Harnessing Technology for Exponential Social Impact by Fundación Ship2B

Harnessing Technology for Exponential Social Impact The Case of Spanish Social Tech Businesses Leonora Buckland Xavier Pont

Legal advice The results offered in this study have been compiled by the authors and do not necessarily reflect the views of the Ship2B Foundation.

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To cite this publication Harnessing Technology for Exponential Social Impact. The Case of Spanish Social Tech Businesses. 2017. Leonora Buckland & Xavier Pont. Ship2B Foundation.

Index Foreword and Promoter organization

Authors

Harnessing Technology for Exponential Social Impact 1 Introduction 2 Definitions

11 11

3 Will technology solve the problems facing humanity?

4 What is happening in Tech for Good in Europe?

5 Exploring social tech businesses in Spain

6 What makes a social tech business a success?

7 Conclusion and role of Ship2B

Bibliography

Foreword At Ship2B, we are delighted to publish this ‘thought piece’ that explores in more detail a subject which is close to our hearts - the power of technology to create positive social impact. We believe that the question of how and whether technology can help us to progress on humanity’s goals and challenges is one of the great questions of our time. When we talk about ‘technology’ we mean newer technologies such as artificial intelligence, virtual reality and robotics and older technologies such as the internet, mobile and social media. We put forward different perspectives on this issue and try to bring some balance to the hype and utopian/dystopian discourse. Most importantly, we bring the conversation down to a more concrete and practical level by providing on-theground analysis and case studies about social tech innovation in Spain and Europe. We hope this can be an exciting contribution to the new and emerging field of Tech for Good, which currently lacks a strong intellectual or research framework. This is not intended as an academic study, but rather a practical and action-oriented thought-piece to inspire and inform the Ship2B community. The paper has implications for Ship2B and its work: the conclusion that the social tech field is blossoming is welcome and underlines that we are in the right place at the right time, however stories from social tech entrepreneurs remind us how far we have to go. As an organization as well as an ecosystem we need to create the right levels of support to help social entrepreneurs realize the potential of technology. This will require collaborating across sectors and bringing together the social and the tech worlds in a new way. We are happy to lead the charge on this in Spain but we need more allies and collaborators!

Promoter organization Ship2B Foundation is a private foundation that aims to invest and accelerate business projects with high social impact by making our community of mentors, experts, entities and large companies available to the best entrepreneurs. In addition, we have the first and largest impact investment network in Spain and a co-investment vehicle to invest in disruptive startups that generate a double profitability: economic and social. The B-Inspired Program, promoted by Ship2B, Acció and Mazda, aims to encourage the use of exponential technologies to generate social impact. The different activities organized within the program seek to: train and inspire leaders of organizations, companies and social entities in disruptive technologies and social innovation; promote the creation of new social entrepreneurship projects that use disruptive technologies to achieve a high impact in an economically profitable way; promote collaboration between public and social entities and private companies around the social impact of a technological base; be pioneers in developing an integrated know-how on disruptive technologies and social impact.

Authors

Leonora Buckland

Xavier Pont

Dr. Leonora Buckland is a freelance author and consultant on social entrepreneurship and impact investment. She lives in Barcelona, researches for ESADE, and advises Ship2B. Previously she was executive director of The Venture Partnership Foundation based in London, and was a consultant for the Skoll World Forum, London Business School, European Venture Philanthropy Association, and Giving Evidence. She started her career as a strategy consultant at Monitor Company before obtaining a Masters in international economics at Johns Hopkins University, Baltimore (U.S.A) and a PhD in European history at the University of Oxford (U.K.).

Xavier Pont is co-founder and CEO of the Ship2B Foundation. Graduated from ESADE and MBA from IESE, he has been a serial social entrepreneur in various initiatives. He has also been director in the public sector in charge of regional entrepreneurship and innovation policies. He is currently an active member of the Board of the Borges Group and the organic supermarket Veritas, among other companies.

Harnessing Technology for Exponential Social Impact The Case of Spanish Social Tech Businesses

1 Introduction Will technology save us or enslave us? Some powerful business voices, such as that of Elon Musk, founder of Paypal, Tesla Motors and Space X see technology as the great liberator and solution-provider. In twenty years, they believe, most of the social and environmental challenges we face will be resolved through the use of technology. Others, such as Evgeny Morozov who wrote, ‘The Net Delusion’ and ‘To Save Everything, Click Here’ 1, are afraid of ‘solutionism’ - the idea that given the right code, algorithms and robots, technology can solve all of mankind’s problems. Somewhere between Musk and Morozov is where the rest of us will find our futures.2 This article explores the great debate about the role of technology in creating a better world. But we do not remain at the philosophical level. We drill down to the micro level, exploring the state of the Tech for Good movement in Europe and examples of exciting social tech businesses in Spain. We ask: are there signs right now, in Europe, of technology’s great promise relating to social challenges - exponential impact? Through case studies of Spanish social tech businesses (BJ Adaptaciones, Made of Genes, Mass Factory, Newton Learning, Specialisterne and SocialCar) we bring to life the exciting, although sometimes struggling, innovation in this space. We examine the disruptive ideas emerging, how social entrepreneurs using technology purposefully to solve social challenges are generating impact as well as the key obstacles and lessons they have learnt along the way. We believe that getting into specific stories is important. Firstly, because the work of many unsung social tech entrepreneurs must be shared, acknowledged and celebrated. Secondly, because these on-the-ground stories provide clues as to how far away we are from the dream of creating exponential social impact using technology and what needs to change for this to become possible.

1 Morozov, E., ‘The Net Delusion. The Dark Side of Internet Freedom’ (2011) and Morozov, E., ‘To Save Everything Click Here: The Folly of Technological Solutionism’ (2014) 2 Lucy Bernholz, https://ssir.org/book_reviews/entry/the_just_right_future

2 Definitions Movements such as Tech for Good are young and emergent, although they are quickly gaining momentum. To date there is minimal research or definitional work on Tech for Good. Below is our attempt to create a map to navigate terms used in this article. We imagine that over the next few years more work will be done to create much needed clarity.

What is Tech for Good? This is a broad umbrella term encompassing projects using technology to deliver social good.

