I responsibly can. It came back to me vividly as Tim celebrated his startup’s anniversary. His company looked nothing like the stereotypical Silicon Valley venture — yet it’s thriving! And the founders pledge program is healthier for it.
This scenario (and the reverse) plays out time and again. The role of a founders pledge should not be that of a fantasy football league for a university’s startups. Picking winners is not within a fundraiser’s expertise, nor is our time well spent trying to build that capacity. VCs spend their entire careers learning to do this. Even these professional investors average 7 failures in every 10 investments.
We give founders pledge programs the best chance to succeed when we build them for the broadest possible community, and serve that community well.
The cost of missing winners is high
This spring, I worked with a Dartmouth colleague to survey more than 30 gift officers across the Ivy League and Seven Sisters Schools about how they work with entrepreneurial alumni. Two-thirds had discovered alumni prospects only after the sale or IPO of a company they founded or grew. It’s much harder to build a meaningful relationship with these alumni at that point.
Read more > Universities Need to Engage Alumni Entrepreneurs Now.
Connecting with alumni in startups now can affect their engagement and philanthropy for years.
There’s also a subset of companies that never even seek venture funding, and fly under the radar for years. Founders of these “bootstrapped” startups keep much of their ownership as the startup grows, and may appreciate a university’s support and network over time.
Every institution values the cost of missing winners differently — lost potential gifts, human and financial resources to re-engage distant alumni, extended time-to-gift, wisdom not shared with future entrepreneurs through active involvement. From what I’ve seen over the years, this cost is unbearably high.
There’s more value in a larger community
Just as Facebook — and a century earlier, the telephone network— became more interesting and valuable as its user base grew, so will your founders pledge community.
You’ll increase networking and recruiting opportunities for your members. You’ll be better able to identify fast-growing startups. You’ll draw on a deeper bench of alums to judge pitch competitions and mentor students. And you can celebrate entrepreneurs for giving these other forms of capital. Not only do they represent time and energy, but they’re also strengthening your entrepreneurial community.
Balance the size of your program with available resources
Still, we need to balance between the resources we invest vs. our need to generate philanthropy dollars in the short- and medium-term. Founders pledge programs are long-term plays, with most startups taking 5–8 years to exit. The larger your community, the more likely you’ll welcome companies at the beginning of that journey — increasing your costs.
To strike that balance, first understand what kind of experience you need to deliver for your alumni. Consider the cost in time and budget to deliver this experience. You can then adjust your membership parameters, marketing efforts, and program offerings to find your optimal community size. More on this in a future post.
One last thought. A founders pledge program should not help you pick a few winners, but rather help you become a beacon for all of them.