New Nonprofit Startup Accelerator Folds after Receiving Large Grant

Trojan horse spotted,” by Hsing Wei

January 22, 2018; Bangor Daily News

As we suggested just last week, it is important to explore the potential dark side of large grants, especially those made on the base of a smallish or newish organization. The timing of the following story suggests a revisit of the cautions made in this NPQ article by Clara Miller about the dangers of large grants.

Just eleven days ago, the Bangor Daily News published an article heralding a grant from a large national foundation to a local nonprofit aimed at training entrepreneurs and helping startup companies grow faster. Today, the same nonprofit has informed the public that it is ceasing operations. The grant of $475,000 came from the Marion and Ewing Kauffman Foundation Entrepreneurs’ Policy Network, an initiative that made grants to only six organizations, and the grantee organization was called Venture Hall. It was so young—founded about 18 months ago in July 2016—that its first 990 had not yet made it to GuideStar. The entire grant pool was $1.9 million, so Venture Hall apparently received one of the larger grants awarded from this maiden voyage of the initiative.

The Kauffman grant was to help promote business-friendly policies at the state level. The grant recipients would be expected to tackle these goals:

  • Identify state policies that inhibit entrepreneurship.
  • Educate policymakers about the impact of those policies in erecting barriers to entrepreneurship.
  • Build support for entrepreneurs and entrepreneurship generally.
  • Facilitate informational interactions between policymakers and entrepreneurs.

That is, perhaps, not an exact fit for a young organization focused on educating and building skills. As described in this article, it served entrepreneurs and startups from around the United States, offering training and events “to teach entrepreneurs how to run and grow their companies.” One of the founders, Jess Knox, does however have a degree in public policy.

It is relatively well known, however, that in startups it is critical to concentrate on building the core competencies of the enterprise.

A letter on the sudden closing was posted on the organization’s website:

From day one Venture Hall has been a champion of Maine’s entrepreneurial ecosystem, one of several proof points that Maine’s innovation economy and its unique startup ecosystem is at an exciting inflection point, ready to take flight.

We are proud to have contributed to this infrastructure, designed to lift aspiring entrepreneurs to the next level.

One of our founding members has resigned for personal reasons. Venture Hall was largely driven by the spirit and drive of the two founders, but the CEO, Mike Sobol, and the board made the difficult decision to cease operations.

We are confident that our ecosystem is deep and robust enough that another organization will emerge to continue this important work with a clear vision and a new brand.

Thank you to all the people who supported Venture Hall, our funders, our experienced volunteer advisors, the promising entrepreneurs embarking on their ventures and other supporters working behind the scenes who lent their skills and support.

A spokesperson for the Kauffman Foundation told NPQ this morning that though Venture Hall was scheduled to receive its grant payment this week, Kauffman canceled that planned payment based on this news.

What is behind all of this remains unclear. But when an organization goes under so suddenly, it does leave a lot of room for speculation of what might have occurred.—Ruth McCambridge