Who are the key creators / providers of Tech for Good? â&#x20AC;˘ Tech corporates: are increasingly active in ensuring their tech solutions reach people who may not be able to afford them. They are also supporting NGOs and innovators working with technology through funding or pro-bono support. â&#x20AC;˘ NGOs/non-profits: most of the Tech for Good movement to date has been focused on non-profits, either large, established ones who are attempting to embrace the digital revolution or smaller, newer innovative non-profits working with tech solutions. â&#x20AC;˘ Social enterprises with a tech focus: this is an emerging group that we will focus on in this article. We define these as ventures which attempt to satisfy a social need through technological innovation in a financially sustainable manner.

Other useful terms Digital social innovation: a type of social and collaborative innovation in which innovators, users and communities collaborate using digital technologies to co-create knowledge and solutions for a wide range of social needs and at a scale and speed that was unimaginable before the rise of the Internet.

3 Will technology solve the problems facing humanity? Technology: in principle a force for good Disruptive technological change is the hallmark of our age. We now live in a networked, individual society where traditional structures and hierarchies are breaking down, facilitated by the triple revolution of smartphone, internet and social media3. The pace and nature of technological change is quickening, the Internet of Things (IoT) will create a giant nervous system regulating and tracking humanity, and combinations of newer technologies such as virtual and augmented reality, artificial intelligence, 3D printing, robotics, nanotechnology and biotechnology are starting to enter the mainstream, laying the foundations for the Fourth Industrial Revolution, where the lines are blurring between the physical, digital and biological spheres. In theory, this enormous technological change will create the opportunity for unbounded positive social change and a betterment of the collective human condition. The intuition that our technological era brings with it an exhilarating new frontier to experiment with and develop solutions to long-standing social problems is certainly the view of the ‘techno-utopians’. Larry Page, Google co-founder notes that, ‘I think we need to be training people on how to change the world. Obviously technologies are the way to do that. That’s what we’ve seen in the past, that’s what has driven all the change.’ Peter Diamandis, a Silicon Valley insider, has set up Singularity University to educate, inspire and empower leaders to apply exponential technologies to address humanity’s grand challenges: resource needs (energy, environment, food, shelter, space, water) and societal needs (disaster resilience, governance, health, learning, prosperity and security). In his landmark book, ‘Abundance’ he describes how ‘technology is a resource-liberating mechanism. It can make the once scarce the now abundant.’ 4 Singularity University has been described as a cross between NASA (America’s space agency) and Mother Teresa.

3 Rainie, L and Wellman, B, ‘Networked, The New Social Operating System’ (2012), pg. 33 4 Diamandis, P and Kotler, S. ‘Abundance: The Future is Better Than You Think’ (2012), Pg. 27

Tech for Good players and what they are achieving

Examples of Exponential Technologies 5 BIOTECH NEUROTECH NANOTECH NEW ENERGY & SUS TAINABILITY ICT & MOBILE TECHNOLOGY SENSORING 3D PRINTING ARTIFICIAL INTELLIGENCE ROBOTIC DRONES

C O N V E R G E N C E

The power of technology for good seems to be particularly obvious in the developing world context. In his book Common Wealth: Economics for a Crowded Planet, Columbia University economist Jeffrey Sachs illustrates eight distinct contributions Information and Communication Technology (ICT) has made to sustainable development: connectivity; increased division of labour; scale; replication; accountability; ‘matching’ i.e. bringing together buyers and sellers; the use of social networking to build ‘communities of interest’; and education and training as ICT can take the classroom global.6 Sachs is not an unabashed optimist (he would not be branded a techo-utopian), but he is betting on technology to save the world, ‘the largest trends include massive technological transformations due to the information revolution; massive increases of population in the world’s poorest countries; a shift of power towards East Asia; environmental crises led by climate change, water scarcity and the loss of biodiversity. These are the deepest challenges we face. We also have profoundly positive opportunities, if we choose to put the new technologies towards human betterment.’7

Many Silicon Valley tech billionaires such as Bill Gates, Mark Zuckerberg and Pierre and Pam Omidyar have turned their attention to innovating around social challenges. This wave of ‘techno-philanthropists’ might inject the big money that could provide the rocket fuel needed for the Tech for Good arena. However, only part of this funding is likely to be directed at technologically-led social interventions. The Gates Foundation, which Gates formed with his wife Melinda, is the world’s largest private charity and it has distributed more than $41 billion in grants. An example of how such money can lead to social tech innovation was the Gates Foundation’s ‘Reinvent the Toilet Challenge’ to bring sustainable sanitation solutions to the 2.5 billion people worldwide who don’t have access to safe, affordable sanitation. The result was several high-tech toilets that removed germs from waste, recover valuable resources such as energy, clean water and nutrients, without being connected to water, sewer or electrical mains. The aim was that they should be cheap (less than 5 cents per user per day) and suitable for promoting sustainable and profitable sanitation services and businesses that can operate in poor, urban settings. Corporate tech players are also starting to explore more intentionally how to use technology for social impact. The tech industry no longer habours the earlier widespread assumption that technology is always or automatically a force for good. Issues of access and inequality which are amplified by technology have become a prime concern. A well-known project to increase access is Internet.org which was set up in 2013. It is a partnership between several corporates – Facebook, Samsung, Ericsson, MediaTek, Opera Software, Nokia and Qualcomm – and claims to have brought more than 25 million people online who otherwise would not be. Besides trying to mitigate the digital divide and inequalities emerging in internet access, specific corporate projects are tackling issues such as education. In Spain, ProFuturo is a partnership between ‘laCaixa’ Banking Foundation and Telefonica Foundation which aims to bridge the educational gap by providing quality digital education to children from vulnerable environments. However, some commentators feel that these corporate initiatives are poorly designed and techled without a proper theory of change and deep understanding of the problem and beneficiaries needs. In a recent move that will have a positive impact on the supply of capital in the Tech for Good sector, Salesforce announced in October that it is launching the Salesforce Impact Fund, a $50 million initiative to accelerate the growth of start-ups that are using Salesforce technology to address some of the world’s biggest problems. As part of Salesforce Ventures, the company’s corporate investment group, the Impact Fund will focus on four key areas: workforce development and education, equality, environment, and the social sector.

