Insights and impact from our Social Tech programmes

January 2018

Insights and impact from our Social Tech programmes

11 Jan 2018

Chris Ashworth

Chris is Programme Director at Nominet Trust. He leads the research, design, implementation and evaluation of the Trust’s portfolio of investments tackling specific social challenges, including reducing the effects of disadvantage and vulnerability in young people’s lives.


In early 2017, we embarked on a social impact evaluation of our Social Tech programmes, working closely with our partners Aleron. It was an important milestone for the Trust and a real opportunity to reflect on our impact to date after many years of investing in early-stage social tech ventures. An opportunity, only now possible with a healthy number of grantees at a point of maturity and of a sufficient number to examine both the role we’ve played and most importantly the impact our projects have had on society.

As the social tech space evolves, it’s vital we share the knowledge and insights we’ve gained as a leading funder of socially transformative tech in order to create a healthy and dynamic ecosystem, so tech can reach its full transformative potential.


Background

We focused on our flagship grant programmes, Social Tech Seed and Social Tech Growth, to understand their roles in the funding landscape and the impact they made on the development of the projects they supported, and ultimately the social transformation they created for the end users. Between 2013 and 2016 Nominet Trust awarded £3.8m across 71 projects through these programmes. This funding leveraged a further £2.9m for the projects following Nominet Trust’s support.

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Social Tech Seed is an open grant funding programme in which applicants were required to have a basic but functioning digital prototype that had demonstrated demand for the tech solution to tackle a specific social challenge. The purpose of the fund was to provide a launchpad to allow social tech ventures to further develop their product so it was ready to take to market or to attract further funding.  The Social Tech Growth programme was developed to take a select number of Social Tech Seed ventures forward through the next stages of development to fully realise their market and social impact potential.

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The challenges

Undertaking such an evaluation isn’t without its challenges.  Firstly, Social Tech Seed funding is often the first step along a pathway for social tech ventures; a critical point in the lifecycle and long-term sustainability of a project. We’re contributing to, but not solely responsible for its long-term impact. That very impact, by nature of us being involved at the very early-stages, goes on into the future and could be profound in both scale and depth but could (and should) be fairly formative at the stage of our funding.

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Secondly, the criteria for Social Tech Seed were also purposefully agnostic in terms of social challenge, aiming to inspire entrepreneurs in harnessing the power of digital tech to reimagine how pressing social challenges could be addressed.  And we actively encouraged funded ventures to iterate, rethink and challenge their own assumptions throughout their projects, understanding that we were supporting innovation, entrepreneurship and emerging technology. All of these factors combined laid the perfect foundations for a truly complex piece of evaluation work.

With all that in mind, and after much head scratching and strong coffee we created an effective social impact framework that centred on three fundamental questions:

  • Had we selected and supported the most credible early stage social tech ventures?
  • Did the ventures achieve the social impact outcomes they had intended?
  • Did they go on to grow and scale?
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What did we achieve?

To date, these 71 ventures have reached 177,000 direct end-users and 21 million indirectly.  Without context, these are significant but not necessarily meaningful figures.  Certainly, at the highest level they demonstrate that investing in establishing a venture and helping it achieve enduring social impact means the impact isn’t perishable – this is the opposite of the ‘pay by results’ model which dominates the UK funding landscape. We also know from the 21 ventures that completed our questionnaire that most of them wouldn’t now be operating were it not for Nominet Trust’s support.

 

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In fact, the vast majority of the ventures are either stable (58%) or growing (32%) – a number significantly higher than their commercial equivalents across the UK.  What’s more, 75% of the ventures are either positive or very positive about their future outlook.

62% of respondents considered obtaining Nominet Trust funding to be important or very important in unlocking further funding. When taking into account respondents who chose not to seek further funding, this percentage rises to 81% of respondents who found Nominet Trust funding to be important in unlocking further funds.

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What did we learn?

The evaluation gave the Trust a number of important insights that are not only helpful for our own programmes, but important considerations for other funders and supporters in this space and for those developing their own ventures.


