Already prior to the present predicament with the coronavirus, the world has been facing severe challenges regarding the well-being of the planet, the ecosystem, and humanity. Many of these challenges have been codified by the United Nations into the Sustainable Development Goals, ranging from eradicating poverty to ensuring clean water and sanitation for everyone, from gender equality to the well-being of the ecosystem both on land and underwater.
Sustainable Development Goals and Startups
We have made tremendous advances towards many of the Sustainable Development Goals in recent years, for example halving absolute poverty through 1990–2012. While the traditional NGO, government and corporation led models can help us gradually make headway towards these goals, there is also an accelerated alternative: startup ventures.
The startup culture is one of the major drivers of innovation in modern society. Startups challenge larger organizations by looking to solve problems that are underserviced or that can be serviced in a new way. Sometimes such fast-moving organizations can even disrupt entire markets.
The challenge with startups is that for a large part their innovations tend to service problems that concern markets whose customers are already quite well off. At the same time, the startup culture is thoroughly infused with the ideals of meaningful work and the greater good, often leading to almost amusing paradoxes where a superficial solution to a wealthy San Francisco inhabitant’s Silicon Valley problem is sugar-coated with a mission statement rife with world-changing jargon.
By far the most pressing pitfall of any startup is finding an actual problem to solve.
However, startups and the brainpower of the often young entrepreneurs driving them present a tremendous opportunity to solve meaningful global problems. The question is, how to identify markets where the problems to be solved are genuine, pressing human issues and where there is also market potential enough to justify the opportunity for exponential growth required by startup financiers, in particular venture capitalists.
Finding a Genuine Problem to Solve
A typical startup dynamic consists of four phases. First, the startup needs an actual problem to solve. Second, it needs a capable team to innovate a new solution to the problem. Third, it needs a market with sufficient purchase power to service. And fourth, it needs a scaling strategy, for example by either servicing more target demographics in its current geographical market or expanding to new ones.
By far the most pressing pitfall of any startup is finding an actual problem to solve. In fact, according to some research, almost half of all startups fail not because of team issues or financial problems, but because they’re solving a problem that doesn’t actually exist . Servicing a market with a solution to a problem that nobody needs solved will eventually lead the startup to either pivot or crash.
In other words, one of the most pressing questions for a startup is to choose a problem that is significant enough for a large enough number of people so that they can form a serviceable market.
The Sustainable Development Goals present a very well researched set of problems out of which practically all touch the lives of millions, if not even billions, of people. The well-organized set of 17 goals is divided into 169 targets each of which may hold potential also for a startup-driven market opportunity.
Gearing Towards Exponential Impact
By identifying the growth opportunities, market sizes and potential obstacles to market entry within SDGs it is feasible to build a roadmap for future startups to really double down on genuine human problems and yet entertain the opportunity of exponential growth in revenues and profits. In servicing an SDG related market, a startup’s impact potential becomes virtually identical with its main profit center.
In other words, by seeking exponential growth in terms of financial performance, the startup will also be simultaneously reaching out to more and more people in terms of having a positive net impact on their lives. For example, servicing poor countries with profitable sanitation installations will not only provide a tremendous profit opportunity, but each sale and subsequent installation will also directly translate to lives saved through better sanitation and cleaner water. If the growth of one is exponential, then so is the growth of the other, of course taking into account the eventual ceiling of reaching the particular SDG target.
In effect, identifying interfaces between real global problems and market opportunities will collapse the profit-seeking motives of the financier and the world-changing motives of the entrepreneur into one, thus enabling not only potentially exponential financial growth but also exponentially increasing global impact.
While startups are not the only way to solve these pressing issues, they offer new kinds of fast-paced firepower to address some of the questions that are most imminently pressing on humanity, the ecosystem, and the planet.
: CB Insights, 2019. The Top 20 Reasons Startups Fail. Available at: https://www.cbinsights.com/research/startup-failure-reasons-top/