5 https://www.slideshare.net/vangeest/singularity-exponential-technologiesfuturevision 6 Sachs, J, ‘Common Wealth: Economics for a Crowded Planet’ (2008) 7 http://www.magazine.about.pwc.nl/special-topeconomists#!/jeffrey-sachs

In addition to corporate players are the many thousands of start-ups attempting to use technology to create social impact, ranging from using big data to predict when disasters like flooding can happen (Cloudtostreet) to using blockchain to issue digital identities to financially-excluded people including refugees (AID:Tech). The UK’s Nominet Trust’s Social Tech guide (founded in 2013) shines a light on over 1300 social tech ventures globally answering diverse and varied social challenges, using tech as simple as SMS messaging or as cutting edge as 3D printing. The Nominet Trust is the foundation of Nominet (the .uk domain name registry) and exists, ‘to ensure that the ongoing tech revolution delivers positive and equitable social impact: that when our lives are transformed by tech, they are transformed for the better.’8 Although there is a flowering of such projects, few have achieved large-scale, transformative change. There are some well-known success stories, although they may not be defined strictly as ‘social tech’. Firstly, microfinance which has become such a widespread phenomenon partly on the back of growing mobile phone usage in the developing world. Micro-lending is happening at scale through internet platforms – for example Kiva.org, based in San Francisco and founded in 2005, has 2.6 million borrowers in 83 countries and has funded $1billion of loans with repayment rate of 96.9%.9 Secondly, Wikipedia which has made the idea of the internet as collective meta-intelligence a reality. Since its creation in 2001, Wikipedia has grown rapidly into one of the largest reference websites, attracting 374 million unique visitors in 2015.10 Wikipedia engages volunteers in creating educational content, sharing information, and learning online. Thirdly, platforms such as Change.org (a certified B-Corp) have also illustrated the power of collective action and campaigning. To add to corporates, successful tech entrepreneurs and start-ups, the Tech for Good movement also includes efforts by large, established non-profits to embrace the digital revolution. A pioneering example is how Cancer Research UK has mobilised citizens to create collective knowledge on their citizen science platform Cellsider. To date Cellsider has involved more than 200,000 volunteers in analyzing around 2 million cancer images. However, as Tris Lumley from New Philanthropy Capital in the UK states, ‘on the whole the charity’s sector’s technological advances have been incremental, not transformative.’11 Indeed, the traditional social sector, which has the long-in-the-tooth experience of grappling with deep social challenges seems ill-equipped to harness the power of technology, since it faces a glaring and troubling digital skills gap as well as some cultural resistance to technology. Whilst it is clear that there is some real energy and commitment behind Tech for Good from several different players and sectors, we need to ask ourselves why there haven’t been more large-scale social tech success stories yet, and whether this means that the idea of harnessing technology for exponential social impact is more fantasy than fact? One of the reasons that we may not have seen as much positive social change created by technological projects, so far, is a severe lack of funding (both grant and 8 https://www.nominettrust.org.uk/about/ 9 https://www.kiva.org/about

investment) in investigating the social uses for technology. As Nesta has pointed out, enormous sums of public money have supported digital innovation in business, as well as in fields ranging from the military to espionage. However, there has been much less systematic support for innovations that use digital technology to address social challenges.12 The internet is approximately 40 years old, and its capacity for generating societal and economic value is relatively well understood, yet its potential for solving large-scale social challenges remains largely untapped, despite its founding raison d’etre being the social one of sharing scientific knowledge. The market size of the Tech for Good movement is currently a drop in the ocean compared to investment in commercial technological innovation.

The dark side of technology Are the Tech for Good projects tinkering at the edges of a bigger, darker picture proclaimed by dissenting and anxious voices that the accelerating pace of technology is broadly moving in an anti-social, rather than a social direction? Technology is potentially amplifying existing inequalities and putting at risk the most important human ways of relating. Civil space can be argued to be declining, and data privacy and surveillance are major issues. A few fairly unaccountable tech companies appear to be in the driving seat. In the recent words of Dutch MEP, Marietje Schaake, ‘the digital revolution has led to a redistribution of power but not to a redistribution of accountability and oversight’.13 She adds, ‘The global tech companies are the new sovereigns.’ Much anxiety over the role of technology is concentrated in the debate on robotics and the future of work, where many will lose their jobs through automation. Although the idea of the universal basic income may compensate, side-effects of a post-work world are unclear. Other potentially pernicious consequences of the accelerating technological changes are a retreat from intimacy through virtual reality, abuse of genetic information, the growth of the surveillance state and the danger of a runaway super-intelligence. There is also the large and growing problem of the electronic waste problem where old electronics are ending up in landfills. With futuristic predictions of singularity and untold disruption to the way we currently live our lives, it seems difficult to distinguish what will actually happen from what will remain as science fiction. Will there be such monumental tech disruption brought on by new, exponential technologies as the technology sector is predicting? How fast will this happen? Uncertainty about the pace and nature of technological disruption complicates our response – we know that the pace of change is accelerating but we are not exactly sure how technologies will evolve. In addition, it feels as if everything is moving so fast, we have little time to reflect of the consequences of this exponential technological advancement.

12 Growing a Digital Social Innovation Ecosystem for Europe, DSI Final Report, pg. 4 (2015) 13 Marietje Schaake speaking at the Obama Foundation Summit, November 1st 2017

10 https://en.wikipedia.org/wiki/Wikipedia:About 11 http://www.thinknpc.org/blog/the-power-of-digital/ 18

There are strong, emerging voices from the social sector calling for it to take the role of standing up for humans, to shape the value system that will determine how government and business operates both now and as the digital world evolves. The social sector must represent the human in the digital age, because arguably no one else is going to.

