D3 + UIX Insight: Funding Innovation
Communications Manager at Data Driven Detroit
Analyst for the UIX Initiative
We have hit the one year mark with the Urban Innovation Exchange (UIX) initiative. After one year we have interviewed an initial 60 innovators identified by UIX; we are now able to start sharing some of our preliminary insights. Check out the initial D3 + UIX Insight, The Skills Required for Innovation
, for additional background information.
The top priority across all surveyed innovators for the coming year was to raise more funds. Finding funding is seen as integral to a project’s success. Looking at past funding patterns for these 60 innovators may offer insight into their potential to raise funds in this year. Interestingly, only 10 percent of innovators took out a formal loan from a bank. Additionally, innovators were slightly more likely to use their credit card or an overdraft to fund their project (11.7%) than a bank loan. The three most mentioned funding types were 1) grants, 2) donations from an individual outside of their family, friends or coworkers, and 3) the innovator’s own personal savings. Ultimately, innovators access capital primarily through donations, whether through personal or professional networks or online platforms. Institutionalized grants and awards as well as personal finances are also heavily utilized funding sources.
Access to personal network with disposable income and education emerge as potential limitations for would-be innovators looking for funding. Firstly, the heavy reliance on donations suggests innovative work may be harder to fund through more traditional means such as formal loans. Many of our profiled innovators currently have access to a network or individuals that have a surplus of financial resources willing to give them money. Secondly, the often complex process of writing successful applications for awards and grants benefits from higher educational attainment. 100 percent of those innovators who reported their highest level of received education (91.7 percent) have at least some college education.54.5 percent of those who answered had an advanced degree. The high educational attainment of innovators may explain their high tendency to look to grants for project funding.
Taking a deeper look, 33.3 percent of male innovators estimated that they received $250,000 or more in total funding over the course of their project, while 29.2 percent of female innovators estimated the same. This gap between men and women grows through the mid-range funding brackets. 53.3 percent of men claim amounts within the 2 mid-range brackets, while only 29.1 percent of women do. The trend stops in the smallest bracket where only 13.3 percent of men reported amounts of $10,000 or less versus 41.7 percent for females.
Because innovators are asked to estimate the total funds they have received, and many have not formally tracked their funds to date, it is difficult to fully explain the noticeable differences along gender lines. Additionally, established non-profits and fledgling start-ups are included in the pool of innovators adding another layer of complexity. However, the average age of projects is similar for both men (6.4 years) and women (6.9 years), suggesting that even though female innovators’ projects tend to be slightly more well-established on average, they are still reporting smaller total amounts. As our dataset grows, we will be able to further investigate potential reasons for these types of differences.
We will continue to explore the issue of funding in more detail through these Insights. As our dataset grows, so will our ability to dive deeper into the innovation environment in Detroit. In total, the UIX initiative will profile and survey 300+ Detroit-based social innovators over the course of its 3 year project cycle. The UIX initiative is committed to surveying a diverse group of Detroit-based innovators. It is essential to get an understanding of the different issues facing all innovators. If you are an innovator, please fill out your survey! If you know an innovator, recommend them through the UIX website under the “About” tab: www.uixdetroit.com
Any questions about the UIX dataset can be directed to:
Kat Hartman / Data Driven Detroit