How digital innovators plug the holes in the small business support ecosystem
Last month, Strive Community announced the grant recipients of its inaugural Innovation Fund. A total of one million dollars was awarded to eight organizations developing innovative, scalable solutions to strengthen small businesses’ digital capabilities. In this article, we analyze what made the Innovation Fund winners stand out. We hope that these insights will help multiply the promising work that all the Innovation Fund candidates have begun.
To understand how the winners were innovative, we draw on the conceptual mapping of the small business support ecosystem that we conducted for our recently published white paper. In the paper, we highlight five archetypal forms of digital small business support: digital market access, digitalizing operations, digital credit, digital skill building, and online engagement. Using these five archetypes as a reference, we looked at how the winners reimagined and pushed the boundaries of digital small business support.
We analyzed the business models of the eight winners, comparing and contrasting them with the types of support models that we derived in the paper. We also compared the winners to the other six finalists, which had been selected from over 500 applicants. Below, we outline the three ways Innovation Fund winners stood out. These are not mutually exclusive; while we mention particular companies as examples for a given theme, some winners showed all three innovations.
1. New twists, new integrations
Two forms of innovation were particularly common across the Innovation Fund winners. The first consisted of new twists — organizations leveraging their assets, such as unique insights or partner networks, to enhance an existing model of support. One such example is Open Contracting Partnership. This organization specializes in aggregating information on government procurement processes, and they leverage open data to enable credit pre-approvals for small businesses who receive government procurement contracts to better manage payment delays.
The second innovation consisted of new integrations. In such cases, organizations’ key value proposition was not a new product, but instead the coordination of their existing market offerings in new ways. For instance, FUNDES & Agridius provides a gamified e-learning platform and comparator tool. With support from the Innovation Fund, they plan to upgrade the comparator tool into a full marketplace offering personalized recommendations for digital solutions for small retailers and merchants. Boost Capital also fits in this category — it is a platform that enables small businesses to access financial services and learn through smartphones. With support from Strive Community, Boost Capital will be able to connect these core offerings of financial services access and financial literacy education. Business owners will be able to distinguish themselves as responsible and improvement-oriented by engaging in financial literacy education and be rewarded with a tangible benefit: access to financial services with favorable terms. A final example is Flourish FI, which offers financial wellness and engagement software to support healthy financial management for individuals. Flourish FI will adapt its platform to empower small businesses to better manage their finances through a gamified journey, which can in turn unlock rewards such as access to responsible credit.
2. Making technology available and usable
As we delved deeper into several cases where technology was core to the winners’ value proposition, we saw that these companies made rather sophisticated technological solutions available to small businesses or to their customers. For example, Boost Technology provides small retailers with easy stock ordering through WhatsApp. Small businesses receive a full range of information, such as invoices and updates on their order.
ChatGenie, another winner, offers a technologically sophisticated e-commerce solution for small businesses, allowing customers to order through social media and messaging services, including Messenger, TikTok, and Instagram. The company also integrates payment gateways and wallets, as well as delivery in some countries. Such a solution makes marketing and fulfillment channels available to small businesses, absorbing technological complexity to offer a relatively simple interface. Through technological integration, ChatGenie expands small businesses’ market reach (digital market access) while simultaneously offering them analytical functions (digitalizing operations).
Novek also fits into this category. Like many other services, Novek offers data-driven ordering and stock management, allowing small businesses to source fast-moving consumer goods in suitable quantities. Novek’s innovation is that it provides software and hardware (dispensers, sensors) that allow for packaging-free delivery and shipments. Novek thereby incentivizes small businesses to act more sustainably, without their financial bottom line suffering.
A final example is XRGlobal. The company makes virtual reality available to small business training partners. Working with training organizations on the ground, XRGlobal is exploring how high-tech virtual reality features can be made available through smartphones and low-bandwidth connections. The company also showcases the importance of partnerships between organizations with complementary assets.
3. Demonstrating additionality in a crowded space
It may not come as a surprise that all Innovation Fund winners are, well … particularly innovative. Specifically, the winners demonstrated a level of additionality with their offerings: solutions that were both needed and as-yet missing in the small business support ecosystem. These unique selling points are what differentiated their offerings from other applicants.
Filling a hole in the support ecosystem
These findings show that small business support innovations don’t necessarily need to be “groundbreaking” to serve small businesses. All eight Innovation Fund winners pursued an approach that was covered under the five forms of digital small business support developed in our white paper. However, they all excel at developing unique, differentiated, and viable value propositions. The eight winners walk a fine line between scalable and proven approaches and experimenting with existing supports in new ways. They deepen or integrate existing technologies and support models to develop something new.
Collectively, the winners also show that innovators are intimately familiar with the ecosystem around them. They are able to examine the support ecosystem from the small business’s perspective, understanding what’s needed and what’s missing. They are also flexible about their value proposition. What is missing may not be a technology but rather a connection between certain kinds of actors. These findings directly align with the pathways to impact outlined in our white paper: effective supporters are intentional in discovering users’ real problems (pathways 1 and 2), they map complementary and competing solutions (pathway 3), and they integrate their offering with others (pathways 4).
Ultimately, the best small business support innovators — including those who are looking to make a profit — are ecosystem team players. They know what is out there and what is possible, deftly applying their strengths and assets while working with others where necessary. We look forward to seeing the eight Innovation Fund winners progress!