It’s not about technology, but about people Faith in technology to solve sticky, organic, human problems at scale seems to be exaggerated, at least on empirical evidence. Despite activity around the nexus of technology and social change, there is no social impact equivalent to Airbnb or Uber. Whilst there is undoubtedly significant creativity and energy in terms of social tech, projects seem to have stayed quite small. Furthermore, some of the larger scale projects, such as One Laptop Per Child (OLPC), which sold over 25 million computers, have failed in terms of their socially transformative mission. According to Alanna Shaikh from UN Dispatch, ‘once the laptop finally starting arriving in the developing world, its impact was minimal. OLPC didn’t provide tech support for the machines, or training in how to incorporate them into education. Teachers didn’t understand how to use the laptops in their lessons, some resented them. Kids liked the laptops, but they don’t actually seem to help tem learn.’14 As Toyama Kentaro explains in his book attempting to deflate the techno-utopianists optimistic vision of the use of technology to solve social problems, ‘a government without genuine motivation to eradicate corruption will not become more accountable through new technologies of transparency. A healthcare system with a shortage of well-trained doctors and nurses won’t find its medical needs met with electronic medical records. A country unwilling to address the social underpinnings of inequality won’t see the end to inequities regardless of how much new low-cost technology it produces.’15 Many seem to be converging on the view that technology is not good or bad; neither is it neutral. This points to the importance of context in understanding technology because people and technology interact in complex ways. We are still hopefully at a point where we have a choice to direct how technology is used and ultimately how far it benefits humanity. Whilst recent authors such as Yuval Noah Harari in his book ‘Homo Deus”16 have argued that human behaviour is increasingly being moulded and shaped by technology (through algorithims and fake news, for example), others experts assert that technology does not determine human behaviour; humans determine how technologies are used. For Klaus Schwab, Founder and Executive Chairman of the World Economic Forum,‘in the end it all comes down to people and values. We need to shape a future that works for all of us by putting people first and empowering them. In its most pessimistic, dehumanized form, the Fourth Industrial Revolution may indeed have the potential to ‘robotise’ humanity and thus to deprive us of our heart and soul. But as a complement to the best parts of human nature – creativity, empathy, stewardship – it can also lift humanity into a new collective and moral consciousness based on a shared sense of destiny.’17

14 http://foreignpolicy.com/2009/09/09/why-did-one-laptop-per-child-fail/ 15 Toyama, K ‘Geek Heresy: Rescuing Social Change from the Cult of Technology’ (2015) 16 Harari Y.N., ‘Homo Deus. A brief history of tomorrow’ 2015 17 https://www.weforum.org/agenda/2016/01/the-fourth-industrial-revolution-what-it-means-and-how-to-respond/ 20

4 What is happening in Tech for Good in Europe? The social tech movement in Europe appears to be in an explosive and burgeoning moment. It is likely that much social innovation in the future will be technological, with the rise of the digital native millennial generation (many of whom are leaving their private sector jobs in technology or business to create purposeful organisations) and the pervasive nature of technological change and opportunity. Whilst there are no figures for the prevalence and growth of social tech businesses specifically, according to a recent report from the UKâ&#x20AC;&#x2122;s innovation foundation, Nesta, the number of organisations working in the digital social innovation space in Europe has doubled over the last year to 2,000. Activity is concentrated in Western Europe with organisations from the UK, France, Italy, Spain and the Netherlands representing 74% of the organisations mapped on digitalsocial.eu. Technology used by European digital social innovation projects18 TECHNOLOGY

NUMBER OF PROJECTS

Digital Democracy Tools

Artificial intelligence and machine learning

Wearables and personal monitoring

Digital fabrication and 3D printing

Geotagging, GPS and CIS

Big Data

109

Sensors and internet of things

112

Online learning and MOOCs

125

Online marketplaces and noticeboards

159

Open source technology

162

Open data

212

Peer-to-peer networks

215

Mobile and web apps

286

Crowdsourcing, crowdmapping,

298

Social media and social networks

435

18 Nesta digital social innovation project database. (November 2017)

Projects on the digitalsocial.eu website by social area19 477 Education and skills 422 Participation and Democracy 325 Culture and arts 300 Work and employment 290 Health and Wellbeing 229 Neighbourhood Regeneration

Nesta says, this is a real weakness. ‘Building better networks is fundamental to the growth of digital social innovation. Acting alone, organisations and projects will not be able to deliver impact at a scale which matches the social challenges we face today.’21 Local and national governments as well as the EU should be responsible for helping to build and support such networks. However, there does seem to be growing interest in how technology interacts and supports social innovation. The EU’s latest 2017 Social Innovation Competition was focused on making technological change and digital transformation more inclusive. There were 800 entries from 40 countries, with three projects wining prizes of € 50,000 each:

197 Finance and economy

• Buildx from the UK, an open source platform reinventing home building

161 Science

• Feelif from Slovenia, a multimedia tool for blind and visually impaired people; and

149 Energy and Environment

• Saga from The Netherlands, a peer-to-peer learning platform

49 Others

In the UK, a strong Tech for Good ecosystem is starting to develop, which supports ventures at different stages of their growth. At incubation stage is Bethnal Green Ventures, created with funding from Nesta, Nominet Trust, Blackstone Charitable Foundation and the UK Cabinet Office. It takes cohorts twice a year of ten early-stage ventures using technology for social good. These ventures receive £20,000 in return for 6% equity. Once there is a prototype, the Nominet Trust steps in, to support global social tech projects with early-stage grant funding and to help them in the stage before Series A funding. Nominet has spent over £44m since 2008 in supporting global social tech projects. The intellectual and research framework is provided by Nesta, the UK’s innovation foundation. Meanwhile, the Tech for Good meetup group in London has over 1,000 members. There are also more specific sectors where the UK is trying to take a leadership role, for example in edtech, where it provides 34% (£178m) of education technology venture capital and angel funding in Europe. 20 There are also some new emerging partnerships and collaborations between the private and public sector in Europe to foment social tech. For example, the Irish Government and Google’s co-founding of the € 1 million THINKTECH fund which is looking to find and back tech-based solutions to Ireland’s critical social issues. Meanwhile, USAID, UK aid, Omidyar Network and Sida’s recently co-founded the Making All Voices Count global initiative to support innovation, scaling-up and research and help harness new technologies to enable citizen engagement and government responsiveness. Yet, in general, the Tech for Good ecosystem in Europe is fragmented. There is limited knowledge-sharing and network-building between different organisations. As

19 Growing a Digital Social Innovation Ecosystem for Europe, DSI Final Report, pg. 26 (2015)

21 Growing a Digital Social Innovation Ecosystem for Europe, DSI Final Report, pg. 32 (2015)

20 http://edtechnology.co.uk/Article/the-uk-ranks-1-in-edtech-venture-capital-funding-in-europe

5: Exploring social tech businesses in Spain After covering the global and the European, we now move to the micro i.e. the local situation in Spain. We interviewed founders or leaders in several social tech businesses based in Barcelona, probing around their key challenges and learnings, so that we could begin to diagnose the state of social tech in Spain as well as to help provide direction for Ship2B in the future. We describe these businesses briefly below.

