Gunjan Doshi

One of the question that is frequently asked by potential investors to an entrepreneur is “what is the size of the target market?”. It is usually not considered wise to go after small markets as the growth opportunity is limited.

I have had the opportunity to observe a premium NYC based angel investment group for the past 5 months and have seen over 100 entrepreneurs pitch to the angels. Surprisingly, one segment that has not come up even once is the non-profit segment. Personally, this is little surprising as the market size is huge. To gauge the size and the power of this segment, look at the following metrics:

• In 2006, 41.4 million individual income tax returns claimed charitable donations totaling upto a $173.2 billion dollars up 0.6% from last year. To give you a relative measurement scale: GDP of Singapore in 2007 was $161.35 billion and UAE was $129 billion. [Source: WSJ]
• In 2005, nearly 10 percent of the nation’s non-farm workforce are employees of the 1.4 million nonprofit organizations with 876,164 organizations among them being 501(c)(3) public charities. [Source: Non-profit Almanac]

I have been thinking about this for a while now and may be in future posts I will cover more. For now, this is what I think: Most successful new ventures are born off the efforts of an entrepreneur who is trying to solve a problem. The entrepreneur then launches a venture and makes a fortune on exit. Ultimately, investors also are interested in the exit potential of a startup. On the other hand the goals of non-profit are usually not aligned with the above mentioned financial goals of entrepreneurship.

However, there have been some inspirational entrepreneurs who have their roots in non-profits. For e.g. Robin Wolaner who started the famous Parenting magazine with Time Inc. Most of the times, it is the other way around: successful entrepreneurs end up pursuing non-profit activities.

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