Sustainable Impact Startups
What is a Sustainable Impact Startup (SIS)? What specific requirements are there to be considered one?
Summary of Sustainable Impact Startups
A Sustainable Impact Startup (SIS) is an early-stage company whose primary purpose is to generate both profit and a measurable public benefit aligned with the United Nations Sustainable Development Goals. Unlike traditional startups that often adopt any mission and focus on maximizing shareholder value, these companies ground their purpose in advancing global well-being while balancing financial success with societal benefit.
Their business model requires that the majority of revenue comes directly from mission-driven products, ensuring that impact and profitability are inseparable. Traditional startups, by contrast, can generate revenue from any product regardless of its connection to their stated mission.
Sustainable Impact Startups prioritize reaching default-alive, self-sustaining profitability before pursuing large-scale expansion. This approach lowers the capital required to succeed, raises the odds of survival, solidifies long term impact and proves that financial sovereignty can be achieved through disciplined growth rather than heavy reliance on outside funding. Traditional startups often seek rapid growth over profitable unit economics and sustainability.
Sustainable Impact Startups legally hold a fiduciary duty to all stakeholders including customers, workers, the environment, community, and shareholders, which creates long-term resilience and shared value. Traditional startups are legally bound primarily to just increasing financial gain for shareholders.
At Arts & Crafts, we believe that one of the most effective and efficient ways of achieving our global peace and prosperity goals as defined by the UN's SDGs is to influence our startup ecosystem to build more and invest more in Sustainable Impact Startups (SIS).
Specific Requirements For Every Sustainable Impact Startup (SIS):
- Public Benefit Corporation - The legal entity of the company must be a Public Benefit Corporation (PBC)
- Impact First Mission - The company must have an impact mission defined as directly aligning to United Nation's Sustainable Development Goals (UN SDGs)
- Impact Business Model - The company must make a majority of its revenue from an Impact Business Model (IBM) as defined by the B-Corporation's standards
- Sustainability Commitment - The company must commit to using best efforts that prioritizes financial capital efficiency by maintaining a "default alive" profitability position while delivering the impact of its mission before scaling operations
Comparing Traditional Startups to Sustainable Impact Startups
| Category | Traditional Startup | Sustainable Impact Startup |
|---|---|---|
| Legal Entity | For-profit (LLCs, C-Corps, etc.) | For-benefit (Public Benefit Corporation) |
| Primary Purpose | Maximize financial shareholder value | Pursue profit and a specific public benefit |
| Company Mission | Company can choose any mission | Mission must directly align to helping the United Nation's SDGs |
| Business Model | Revenue can be generated from any product or business model | Majority of revenue must be generated from the products that delivers the impact of its mission |
| Stance on Profitability | Maximizing financial shareholder value, even if it means delaying or never becoming financially profitable/sustainable | Prioritizes getting to financial profitability as soon as possible while delivering the impact of its mission |
| Fiduciary Duty to Stakeholders | Liable to making decisions that benefit only the shareholders of company | Liable to making decisions that balance the benefit of all stakeholders (customers, workers, community, environment and shareholders) |