Description of social tech businesses interviewed MOBILITY SocialCar using peer-to-peer networks and internet SocialCar is a well-known consumer-facing collaborative car-sharing internet platform, set up in 2011 by Mar Alarcón and Francesc Queralt. Their original vision for SocialCar was for a more modern type of car-sharing than was currently being offered by, for example, Avancar. Mar Alarcón, CEO of SocialCar is proud that they have ‘innovated in a super traditional sector’, for example on the issue of car insurance. Moreover, they were relatively early movers and ‘had to create a market. You can’t force the rythmn of a new market. The hard bit is to be able to survive this market rhythm.’ SocialCar currently has 150,000 members across Spain. It is a key player in the emerging collaborative economy, a sector set for exponential growth. In the UK, Nesta research documented how 25% of UK adults used Internet technologies to share assets and resources in 2013-4.

Mass Factory using geotagging / GPS technology and mobiles Mass Factory is a spin-off of the Universitat Autònoma de Barcelona (UAB), which has designed the App&Town Compagnon for people with physical, cognitive and sensory disabilities, older adults and children, that allows them to travel by regular public transport through a precise guidance provided by a mobile app and a continuous monitoring of the user from a control centre. The system is currently running in Barcelona, Laval and Longueil in Canada, is in its implementation phase in London and will be rolled-out in Columbus in the USA. The founder of Mass Factory is Dr. Roig, Professor of Computer Architecture and Technology at UAB.

EDUCATION / TRAINING Newton Learning using digital learning The Edtech market globally is growing and the number of projects is mushrooming. In Catalunya, edtech encompasses approximately 500 companies with 7,500 workers turning over around € 250-280m in revenues.22 Experts and early pioneers in this space are Héctor Martín and Ariadna Álvarez who are scientists, and specialists in the area of science education. In 2011 they founded Newton Learning which promotes instructional excellence in education with technology to help teachers deploy new pedagogical methodologies successfully. They have three main digital learning products: Science Bits, Math Bits and Yoled Club (for reading comprehension). In 2016 these materials were used in 357 schools by 56,022 students and generated revenues of € 1,155,000. They have expanded internationally into the US and have small pilot projects running in several countries including China, Colombia, Chile, Argentina, Singapore, Pakistan, South Africa and the UK.

Specialisterne using internet and big data Whilst not using a technological intervention, Specialisterne Spain is a replication of a successful Danish social venture which enables people with an autism diagnosis to secure employment, by training them in technology-related services where they naturally excel (such as e-commerce, analysing big data, working on cybersecurity issues, software testing). More than 1% of the population has autism and 85% are unemployed. The Specialisterne business model derives from selling such services or having clients employ people that Specialisterne trains. Demand from corporates is rising: for example, SAP a key client of Specialisterne, has a global plan to employ 1% of autistic employees by 2020. Currently there are 16 people working in Specialisterne Spain and it has reached sustainability.23

breakthroughs as well as cost savings. Made of Genes is working in the important arena of data protection and privacy. They are now aiming to expand internationally, raise further finance and were one of 10 Catalan businesses showcased at the TechInnovation conference in Singapore in September 2017.24 The Made of Genes idea has partly emerged from science, but also from the changes in the capacities and demands of citizens, data-driven innovations and technological developments which have provided an invitation to reconsider the role of citizens in the healthcare sector, both at individual and collective levels.

INCLUSION Since universal design in technological product development is not yet mainstream, developing bespoke products for people with disabilities is the bread and butter of BJ Adaptaciones set up in 2011 by technical engineer Borja Romero. It manufactures innovative products offering a range of options in the areas of computer / smartphone / tablet access, participation, environmental control and sensory products.

Ranking for Potential Digital Disruption by Industry25 SECTOR

RANKING

Technological products and services

Media and entertainment

Retail

Financial services

Telecommunications

HEALTH

Education

Made of Genes using biotechnology and big data

Tourism and transport

Manufacturing

Health

Utilities

Energy

Pharma

Whilst the education sector is ripe for digital disruption, the health sector comes closely behind. One social tech business which is at the forefront of emerging trends is Made of Genes, which can be described as a one-stop genomics marketplace, where genomic data is transacted between different health sector players. It was set in 2015 up by Miquel Bru (who originally trained as a nurse and later became involved in the technology sector) and Oscar Flores, an engineer with a strong belief that bio-information and genetics is the next medical frontier. Made of Genes is currently the only business worldwide that provides genetic information in its pure form. The idea is for this genetic information to become a treasure-trove for researchers and doctors, where genetics is likely to provide 22 Edutechcluster data

24 Content and quotes are taken from telephone interview with Made of Genes co-founder, Miquel Bru,

23 Content and quotes are taken from face-to-face interview with Francesc Sistach, CEO, April 25th 2017 as

March 6th 2017 as well as publicly available materials

well as publicly available materials

25 Digital Vortex, ‘How Digital Disruption is Redefining Industries’, Global Center for Digital Business Transformation (2015)

What we learnt from the experiences of these social tech businesses ◊ Tech provides new opportunities to create social impact, but exponential impact feels far away Salim Ismail, ‘An exponential organisation (ExO) is one whose impact (or output) is disproportionately large – at least 10x larger – compared to its peers because of the use of new organizational techniques that leverage accelerating technologies. Rather than using armies of people or large physical plants, Exponential Organisations are built upon information technologies that take what was once physical in nature and dematerialize it into the digital, on-demand world.’ 26 Are these social tech businesses able to achieve exponential impact? Miquel Bru describes how Made of Genes does have ‘exponential vision’ in the sense that, ‘if you are going to start something, it is to change the world.’ This exponential vision appears to be shared by many of the social tech businesses mentioned above. And yet, the journey towards exponential impact seems to be fraught with obstacles. Why? For Made of Genes, one of the issues in being such early movers is that there are not many doctors who can interpret genetic information. ‘There are more than 20,000 genetic tests, but only a percentage of doctors actually know which genetic tests to prescribe to patients. In Spain there is no specialisation for doctors in genetics.’ Whilst Newton Learning aims to be in 1,890 schools and serving 760,000 students by 2019, Jordi Majo describes how ‘education is a bit of a strange space in respect to exponentiality. It is hard to be exponential if you are deciding to play within the system. You are dealing with government-owned organisations.’For SocialCar, the market is not at the point yet of providing exponential opportunity, ‘where everyone sees their car as a service. But that moment is coming. This is going to explode when we are at the point of having connected cars.’

