Profit for impact in the Assistive Tech space [Part of our new blog series: AT, Entrepreneurship & Finance - with Assistive Tech Impact Fund]
Assistive technology companies are often started by clinicians, academics, or engineers that have worked in the disability space for many years. When you speak to AT founders about what drew them to this area, the sector provides engineers with endless problem-solving opportunities, clinicians the chance to transform care, and researchers a way to explore an often under research human experience. Almost all people working in AT companies that we’ve spoken with share the common goal of wanting to make the lives of people with disabilities better and to build a fairer society. It’s no surprise therefore that the AT sector also attracts many people from the charity, NGO and humanitarian sector, who are also driven by impact and making a difference.
In the context of the assistive technology sector in LMICs, many would-be users simply cannot afford expensive AT that’s developed in high-income countries. Likewise, government, clinicians and even NGOs tend to have limited funds, so are rarely able to afford AT. Many AT companies, therefore, make use of their employees knowledge and experience in the academic, charity and humanitarian sector and tend towards making AT free, and choose to fund their activities through grants and philanthropic capital.
However, companies underpinned by this type of funding are constantly at risk. Grant and donor funding can be wildly unpredictable and heavily influenced by politics, economics, and world events and can be pulled, minimised, or redirected with little to no warning. For AT founders, this isn’t just a hypothetical situation:
“There’s nothing more devastating than working eight years on creating fantastic services and access to it. The moment the big funder pulls out, everything falls flat to the ground”
What’s more, the overall size and number of grants are reducing year on year, so if companies lose grant opportunities, finding replacement funding is becoming more and more difficult. Even if funding isn’t pulled, almost all grants will have an expiry date, because grants are often supported as time-limited ‘projects’. In the context of assistive technology, this causes problems because we know that AT is not simply a ‘one-off’ distribution event, and must be supported long-term to ensure AT is appropriately maintained. Without a source of reliable funding, over time, companies that are dependent on grants will not be able to support their customers as they are financially unsustainable.
There is another way, however. Shifting towards an operating model that sells AT is not easy and fraught with difficulties, but many AT companies are realising how important it is to pursue financial sustainability and independence from grants:
“We set out very aspirationally around providing AT to people, but if you keep on being dependent on grants and funding to keep afloat, that’s not sustainable in the long run"
Whether it’s business-to-business, direct-to-consumer, or a mixture of the two, AT companies that sell are free to grow their business in whatever direction they want, rather than being bound to the priorities of grant distributors and donors. Moreover, one AT CEO has found that in his experience, the difference between successful and unsuccessful AT ventures in Africa comes down to if the founders treat the company like a business or a social good. If founders are business-minded, they are always looking for ways to make the company stand on its own feet and keep growing. AT founders that treat their organisation like a social good instead have to worry where the next found of grants will come from, and how their organisation can set up projects that align with the interests of funders.
Changing the company mindset
As organisations change their focus to make a responsible profit, the entire organisation needs to be ready to change. Multiple AT entrepreneurs have shared that shifting to a commercial mindset has been extremely challenging because their employees are not used to the push of the commercial world, and may even have reservations about selling products to customer bases with limited finances. Basic business activities such as pricing and revenue models are an immense challenge, with companies that are prioritising commercial thinking facing pushback even from their own board of directors:
“Before we could even start to offer these services for a fee, we had, it was a bit hard to convince even the board that this was something we should do”
To overcome internal resistance, AT founders can do a few things. Firstly, employees need to clearly hear why the operating model is changing given the changing grant and donor landscape, and that selling AT will become a core part of the solution. However, becoming sales-oriented does not mean pursuing profit at all costs. Profit instead becomes the way that organisations pursues long-term scalable impact to help as many people as possible.
This change towards a commercial mindset can take time, and some companies undergoing this transition have found that they have needed to expand their workforce with employees who have extensive business experience. These people do not necessarily need to have a background in AT, but must be aligned with the vision of profit-for-impact, not profit for profit’s sake. Over time, companies can support these experienced commercial hires by providing commercial training to staff from non-commercial backgrounds so that everyone in the organisation is working towards the same goal, whilst being aligned on the best way to reach that goal.
AT organisations need to embrace a ‘selling’ mindset in every part of the company to become sustainable. This may involve upskilling current employees, or even involve hiring new talent from commercial backgrounds. However it is achieved, financially sustainable AT companies offset unexpected and hard to mitigate risks caused by grant and philanthropic capital instability. A selling and profit-oriented mindset may seem counterintuitive to the mission of getting AT to everyone. However, financially sustainable companies that are able to create, provision and support AT are a sure-fire way to provide the reliable and scalable impact that improves the lives of people with disabilities.