End-users

Let’s look at the end-users, the overall numbers take on slightly more meaning when we look at the spectrum of ‘depth of impact’ on end-users.  Here we attempted to qualify impact on a spectrum despite the varying nature of the social issues.  In this we recorded 9% as being life-saving, 43% as being life-changing and the majority, 52% as being life-enhancing.  This implies there’s a natural trade-off that may need to be struck.  We couldn’t necessarily have achieved the same incredible scale and reach had we solely focused on the ventures that had focused on, often niche, but life-saving projects.  There appears to be a correlation albeit from a small sample that exclusively life-saving interventions will reach a smaller number of direct beneficiaries. 

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There’s an assumption that more immediate life-saving digital interventions are often incubated and nurtured in the world of humanitarian aid or medical research – partnerships between academia, the NHS and multinationals rather than the digital start up community.  There are of course exceptions to this and you certainly shouldn’t dismiss either developing the idea or supporting a venture that has a lifesaving ambition as its purpose. However, you may need to appreciate that the ventures user/beneficiary reach is going to be more limited in breadth in a range of instances.

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Innovation

Turning to innovation. We support tech that transforms lives, but it is through innovation that social transformation or disruption can be achieved.  Innovation can take many forms beyond simply the ‘product’ and can involve innovating a process a system or marketplace, in order to meet the user’s needs. There is a distinction however between how innovative a technology is and how innovative its application is.  For example, a web platform developed in 2016 wouldn’t be considered particularly innovative, but if it entirely reimagines how a service is delivered compared to existing provision then it is legitimate to explore its development.  Equally, leading-edge tech may excite grant funders, but if the market doesn’t have the infrastructure or systems in place to support it, then the venture is likely to spend far longer in the concept stage than the 12-month Social Tech Seed programme can afford.

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What did become clear in the evaluation was that the more innovative the venture (either in terms of tech or its application), the more successful it was likely to be post-grant. There is a ‘sweet spot’ worth exploring further where the most successful social tech seed ventures may be those that could be considered medium-to-high in terms of innovation; enough to really challenge and excite the status quo but not so advanced that they face insurmountable barriers to adoption in the ecosystem in which they are trying to find user and social value.

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Agility

A truly innovative venture is far more likely to need to adapt during its project lifecycle. From our experience in supporting early-stage social tech, we’re acutely aware of the importance of flexibility and agility in developing social tech ventures.  Project plans will deviate off course, unexpected bumps in the road will need addressing and there will be times when a little faith or patience is required in managing risk.  Fundamentally it means there isn’t a one-size fits all approach to the relationship and pathway when supporting innovative ventures. The onus is on the funder to appreciate that and build a programme that supports such eventualities rather than expecting a smooth and uninterrupted project plan agreed from the start.


Match funding is key

Moving on to funding the key insight that stood out from the evaluation was that organisational success was far more certain when the venture had access to more than one source of funding at the time.  There are a whole host of reasons why this is the case; it’s likely the venture fundamentally has access to different forms of capital but also access to a wider pool of support, networks and partnership opportunities.  Whilst across our portfolio of grantees there wasn’t a distinction as to whether this funding was better made up 20% or even 70% of financial support. However, of the ventures with sole funding from Nominet Trust, 33% are now dissolved or inactive. This figure reduces to 6% or lower when another funding partner was on board. 


More founders equals growth

The number of founders involved directly with the venture also gave a clear indication to future growth.  With the involvement of more than one founder the chances of becoming inactive or dissolved reduces to 12% or below.  A venture taken forward by one founder in isolation saw this increase to 40%.  Across the portfolio, there were consistent perceptions of success that highlighted the importance of access to a wider range of skills and networks, commercial and business modelling advise and access to research.  With more than one founder the ability to take on and resource those benefits is multiplied. 

The evaluation report contains many more insights and I’d encourage anyone involved in this space to look through and get in touch to explore the findings further.

Read the full report here.