How a Company Aiding Nonprofits Secured Venture Capital

A new way for small nonprofits to tap into big audiences and raise awareness and exposure online.
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This story appears in the April 2011 issue of . Subscribe »

If there is an ideal pedigree for building a philanthropic social networking platform, Ed Messman's fits the bill. Before joining the team that grew and sold enterprise social network platform-builder HiveLive for a reported $6 million, Messman worked in venture capital for Hercules Technology Growth Capital. When he and colleague J.P. Lind were looking for their next venture in 2008, they noticed that the philanthropic community was testing social networking in the same preliminary way that corporations had been when HiveLive was founded in 2007.

"The new donor that's coming up and filling my database doesn't respond the same way," Messman says. "They don't give the same way."

The 2009 market for charitable contributions was more than $300 billion, but that total was down 2 percent from the previous year--and less than 6 percent of that giving was happening online, Messman says. He decided the formula of grants, events and big checks from high-net-worth donors isn't the way of the future. So in January 2009, he and Lind launched Giveo as an easy-to-use solution, marrying social media with the fundraising and communication needs of charitable organizations.

The Boulder, Colo.-based company helps nonprofits tap the sizeable audiences and brand awareness of corporations and foundations and partner with them, turning them into advocates that generate far more return than one check. Messman points to the success of Pepsi's Refresh Project, which uses similar principles to find and direct donations of millions of dollars to grass-roots projects.

After a round of seed funding, which launched Giveo and gave the team enough resources to see that the idea had legs, Messman and Lind tapped their first angel investor, Joe Zell of Vienna, Va.-based Grotech Ventures, to reinvest. Zell and Grotech led a $1.5 million round that closed in November 2010.

Zell would like to see the money used to target more big customers. "We'll use it to get a beachhead as the first real cause-marketing, cause-branding campaign management platform," Zell says.

And that's happening. As of January, the company had landed 37 clients, mostly medium-size nonprofits and marketing agencies. One nonprofit client provided the entree to a program that funded 600 salad bars in schools across the country--and got the attention of the White House and Michelle Obama's "Let's Move" program to fight childhood obesity. Giveo launched "Salad Bars to Schools" in partnership with Whole Foods, the F3 Foundation, Let's Move, the U.S. Department of Agriculture, the Centers for Disease Control and Prevention and other foundations.

"We're now starting to think about other areas of healthy food we can address," Messman says. "That's just one example of where the opportunity is."

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