◊ The ‘social’ is at the heart of what they do, but they do not have sufficient impact data

emphasis on humanity in terms of treatment of staff is a common theme. Borja from BJ Adaptaciones describes how they did not let go of any of their employees during the financial crisis despite a 50% drop in revenues. For Miquel Bru, the social part is the prioritization and valuing of the individual patient, as well as being driven by ‘making personalised medicine a reality with the huge health benefits and savings that this brings.’ Whilst other organisations involved in genomic data are selling information to pharmaceuticals, the fact that Made of Genes does not ‘is the big point of our business.’ Whilst the ‘social’ element is sometimes a constraint with a constant trade-off required between the business and the social, entrepreneurs believe that it is the social that gives them their purpose as well as their competitive advantage. For Borja from BJ Adaptaciones, ‘it has made us strong. It provides us with will and personal motivation.’ According to Miquel Bru from Made of Genes, ‘we believe that as a business, our best protection from the competition is our responsible and ethical vision. We put social criteria before economic criteria. We are in the reputation game.’ Whilst the social impact may be woven directly into their business models, there doesn’t seem to be a strong evidence base of social impact. This reflects broader problems in fields such as edtech, which suffer a surprising paucity of information about effectiveness. The lack of a specific legal framework or identity for social enterprise in Spain and a weak social / impact investment market means there may be limited incentive to invest in gathering this evidence base. As part of a new and emerging organisational type / movement, these social tech businesses are between a rock and a hard place – on the one hand they are accused of not being social enough, with little generalised market recognition that it is possible to be both social and profitable, and on the other hand they are often considered ‘too social’ when it comes to accessing external finance.

◊ The public sector is an important player, but can currently be a barrier to ‘exponentiality’ Javier Creus, ‘Many social enterprises put themselves in a position of dependency with the government. If you are small, your only advantage is speed.’ 27

Social tech entrepreneurs talked about their socially-driven mission at the heart of what they do. For example, the SocialCar founders were inspired by Grameen Bank (where they worked) and see themselves as a business resolving social problems, with a double impact environmentally and economically for families that rent out their car. Being a social business is about more than serving more vulnerable beneficiary groups but also about operational practices. For Francesc Sistach from Specialisterne Spain, ‘we are very social. We have much, much more patience than normal businesses. To be a social business, you need all of the humanity and all of the professionalization.’ This

There was a general sense of frustration with the pace of public administration which many of these social tech businesses rely on as customers. The key challenge described by Faustino Cuadrado Capital, CEO of Mass Factory, to sell the App&Town system for people with disabilities is ‘how long it takes for public administrations to contract new services.’ These slow-moving purchasing decisions also affect social businesses selling to primary and secondary schools. Jordi Majo from Newton Learning explains that there are only small windows of opportunities to sell tech products, with

26 Ismail, S, ‘Exponential Organisations: Why new organisations are ten times better, faster, and cheaper

27 Face-to-face interview with Javier Creus, April 18th 2017

than yours (and what to do about it)’, pg. 32

schools buying educational solutions for four years at a time. Another barrier is resistance on the part of teachers, ‘the biggest issue when it comes to transforming educational systems is how to redevelop teachers who were trained in a different era.’ Head of the Edtech cluster in Spain, Patricia Remiro notes that ‘in the majority of schools, children are still using books’ and that ‘it is very competitive to sell ideas and solutions into schools. The system is rigid and doesn’t leave space for new possibilities.’ Perhaps these challenging factors explain why there is some disillusionment in general with the potential of edtech. Iris Lapinksi who has been considered one of 10 Tech for Good heroes in the UK, having set up and successfully scaled Apps for Good which equips students to research, design and make digital products and take them to market describes how, ‘there was an edtech hype about 3-4 years ago, but in the US the market now feels very deflated.’28 For the education sector, being a non-profit is an advantage but this is not necessarily the case for social businesses, which do not have a distinct identity or current advantages in terms of procurement by public bodies. Francesc Sistach from Specialisterne notes that, ‘in Spain there is the idea that if it is not an NGO, it cannot be social. There is a lack of understanding in public bodies.’ Other social businesses are struggling with similar culture change issues. For example one of the key issues facing Made of Genes is getting public hospitals to participate, to convince people of the vision which is far away from their current modus operandi. In addition, legislative and regulatory challenges can create uncertainty for social businesses operating at the frontier of relatively new environments. The importance of the public sector as an enabler, customer and partner will be crucial to how and whether these tech social businesses can achieve exponential impact. For example, the public sector is an enabler by building digital infrastructure, creating appropriate regulatory frameworks, opening datasets, setting standards and in general supporting social tech innovation through financing mechanisms. It is also a critical customer – public purchase of goods and services accounts for 14% of GDP across the EU, and in some cases holds a monopoly around purchasing for social tech businesses (health, education etc.)29

