Nestled away in the Pacific Northwest, Seattle may be known more for software, coffee, and drizzly weather than for startups, but it’s aiming to become the center of entrepreneurship to solve social and environmental issues.
"Seattle is interesting; it’s the number one most charitable city in the nation—meaning that largest number of people who donate money—and it has lots of new tech companies alongside established ones like Microsoft, Amazon and Boeing," says Lindsey Engh, who works at The Hub Seattle, which rents space to startups and forms connections with investors.
Engh says that a critical mass of people who care about social problems works in combination with a novel legal structure, passed by the state’s house of representatives that accommodates legal structures for "hybrid entities" that blend nonprofit and for-profit principles. Washington would join about 10 other states that give special status to businesses that make a social impact.
In addition, schools around the area have special focus on social enterprise and entrepreneurship. Places like the Bainbridge Graduate Institute integrate sustainability into traditional business practice, and the University of Washington Foster School of Business also has a focus on doing good for the world while still doing business.
Some of the social enterprises to watch out of Seattle, that all have a for-profit arm but socially motivated goals, says Engh, include: Stockbox Grocers (getting local food to food deserts), Microryza (crowdfunding for science research), Island Wood (environmental education), Explorations in Math (education), Equal Opportunity Schools (education), Lumana (combating poverty in Ghana through financial services).
So why are so many companies turning to a hybrid model, and using a profit-making wing to support non-profit activities? Part of it could be the recession, which made reliable funding for charitable organizations difficult, and forced people to think outside the box. "I definitely think that a large part of the turn to hybrid models was driven by the economic downturn," says Engh. "Typical donors, sponsors became more risk-averse or were just unable to give money in the way they were used to. But there’s also a cultural shift toward hybrid models, especially in Seattle. Social enterprise is a buzz word here."
Engh’s colleague Brian Howe says that social entrepreneurs think about "leverage, scale and impact"—things that governments and NGOs have a more difficult time considering. "I think there’s every reason to believe that Seattle will be the capital of social entrepreneurship within the next ten years," he says.