Flower child capitalists turn low profit company into gazelle startup, ardentCause
To say Kathleen Norton-Schock and Rosemary Bayer were excited when they started ardentCause would be an understatement. The partners knew the type of technology they wanted to build, how to get started, and leaped right into it. That proved to be the biggest problem for the fledgling software startup.
"We discovered what the customers wanted was different," says Rosemary Bayer, chief inspiration officer for
ardentCause. "We had to change who we thought our customer was and adapt our products to it."
The Troy-based socially entrepreneurial startup developed software applications for non-profits, foundations and the like. The ardentCause platforms help make the users more efficient and fulfill their missions more effectively. One of its early customers was the
United Way for Southeastern Michigan, which played a pivotal role in ardentCause figuring out how to put one foot in front of the other when it came to developing its business model.
That was five years ago. A lot has changed for ardentCause since then. The startup now has four primary software products and is about to come out with a couple more later this year. It hit the 100-customer milestone last year and is now at more than 150 clients, including adding its first customer outside of Michigan.
ArdentCause hired four people (software programers and sales professionals) over the last year, bringing its staff to 14 people. It is now looking to hire a full-time employee and two independent contractors the company expects to turn into staff members sooner rather than later. The company's employee base is set to cross 20 people within the next year to keep up with its growth demands.
"We're basically doubling our revenue every year," Bayer says.
"You called us at the right time," Kathleen Norton-Schock, chief connections officer with ardentCause, adds right after Bayer. "We just had a record month."
That's impressive because ardentCause is a low-profit limited liability company (commonly known as a
L3C), which means it's a socially entrepreneurial venture that operates somewhat like a non-profit but still aims to make money. The lion's share of the money it makes goes right back into the company through new hires or enhanced infrastructure. The company is set to become a $1 million firm within the next year as it aims to take its products and services national.
Getting to this point is harder for a company like ardentCause because seed capital is too often in short supply for L3Cs. ArdentCause started off with its co-founders resources, a grant from the
Michigan Small Business Development Center, a small loan from
Invest Detroit, and a grant from Wayne State University to hire an intern. It all amounted to less than $100,000.
Angel investors and venture capitalists normally avoid L3Cs because the financial returns from them tend to be at best limited. That financial bottleneck has eased somewhat with the emergence of
impact investors (people who invest for financial and social gains) but still is a real challenge for social entrepreneurs.
"We're doing pretty well," Norton-Schock says. "We might have to take a step back and say things have changed. There is a lot more angel money available in Michigan now."
However, just because ardentCause has national aspirations doesn't mean it doesn't remember where it comes from. Both Norton-Schock and Bayer are active in mentoring local entrepreneurs, especially women. They work with
Inforum, which helps develop both women entrepreneurs and investors.
“We thrive on community building and problem solving,” Bayer says.
Welcome to the Year of the Gazelle, an exploration of the fastest-growing startups in southeast Michigan by the Startup team and the New Economy Initiative for Southeast Michigan (NEI). Not only will we identify the local gazelle companies that are perfecting innovative new products, creating jobs, and generating lots of revenue, we will give you a full accounting of each one. The stories behind the entrepreneurs that build these businesses. The investors that back them. The resources they leverage. How they have all worked together to build Metro Detroit's new economy, and how they plan to do it in the future. In return we will only ask you to do one thing: keep up.
- Written by Jon Zemke