John McDonald and Tom Kilcoyne could easily be considered serial entrepreneurs. The two have founded, grown and sold several businesses and, a number of years ago, they started to think about how they could help others do the same. Their business model is now helping established companies, startups, nonprofits and entire communities.
“We wanted to be force multipliers, if you will, and work with more than one business, so we started studying the typical model for venture studios,” explains McDonald. “We started thinking, ‘Well, what if we were like a service provider to startups and helped them with stuff like fundraising, pitch decks and getting their business model straight?’”
What they came up with was NEXT Studios, a benefits corporation (known as a B Corp) headquartered in Indianapolis.
“It’s a structure where you have to have a public benefit for the existence of your company in your corporate charter. Ours is advancing entrepreneurship in Indiana. As a result, you are compelled to use some of the resources of your company in service of the public. It’s sort of like a cross between a charity and a regular company,” McDonald says.
By operating as a B Corp, NEXT Studios uses what McDonald calls the Robin Hood method.
“We work for established corporations, communities or organizations and help them with innovation issues,” he says. “They pay for that, but then we turn around and run programs for the benefit of primarily underserved founder companies at no charge to them.”
“When we started, it wasn’t at all about underserved founders. But in the first cohort we had a black founder, a woman founder, a LGBTQ founder and a rural founder,” says Kilcoyne. “It was through their eyes that we came to understand the particularly challenging situation that underserved founders and communities can face. We really leaned into that.”
So when existing companies use the services of NEXT Studios, they’re not only getting help for themselves, they’re helping new businesses thrive which, in turn, stimulates the entire economy. According to Kilcoyne, 43% of Gen Z today say their goal is to start their own business. Programs like those offered at NEXT will help ensure their success, spurring growth that is good for everyone.
“There’s a myth that it’s small businesses that drive the American economy. As it turns out, it’s actually new businesses that drive the American economy. Businesses that are less than five years old have been the only creators of net new job growth in the American economy. That’s because existing companies tend to create and destroy jobs at relatively the same rate, but new businesses only create,” explains Kilcoyne.
That’s one reason Kristin Marcuccilli, president of STAR Financial Bank, chose to partner with NEXT Studios. STAR has been a fixture in north central and northeastern Indiana for eight decades. As Marcuccilli leads the company into the future, members of the bank’s executive team are working with NEXT on strategic planning.
“It’s a really unique way to be able to give back. I’ve got a bias because I love supporting entrepreneurship and innovation across the state and it’s where I spend a lot of my time outside of STAR,” says Marcuccilli. “There is such an impact when done correctly and you’re supporting ecosystems that fuel this activity in the right way.”
A new founder/entrepreneur who participates in one of NEXT Studio’s Discovery Workshops will spend 3-4 intense days developing a business plan that will give them the skills and the confidence to take the next steps. They can also learn about a funding model that is particularly focused on supporting new companies. McDonald and Kilcoyne have built one of the first Impact Funds in Indiana.
“Traditional venture capital tends to shy away from first time founders. They’re very risk averse,” McDonald says. “So how do you break that cycle and get money into the hands of first time founders? The money in an Impact Fund is from donations versus regular investors. The significance of that is multifold — the first reason being that it’s a real venture fund, so it creates a sense of discipline, but because the money is donated, you have the freedom to go invest in earlier stage companies. Since it’s donated money, if there’s a return from those investments, the money goes back into the fund to be reinvested over and over again, so it creates a sort of evergreen flywheel. We have half a dozen communities across Indiana that are in various stages of doing something similar for exactly the same reasons.”
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