For every business out there, raising capital is a challenge. Social Enterprises have it even harder trying to prove they can maximize their positive impact while demonstrating that they can handle the market and growth.
A social enterprise funder shares 7 tips below to help gain the capital you need:
1. Build a stellar management team. Just as real estate is about location, location, location, raising money is about management team, management team, management team. The first question funders have is “Who is running the business and what do they bring to the party?” Do a ruthless assessment as early as possible. And if you have a gap, say so. Don't force funders to hunt for weaknesses in your organization–it makes you look bad.
2. Ditch the 70-page business plan binder. Funders don't want to plow through that, and they won't. Go with a one-pager that focuses on the top questions on the funder's mind: Are you addressing a real problem? What's unique about your business? Why you? Is this a growth business or a lifestyle business?
3. Have a practical plan as well as an inspiring vision. This applies to impact growth as well as financial growth. What's your story about how you're going to get from where you are now to the next level? Be realistic: if all your graphs zoom up to the right as sharply as possible, a serious funder will think you don't have a prayer.
4. Seek the right kind of funding for your goals. Social entrepreneurs often buy into the culture of venture capital–they position their enterprise as a growth business, look for a miracle angel investor and start giving away equity. They're not thinking about how the investor gets their money back. Consider at the beginning what you ultimately want to do. Are you planning to sell this business? Do you see this as a legacy business that you're building to last?
5. Search out specialist funders. Dedicated social enterprise funders typically specialize in one or a few areas where they have a passionate commitment and deep knowledge. Look for funders that focus on your sweet spot–they'll have a better understanding of the market opportunity, and won't expect your business to compromise its mission in order to grow.
6. Ask for advice–sincerely. Brazenly pitching everyone you meet like a madman is likely to annoy people. Figure out what value you can bring to a discussion, and ask funders for advice. People love to give advice. But as in dating, don't be desperate. If you're only pretending to earnestly want advice because you've heard this tip, people will see through that.
7. Show that you can go the distance. A funder wants to understand not only why your business is needed and why you're the one to build it, but also your level of stick-to-itiveness. You could be brawling with your partner and lots of things are going to be a disaster– the point is to tell the funder a couple of things that demonstrate how resilient and determined you are.
Do you feel any important steps were left out when proving to a funder that they should invest into your company? Can you share them with us and out readers below?