◊ Aiming for financial and social returns makes it hard to raise finance Whilst all start-ups struggle to obtain financing, social tech businesses feel they face specific challenges. Firstly, they describe how there is very little social investment and few funders who really understand social businesses, particularly social tech businesses with a long-term, exponential vision. According to Miquel Bru from Made of Genes, ‘In Spain, the risk capital market is very scarce. Either you have some very tangible and concrete outcomes, some quick wins to show people. Our vision is a more long-term one. If you are a more third way project (i.e. seeking profit, but with a social impact), you are out in the market competing with 100% profit companies.’ Social businesses who had 28 Telephone interview with Iris Lapinski, April 28th 2017

been to the USA, described investors with a much stronger level of understanding of the concept of social business, as well a greater interest in investing in start-ups. According to Jordi Majo from Newton Learning, ‘Venture capital in the USA is much faster and more competitive from an investor perspective. The problem in Spain is that there are very few companies operating in venture capital and they all know each other. It is a bit of an oligopoly.’ For Catalina Parra, who set up a technology accelerator in Spain and invested in two rounds of twelve social enterprises each, ‘it is better not to present your business to investors as social. They are more traditional investors. There is a real lack of impact investment in Spain.’ 30 The funding gap appears to be particularly acute at the Series A stage. Whilst there are start-up incubators and support programme (for example Mass Factory participated in the Momentum Project supporting social enterprises and Made of Genes has benefited from the Telefonica incubator), expansion and consolidation financing seems very hard to find. Some social tech businesses do seem, to have had the grace of finding an appropriate social investment funding partner. Specialisterne Spain has relied on one key social investor who is a member of the board and has funded their start-up and running costs until it reached sustainability. He did not require any financial returns. According to Francesc Sistach, ‘he wanted a certain style of direction as well as a social enterprise. He has been very involved, participating actively in business development.’ Meanwhile, in 2015 Science Bits (part of Newton Learning) was among 15 companies selected by the New Schools Venture Fund in California which supports edtech projects. They were given $150,000 with no commitment aside from that they had to spend the money in the USA. New Schools Venture Fund also helped them with a usability and feasibility study and connected them with a network of US investors. Later they obtained impact investment funds from Meridia Capital, with Jordi Majo describing how ‘we like these investors because they are more patient and at the end of the day the discussion about dividends is different: we want to give to the foundation.’

◊ Partnering with other players (corporates, NGOs etc.) can be the key to survival and scale Mass Factory describes how in scaling and developing App&Town their partnerships with two other NGOs, Ampans and Sant Pere Claver, have been crucial. Ampans (an NGO focused on people with intellectual and mental health disabilities) is a shareholder of Mass Factory and collaborates closely. Sant Pere Claver a group providing a wide portfolio of services, focusing on those with mental health problems, intellectual disabilities and homeless people has transferred their know-how towards Mass Factory and helps to promote App&Town. In another case of collaboration, this time with the corporate sector, SocialCar has formed a partnership with the RACC (the automobile association with 820,000 members in Spain). The RACC has taken an initial 6% of equity with a one-year

30 Telephone interview with Catalina Parra, 25th April 2017

29 Growing a Digital Social Innovation Ecosystem for Europe, DSI Final Report, pg. 53 (2015)

commercial collaboration in which SocialCar will give discounts to RACC members. Whilst some may see this as a sell-out of their vision to a more traditional player, SocialCar argues that, ‘the RACC brings a consolidated trajectory and reputation and excellence in numerous services complementary to our activity such as vehicle inspection, roadside assistance or customer service.’ Despite a growing tendency towards partnerships and collaborations, this needs to be further encouraged by players such as Ship2B. Nesta believes that in general digital social innovation practitioners, ‘have been relatively slow to build longterm partnerships with other organisations who can support the growth of initiatives, such as established charities, government and the private sector. This can be because practitioners do not understand the importance and potential of partnerships, because they have difficulty meeting the right people; or, in some cases, because they are suspicious of working with bodies who may not share their values.’ 31 The concept of partnerships and alliances are likely to be increasingly important. Most experts believe that the key to large-scale social change will come from better cross-sector coordination rather than from the isolated intervention of individual organisations. Charities, governments, businesses, and the public, they argue, must be brought together around a common agenda to create collective impact.

network model, the early years can be tough to survive because these type of social innovations tend to ‘underperform’ against linear expectations during these years. As noted by Shift Design’s Nick Stanhope, ‘investment in social technology delivers a fraction of its potential impact during its development stages (…) Pretty much all of the value accumulates as they scale and grow, which may be many years into the business plan and development roadmap.’33 In addition, social / impact investors may well prefer non-digital solutions which are more tangible. While the impact investment market is now worth almost £114 billion globally, there is no data on how much is invested in technological approaches to delivering social impact, although the fact that a mere 2% is invested in the ICT sector indicates it is very low.34

◊ A social tech business has some distinct challenges A question we have been exploring during discussions with these social tech businesses is whether they represent a special category of social business (with implications about the type of support they need etc.)? We would argue that they are, partly because they face some distinct challenges. One of these is how difficult it is to communicate their social impact in a tangible way. Mar Alarcón from SocialCar states that, ‘when you are innovating using technology, you are less visible. For example, you are not digging wells in India’. Another challenge is how quickly technology evolves and the need (and cost) to stay up-to-date with these changes. Moreover, it is extremely costly to hire programmers and techy employees. By some estimates, the EU28 could face a gap of 500,000 skilled ICT workers by 2020.32 Corroborating what we heard from social tech entrepreneurs in Spain, Nesta describes accessing digital skills as prohibitively expensive for digital social innovation initiatives across Europe. On a hopeful front, some international projects and organisations are supporting these initiatives to widely access digital skills and to develop their own digital skills. For example, DataKind is an international organisation with chapters in five countries including the UK and Ireland. DataKind links up data scientists, working on a voluntary basis, to build algorithms or predictive models with social purpose organisations to increase social impact. Another specific challenge is related to funding a tech start-up: if there is an exponential

31 Growing a Digital Social Innovation Ecosystem for Europe, DSI Final Report, pg. 47 (2015)

33 Growing a Digital Social Innovation Ecosystem for Europe, DSI Final Report, pg. 42 (2015)

32 Ibid, pg. 45

34 Ibid,

6 What makes a social tech business a success? It is hard to find the magic alliance between the tech and the social. As in traditional entrepreneurship, many social tech businesses will fail. It is not clear whether the failure rate is higher or lower than normal social businesses. Bethnal Green Social Ventures in the UK expects a failure rate of at least 50% of the start-ups that it supports. Of the social tech projects that Nominet Trust has supported, 73% of ventures remain active two years afterwards with 50% actively growing. One of the key questions for the sector is whether these social tech businesses can create social good whilst at the same time as being sustainable or profitable. Ship2B searches as for the holy triangle of: team, technology and impact.

