A social-minded startup wonders whether to become a not-for-profit or a for-profit enterprise.
The situation: Startups that have a social purpose at their core have a very important decision to make about their corporate structure: become a not-for-profit or a for-profit enterprise. The distinction is important because it helps define how entrepreneurs raise money and sign partners in the short term, and it will also impact their decisions for years to come. Sarah Drew, founder and CEO of Every1Games, was facing just such a decision as her startup was ready to exit Ryerson University’s incubator space. Every1Games had already morphed from a small one-night gamedevelopment workshop for a group of five autistic teenagers to an ongoing concern that was partnering with schools and, potentially, clients who would pay for their children to attend skill development workshops. “Given that I’m eager to sign a few contracts, we have to decide what kind of entity we’d like to be,” Drew said.