The world of tech loves innovation and thinking outside of the box. Except, perhaps, when it comes to fundraising.
As Rebekah Bastian was making her pitch to funders in recent months, she realized that her Seattle-based startup didn’t neatly fit into accepted tech business models. OwnTrail is a new platform where women share the journeys of their careers and personal lives, providing each other support and connections. On funding forms that asked her to check a box describing her venture, none were a good match.
So Bastian, a former Zillow executive and lover of puns, came up with a solution. She proposed a new category to join the ranks of the “-tech” set (edtech, fintech, healthtech and others), dubbing it “authentech.” Bastian shared the idea on Twitter last month, and after a wave of positive response she made her authentech pitch in a post on Forbes.
“Authentech is emerging not because the world needs another technical business model, but because the world needs inclusive, authentic connections in order to move forward in this turbulent decade,” Bastian wrote. “It’s time for a new way of doing business that centers the human and turns customers from commodities to community members.”
— Rebekah Bastian (@rebekah_bastian) December 11, 2020
Bastian predicts many new companies will be emerging that are best described by her neologism, and she has compiled a list of existing businesses that are embracing the term. They include Pacific Northwest ventures such as the business and product recommendation site Fresh Chalk; Tribute, a mentorship platform; the interview prep platform WholeStory; Supporti, a goal-setting app; Intentionalist, a site for finding minority-led companies; as well as other companies within and outside of the region.
“Categorizing companies as authentech creates a useful lens for consumers looking for alternatives to the online status quo,” said Fresh Chalk CEO and co-founder Liz Pearce.
Authentech overlaps with company descriptors such as “mission driven” and “social impact.” But the new term captures a “category that hasn’t been accounted for yet,” Bastian said. It centers on building community to build a business, and those communities help drive which services and products are being offered. Authentech enterprises are still for profit, but eschew exploiting customers to boost the bottom line.
The idea resonates with Naimeesha Murthy, an entrepreneur from the greater New York City area and founder of Products by Women, a platform supporting women working in tech that has more than 8,000 members.
“Traditionally, we’ve seen that companies build first and then focus on customer acquisition later. But I would say it’s probably more effective the other way around — first showcase value, intention and impact and then move to building,” Murthy said. “This essentially means that you have a loyal customer base even before you define your final product or service.”
Dennis Joyce, director of investments for Tacoma Venture Fund, agreed that it can be tough for startups with new approaches, in uncharted territory, to make their case with funders.
While investors are keen on innovation and new approaches, they’re also looking for success stories from related ventures to boost their confidence. These challenges will likely become increasingly common as funders seek greater diversity in gender, race and sexual orientation in the startup founders they’re backing.
“As we go deeper and deeper into a more inclusive investing role, we’re going to find more and more companies that don’t adhere to the traditional norms of the industry,” Joyce said. “That is where the excitement lies and the opportunity lies.”
Not everyone engaged with mission-driven ventures is onboard. Luni Lubes, a long-time Seattle-area leader in impact investing, has concerns about the concept.
“I appreciate how the authentech term is trying to convey the importance of ethical behavior by tech companies, [but] I’m not seeing why the world needs yet-another word to describe what should be the baseline good behavior of companies,” Lubes said.
Despite defying easy categorization, some self-described authentech startups are securing funding. OwnTrail announced in August that it had raised $250,000 and Fresh Chalk landed a $2 million seed round in 2019. Tribute also raised capital last year.
Anyone is welcome to join the authentech database, which currently exists as a spreadsheet. Bastian is hoping the organic movement to establish the new tech category will help companies in the space find each other and allow them to share business strategies and stories of success that can buoy the sector.
“We’re thrilled about authentech as a business category,” said John Roach, CEO and co-founders of WholeStory, a social purpose corporation. The Pasco, Wash.-based platform helps people prepare for job interviews and learn how to share their “soft skills.”
“It will create an identity that aspiring companies can align with,” he said, “which will put them in community with other values-aligned companies leading the shift toward a true stakeholder economy.”