Science and technology

Enterpreneurship

Social Impact

Team Finding the right team with the tech, the social and the business skills required is key. For Catalina Parra, ‘the training of the team and the completeness of the team has a big influence on outcomes.’ She describes how there are specific issues with supporting ICT-type of social entrepreneurship (which is lighter, and needs less capital) versus supporting social entrepreneurs developing new technologies, where entrepreneurs will often come from a university or technical background. The latter group ‘knows a lot about technology. But they need to have some marketing expertise on the team. It is much harder to make a success of it.’ When investing, the Nominet Trust look for, the strength of the team and tech expertise within it. For other impact investor advisors, such as Wolfgang Hafenmayer, co-founder of Challenger 88, when investing in Tech for Good, the team comes before the technology. He believes in taking a long-term bet on the team and allowing the technology to evolve. Other investors provocatively argue that to succeed in a social tech venture it is better to bet on successful tech entrepreneurs and to try to persuade them to adopt a more social lens to their work.

Technology The key is for the technology to be user-led rather than tech-led. The entrepreneurs behind Newton Learning, for example, saw that the key to success was teacher involvement and training. They co-created their digital learning products with teachers. The entrepreneurs learnt pretty quickly in their first venture before Newton Learning that the product needs to be focused on making the teacher’s job easier or it would not succeed even if it was a fantastic product. In another case of responding to users, SocialCar listened to concerns about car insurance. SocialCar’s ability to innovate on this topic proved one of the keys to their subsequent success. Furthermore, some social tech businesses, such as Specialisterne or Mass Factory, were created from the personal experiences and histories of the founders, who understood in depth the needs of users because either themselves or someone in their family suffered. However, social tech can often fall into the classic digital product development traps i.e. creating technology without properly testing them with users. CEO of Apps for Good, Iris Lapinksi, describes how ‘she made a lot of mistakes, particularly with allowing the techs to design the product before doing market testing.’ Iris was lucky that Nominet Trust funded her again, even though she had spent their first tranche of money on a prototype which was a ‘total disaster.’ Iris now sees creating a tech product like building a house: you need an architect and a clear design process. Design-thinking and user-led best practices seem to be getting through to the latest generation of social tech entrepreneurs. For Vicki Hearn from the Nominet Trust, the social tech ventures they support, ‘need to have evidence of a prototype and to have tested it with a user population and show user demand.’

Impact As with any social business, there needs to be a very clear theory of change to support the technological intervention proposed. Technology must be the tool to achieve the end impact desired. A key conclusion is that the tech and the social worlds need to come closer together and collaborate more. The Tech for Good ecosystem needs to include players from both worlds, where deep experience of social issues must be married with an innovative, technological understanding and mindset. This marriage of the tech and the social will be the key to unlocking the potential of social tech in the future.

7 Conclusion and role of Ship2B Whilst various tech companies have radically altered the rules of the game in the private sector, the social sector has yet to undergo such enormous transformation. Social interventions using technology are scalable in a cost-effective way that analogue ones cannot compete with. And yet, technologyâ&#x20AC;&#x2122;s promise has remained somewhat elusive in addressing social challenges. This is for a myriad of factors: social sector organisations are tweaking their models using technology, rather than embracing its disruptive potential; there has been systematic under-investment in social tech innovation; there is a weak and fragmented Tech for Good movement; and some tech projects have underestimated that social problems are messy and often require organic, human solutions and touches. Although the jury is still out on whether tech can be, on balance, a positive force for humanity, it is clear that there is a growing trend to bring the tech and the social together. Within the broad umbrella of Tech for Good, social tech businesses across Europe are on the rise and there is enormous power in this movement. If we look at Spain, we can see some very high potential social tech businesses working with both older and newer technologies and achieving significant impact. Yet, whilst the good news is that there is a flowering of projects, interviews with Spanish social tech entrepreneurs illustrate that the ecosystem at a European level and in Spain is not mature enough to adequately nurture these organisations so that they can scale their impact and meet the very significant challenges they face. For Spanish social businesses, the issue of a lack of specific identity for social enterprise (although potentially the B-corp movement provides an alternative solution) coupled with a very young social / impact investment sector creates significant limitations. Ship2B is playing a key, catalytic role in the social tech innovation ecosystem in Spain through accelerating social tech businesses within its various labs and investing in selected social businesses. Through experience of accelerating 89 start-ups, a network of over 400 investors and a fund of â&#x201A;Ź 1.5 million, it is also leading on the idea of bringing in and educating players from other sectors, such as key corporates or the public sector, to potentially partner with these young social tech start-ups. Its plans for 2018 to further build the ecosystem and to co-create and collaborate with other players seems very appropiate, considering the findings of this study which emphasizes the need for a more collective impact approach. Many of the tech social entrepreneurs interviewed described how far Barcelona is an excellent place to be based, with high levels of dynamism and innovation. Indeed, Barcelona is arguably in an excellent position to be at the forefront of social tech innovation, since it has very high ICT penetration, is pioneering a digital innovation strategy through its town hall and is home to the Mobile World Congress and significant tech clusters. This article hopes to serve as a call to action of a) how important the social tech innovation movement is (particularly considering how slowly the traditional social sector is in responding to the digital revolution) and b) how much needs to be done to ensure the right environment for these exciting projects to flourish. Three actions are essential: increasing knowledge about social tech innovation; increasing funding for social tech (which will be the key lever for accelerating the movement) and increasing collaboration between projects themselves as well as different players in the Tech for Good ecosystem. Ship2B can lead the charge on this, but it needs other players to join it. 41

Acknowledgements First and foremost we are extremely grateful for all of the entrepreneurs and experts who gave their time: Mar Alarcรณn, Miquel Bru, Faustino Cuadrado Capital, Javier Creus, Iris Lapinski, Jordi Majo, Catalina Parra, Manel Pretel, Patricia Remiro, Borja Romero, Francesc Sistach. We would also like to thank our sponsors and collaborators in the B-Inspired programme who are on a shared journey of discovery and exploration with us.

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