A Non-Profit Startup Incubator Promotes Patient Innovation

Two blocks from Madison Square Garden, on the eighth floor of an otherwise inconspicuous building, exists an open-concept, thoughtfully-designed space that is — simply put — calm. The relaxed atmosphere is the antithesis of New York City life and a stark contrast to the manic pace of the tech startup world.

Beespace’s bright, open-concept space, located in the center of New York City, New York on Sept. 9 2016. (Upstart City/Britt Martin)

Startup incubator Beespace challenges the traditional pace of innovation, offering a two-year program exclusively to not-for-profit innovators in New York City. For Heat Seek, a current Beespace “incubee,” this luxury of time has helped them shift from simply fixing a problem to finding their core value in the complex ecosystem in which that problem exists.

Innovation economics largely rests on the central tenant that innovation is driven by a winner-takes-all race: the first to innovate monopolizes their market (at least temporarily) and, in reward, solely capitalizes on said innovation. This Schumpeterian doctrine is replicated real-time by startup incubators/accelerators around the world who supercharge this innovation race, pushing startups to produce a minimum viable product by demo day — sometimes within as little as twelve weeks — in the hopes of finding their next unicorn.

But if profit is not your ultimate purpose, what fuels innovation?

Kristen Engberg, CEO of Beespace, says there are two types of innovators: “problem fixers and systems thinkers”- and that the latter is where not-for-profit startups typically fall. Not-for-profit innovation is not driven by some laudable calling to altruism but rather “seeing something wrong in the world that you need to right,” Engberg explains. When it comes to systemic social impact, she says, you are working to rewire the system that has created that wrong in the first place.

Beespace offers its startups rent-free space, seed funding, in-kind support valued around $300,000 each year and a structured two-year curriculum. Heat Seek CEO, Noelle Francois, admits that beyond the funding her team “didn’t know what an amazing opportunity (Beespace) was going to be.”

In their first year, incubees are encouraged to forget seeking outside-financing altogether and to focus solely on designing their programs to optimize their social impact. For Heat Seek, already nine months into their incubation, that meant working with Beespace-affiliated consultants to “look at our theory of change, map the whole system” and then determine “how can we fit into this ecosystem of trying to preserve affordable housing” in New York, Francois recalls.

Heat Seek makes sensors that measure and collect data on temperature levels in New York City apartments each winter, in an effort to provide a reliable source of information to flag heating code violations. The not-for-profit ran pilot programs in the city the past two winters; in 2015, they jumped from 10 sensors to 60 with the help of a six-month catalyst program at Blue Ridge Labs.

Francois highlights that if Heat Seek was thinking like a for-profit organization, their focus would be “how many temperature sensors could we sell.” However, this winter they have three new pilot programs they plan to roll out and none involve an increase in the number of sensors they have in buildings throughout the city.

Instead, after months of grassroots investigation and program iteration, Heat Seek’s focus will be strategically identifying opportunities to use their data for maximum social impact, Francois explains. One of the pilots will help tenants rights coalitions to use Heat Seek’s temperature data to support tenants in neighborhoods that are up for rezoning.

Heat Seek’s development represents the kind of systemic thinking about social impact that Engberg believes patient capital, like that at Beespace, promotes. And although incubators for social impact are fewer than those focused on for-profit startups, both Engberg and Francois believe things are changing, with organizations like the Rockefeller Foundation and even traditional incubators like Y-Combinator opening venture philanthropy offshoots.

Envisioning what starting Heat Seek would have been like even just five years ago, Francois asserts they would never have made it. Because — in a true testament to innovation — social impact “incubators didn’t exist until we needed them to.”