How do you quantify social impact? How do you compare the impact of two products from totally different industries? Impact investors obsess over these very questions.

‍

How we compare impact at two builders in fintech and civic-tech.

Esusu, a fintech startup helping people build credit, and Motivote, a civic-tech platform increasing voter turnout, are both intentionally designed to make a positive impact on people and society. Which one is more impactful? How much impact does each actually have on a life? And, which one will reach profitability?

These questions are critical for early stage impact investors. With limited capital to deploy, they need to discern which startups will thrive financially and have deep, broad, and scalable social impact.

• ‍Esusu Rent is a fintech startup helping people report on-time rent payments to major credit bureaus to build credit. They built an avenue to take what people were already doing, paying rent on time, and turned it into a way to build credit. Millions of  individuals with no to poor credit can improve their credit score to qualify for lower-interest loans and credit cards and improve their financial stability. Credit scoring is a historical barrier to resource access and Esusu has aided more than 40,000 people in crossing it.
• ‍Motivote is a web app designed to aid an individual’s journey to voting with personalized information (like when a mail-in ballot is due for the primary in their county) and rewards (like free La Colombe coffee) for completing actions on their voting plan. Motivote users are 3 to 10 times more likely to vote than the average person.

There are several rich and nuanced frameworks for evaluating social impact by the admirable work of the Impact Management Project, Toniic, Sopact and others. However, when it comes to early stage startups with less than $100K in revenue, there is limited historical evidence to build robust impact models. So, we designed our own.

‍

The simple framework we designed to measure a company's ability to realize their mission.

After analyzing more than 25 venture deals, we took the best of our approach and designed a simple list to focus on three primary areas of total impact potential in our analysis:

• Depth of positive impact on the daily life of a user
• Breadth of impact on our societal systems, and
• Ease at which the product can scale to millions of users.

Each category gets a high, medium, and low impact rating rather than specific impact ratings  (i.e. a score out of 100). We found impact ratings make it challenging to compare startups from different industries and often devolve into analysis paralysis.

Below are some examples of how we ask startups to define the impact:

‍

Individual Impact‍

How much is a person’s life improved by using the product? Rate “High”, “Medium” or “Low”, please provide an explanation.

1. High: life altering impact on a daily basis for an individual
2. Medium: moderate and consistent improvement to an individual’s life
3. Low: infrequent yet meaningful impact in someone’s life

‍

Systemic Impact

Which systems would be improved and by how much if the product is adopted widely? Rate “High”, “Medium” or “Low” and explain why.

1. High: systems that affect tens of millions will be significantly improved long term (e.g. US financial system)
2. Medium: systems that affect millions (e.g. Illinois education system) will be moderately improved for the long term
3. Low: if adopted widely, systems that affect hundreds of thousands (e.g. DC housing system) will be mildly improved in the long term

‍

Scalability

How easily can the product be adopted widely, if demand is there? Rate “High”, “Medium” or “Low” and explain why.

1. High: easily adopted by hundreds of millions of people
2. Medium: easily be adopted by tens of millions of people.
3. Low: is not easily adopted by more than a few hundred thousand people.

‍

How we rate Esusu and Motivote on our three point scale.

‍

Individual Impact

Esusu scores high on individual impact.  

• Esusu helps people with low to no credit save money and build their credit score, which disproportionately affects black and brown communities and people of color. Esusu impacts both the financial stability of an individual’s life and the inclusivity of the U.S. economy by aiding in the disruption of the cycle of high-interest and predatory loans.

Motivote low for individual impact.

• Motivote, on the other hand, improves the likelihood of voter turnout by arming people with voting deadlines, a plan to prepare for voting day, and enrollment of universities, employers, friends, and family. While increased voting turnout allows U.S. democracy to function at its best with a government more accurately representing its community, most elections only occur every two or four years. An app informing individuals on how to vote and easily access voting  information is great, but does not immediately result in an improvement to daily life.

Broader System

Looked at from a systems view, Motivote and Esusu both rate high.

• Esusu’s product influences the credit scoring system to adopt more inclusive measurements like rent reporting, which benefits a huge swath of the population. Credit scores are a cornerstone to the financial health of everyone in the U.S., and more than one-third of all households are rented.
• Motivote increases voter turnout in elections where even a few additional percentage points can lead to significant changes in election results and public policy. Every system, financial, health, education, etc. is governed by who we vote for. Increasing voter turnout impacts the main system which affects the rest of our systems.

Scalability Matters

Both Motivote and Esusu are easy to access online and can register new users in minutes, earning both a high rating for scalability.

• Esusu has tens of thousands of users across dozens of states and is growing rapidly everyday.
• Motivote can onboard any university or corporation within an hour.
• Neither are limited to providing their service to a particular geography. Once profitable, these companies can rapidly self perpetuate their impact nationally and globally, potentially improving the lives of hundreds of millions of people within a few short years.

Focusing an impact evaluation on breadth, depth, and scale enables a robust comparison of the potential impacts of startups across different industries with very different approaches. While we may not see the full range of their impact for a few years, we are among those who want to see these impacts realized.

‍