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30 UNDER 30: 2012

Inside the Radical Incubator for Social Entrepreneurs

The Unreasonable Institute incubates for-profit social enterprises that compete for the program by raising their own tuition via online crowdfunding.
Tyler Hartung (left), Daniel Epstein (center), and Teju Ravilochan are the founders of the Unreasonable Institute.

The Unreasonable Institute

Founders: Tyler Hartung, 28 (left); Daniel Epstein, 26 (center); Teju Ravilochan, 25

Year founded: 2009

Location: Boulder, CO

2011 Revenue: $288,000

2012 Projected Revenue: $300,000

Employees: 4

Website: The Unreasonable Institute

Facebook: Facebook.com/
The Unreasonable Institute

Twitter: @BeUnreasonable

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Tyler Hartung describes The Unreasonable Institute as a "TechStars or YCombinator, but for social entrepreneurs."

The not-for-profit, which was founded by Daniel Epstein and co-founders Hartung and Teju Ravilochan, does share some characteristics with those highly-competitive, mentor-driven, start-up incubators.

Based in Boulder, Colorado, Unreasonable brings together 25 entrepreneurs for six intense weeks of mentoring, business development, and networking, with the intention of scaling up international start-ups, each with a mission to address a pressing environmental or social need. Members of this year's class, for instance, include a company that employs very impoverished individuals to recycle plastic bags in Delhi, a dairy operation that benefits women in Sri Lanka, and a company that improves cocoa production for Mexican farmers.

Epstein and his partners, all University of Colorado at Boulder grads, noticed that there was a dearth of support, knowledge, and networks to help entrepreneurial-minded young people start social ventures. "We're idealistic and we want to start businesses that have social missions," Hartung says.

So the three decided to facilitate that process by launching The Unreasonable Institute. The organization's name comes from a George Bernard Shaw quote: "The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man."

Applicants apply from all over the world and Unreasonable's partners whittle down the initial list to about 40 or so viable candidates. The ideas "can't be donation or grant driven," says Hartung. "They have to have a revenue mechanism that covers costs. And we're looking for organizations that can scale outside of their country of origin and meet the needs of a million people."

This year, the partners changed an important criterion: Only for-profit companies were accepted. The reason for that is two-fold, says Hartung. After observing Unreasonable fellows for two years, the partners realized that for-profit enterprises were getting the most out of the program. And more for-profit participants meant the ability to attract more high-quality mentors and potential investors. Mentors include Phil McKinney, the former CTO of HP; Billy Parish, founder of the Energy Action Coalition; and Bob Pattillo, founder of Gray Ghost Ventures.

Here's where the similarity to TechStars or YCombinator ends. Each candidate is required to earn the Institute's $10,000 tuition fee by pitching his or her venture online at the "Unreasonable Marketplace"—essentially a crowdfunding platform where donors can support the ventures. To eliminate the possibility that a wealthy fan would fully fund a venture immediately, there’s a limit on the amount that a single donor can commit each day. 

The first 25 companies to raise $10,000 within a 50-day period are selected to attend the institute. "The fee pays for lodging, food, a laptop, legal advice, mentor's travel expenses, and website development," says Hartung. The program ends with a pitch fest, attended by venture capitalists. Hartung says the majority of Unreasonable fellows are still operating; 66% of the first year’s fellows who were looking for capital received funding.

This year, Epstein is  launching a separate venture called Unreasonable at Sea—a partnership between The Unreasonable Institute, Stanford d.school (Institute of Design at Stanford), and Semester at Sea. "The program is an accelerator for technology companies looking to scale internationally and experimenting in transnational entrepreneurship," says Epstein. "Over the course of 100 days we will sail more than 25,000 nautical miles and port in 14 countries.  We will have 25 mentors on board and our entrepreneurs, looking to scale their technologies into new markets, will also serve as mentors to the 600 Semester at Sea students who will also be onboard."

Also on deck: a for-profit spin-off called The Unreasonable Group, that will leverage the organization's growing brand cache by launching a variety of companies in the travel, media, and investment industries to start. This time, the model is more ambitious: Epstein, who will head the group, cited Richard Branson's Virgin empire as inspiration.

IMAGE: Courtesy Company
Last updated: Jul 2, 2012

DONNA FENN | Inc.com Contributing Editor

Donna Fenn is the author of Upstarts! How GenY Entrepreneurs Are Rocking the World of Business and 8 Ways You Can Profit From Their Success, an exploration of the ways Gen Y is changing the entrepreneurial landscape.




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