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The Role of Nonprofits in Capital Deployment

Following the announcement of our new Capital pillar addressing health inequities, Heath Naquin, who’s leading the charge, weighs in on opportunities for nonprofits like the Science Center to effect positive impact.

The role of capital in the life cycle of company creation is well known. Businesses need money to survive and grow. Capital, in whatever form it takes, is often the life blood of early businesses as they refine business models, hire staff to serve new markets and expand to grow new revenue opportunities.

In recent years, the capital markets, as with many things have evolved. Traditional Venture Capital (VC), has for the most part moved to later in a company’s capital continuum. “A Round” or first money in, from Venture Capital were usually no more than $1 million fifteen years ago. In today’s markets, “A Rounds” from Venture Capital are usually $3-5 million or as high at $15 Million. While the VC industry has evolved, new companies face the same traditional issues of needing incremental capital early in the commercialization lifecycle to vet business models before seeking an “A Round” from the traditional VC marketplace. In recent years, the Angel Community and increasingly government funding such as SBIR/STTR, stepped in to fill this gap. But there is still more work to do.

As capital markets mature, innovation intermediaries, mostly nonprofit entities, have increasingly stepped in to fill the early stage capital gap. This is a logical progression as many innovation intermediaries have, for many years, deployed various forms of programming associated with commercialization of science and technology-based ventures. The direct provision of smart capital by nonprofits, tied to mission and innovation programming, is the next phase of early-stage capital provision for many early-stage startups across the country. While the concept of nonprofits or academia providing capital is not new, often times nonprofit entities are either 1) not well equipped from an infrastructure perspective to administer funds or 2) face legal issues or bureaucratic hurdles in the deployment of that capital.

At the Science Center, we are building off our 60-year history in science and technology-based innovation programming, to develop new models for capital provision to startups and founders. With the recent announcement of the strategic Capital pillar, the Science Center will invest, raise and deploy early stage risk capital into the ecosystem.

The Science Center Capital strategy will revolve around two core themes; diverse founders in STEM and investment in technology-based firms addressing health inequities, with the potential to scale. In doing so, the Science Center will support its nonprofit mission of serving the community in which it resides, while demonstrating and proving a new model for early stage capital deployment which has the potential to be adopted nationwide.