Flower child capitalists turn low-profit company into gazelle startup, ardentCause

When Kathleen Norton-Schock and Rosemary Bayerstarted ardentCause, the partners knew exactly the type of technology they wanted to build and leapt right into it. That conviction proved to be the fledgling software startup's greatest challenge.

"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 social enterprise develops software applications for nonprofits, foundations, and the like. The ardentCause platforms help users discover efficiencies and become more effective at fulfilling their missions. One of its early customers was the United Way for Southeastern Michigan, which played a pivotal role in helping ardentCause figure out how to adapt its business model.

That was five years ago, and 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 now has more than 150 clients, recently adding its first customer outside of Michigan.

ArdentCause hired four people (software programmers 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 who the company expects will turn into staff members sooner rather than later. The company's employee base is on pace to grow to 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," adds Kathleen Norton-Schock, chief connections officer with ardentCause. "We just had a record month."

That's impressive because ardentCause is a low-profit limited liability company (commonly known as an L3C), which means it's a socially-minded venture that operates somewhat like a nonprofit 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 are limited. That financial bottleneck has eased somewhat with the emergence of impact investors (people who invest for financial and social gains), but it is 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 has forgotten 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.