Changing the world isn’t an easy task. It is a recipe where a lot of ingredients have to go in so that the end result is sweet. Social entrepreneurs and social impact startups embark on their journey to transform the world for the better, and since their mission usually has more than one bottom line, they are open to any kind of help that can get them going. Having a vision, forming an organization, collaborating with people, advertising the idea to the masses are all part of a social enterprise. But none of these schemes can work if you don’t have the requisite capital and funding. This is one of the primary reasons behind the failure of hundreds of startups.
Funding can come your way in many forms such as support from donor entities, from grants or incubator services. But the presence of an investor or group of investors on board with your social enterprise is perhaps the best way to go if you’re in it for the long haul. The tricky part here is that obtaining the attention and support of an investor is tough and quite competitive if you don’t know the right way to get your idea across the table. Investors are attracted to social entrepreneurs who are zealous about their idea and demonstrate the right business skills. The most important thing is to gain the investors’ attention in the first two minutes of your pitch. There are certain do’s and don’ts of pitching and these few tips will hopefully be of great help for individuals looking to sell their grand ideas:
1 . Highlight your cause. Prepare yourself along with your idea.
Investors first invest their valuable time in an entrepreneur, and then in their idea. So, don’t Hold back from highlighting essential things about yourself such as who you are, things you have done so far, and the reason you are standing in front of them. Social investors are interested to know what motivated you to get on this track.
Your vision, no matter how big or small, you need to be able to convince that your idea is unique and you are totally committed to it. Instead of putting your purpose of being there for the last, state it up front, so that whatever follows will fit in better and sound more sensible. Investors will assess you within the first few seconds and your ability to come off as a clearheaded professional with a resilient plan will get you further.
2 . Know your audience and keep the right facts at your fingertips.
It is essential that you do the research before meeting the investor panel. This is because entrepreneurs and investors should get along. You have to know the profile of the investor you will be meeting with: will he/she be perfect for your startup? What kind of ventures does he/she usually invest in? Has he/she been successful in the previous endeavors? Once you are sure of all these factors, you have to capture the essentials effectively. Make it a point to explain your idea, the growth strategy and the return on investment within five minutes. You should also be prepared to answer any question that is thrown at your way and with confidence.
3 . Be adept in the art of storytelling.
Unlike business investors, social investors are moved by stories of change. Sam White, the Founder of Promethean Power opines: “For social impact, a story is really important”. So, go on and let them know about how you got started, the hurdles you overcame, the achievements you made so far, and most importantly the impact you created. While narrating, make sure you are specific. White further says that the goal is to articulate to the funders, a social issue, often from the perspective of the common man, and to turn that issue to the focus of social business. Compelling stories always go a long way in winning the hearts of people. Bill Reichert, a venture capitalist and founder of Garage Technology Ventures, says about venture capitalists: “They invest with their hearts.”
4 . Use the right tone to connect with your audience. Keep it simple.
Speak with conviction, be creative, making sure that you are using the right tone to convey your message to your audience. Keep your presentation concise and perky. Make eye contact and use proper hand gestures. These show your confidence and smoothness as a speaker. Speak in a way so that your audience can relate to what you are saying. Rather than using catch phrases and cliches, use everyday words.
5 . Demonstrate the right business plan using the right numbers and scale.
It is not an unknown fact that investors are primarily interested in three things: revenue, scale, and your exit strategy. First, you gotta be specific about what you intend to sell and put up a clear marketing strategy. Kola Masha, founder of Babban Gona maintains that: “You have to be able to ensure that your business model has a compelling story around scale and how you’ll get to scale very quickly”. While a five-year plan seems too vague, a three-year plan can stand out to be more realistic and promising. Investors tend to lose interest if the project stretches on, so having a well-planned exit strategy is essential: will you be selling your shares to another company? Do you intend to go public with the company or do you intend to sell it to venture capitalists? Whatever your intentions are, lay it out. While doing so, be proactive and use the two dimensions of social business, ie., social and business.
6. How do you plan to manage the financials of your venture?
Your investors will definitely be interested to know how you intend to deploy the raised capital to meet the goals that you started in the first place, and also because this is critical for raising funds in the future. Show your investors what you’re expecting on the revenue side over your planned period, but keep in mind to backup your numbers by sharing the necessary assumptions with them. While this is true that your projections and assumptions are premature in assessing the business fully, they’ll appreciate your effort and the fact that you understand financial barometers and how to lead a business.
7 . State how you intend to grab the market despite the presence of your competitors.
As a social entrepreneur, you need to be realistic about what your impact base is going to be and also understand the needs of your customers. Hence, you need to define the specific group that you want to serve, the group who’ll contribute to your income. Once an idea is out in the market, it doesn’t stay fresh for long. Competition exists everywhere and in every sector. Your competition can come in any form – existing companies or new startups that are being hatched somewhere. So the safest bet for you would be to assume that your idea is going to be iterated, and keeping that in mind you need to tell your investors your strategy to survive despite the odds and successfully grab the market shares in the highly competitive market.
8 . Always keep your investors’ best interests in mind, but stay true to yourself too.
When someone decides to invest in a startup, it is essentially taking a leap of faith. As an entrepreneur, your duty towards your investor would be to protect his/her shares. Both, you and your investor need to be in the same boat in order to grow mutually. Accept funding only from such individuals who you think can add value to your social venture. At the same time always be true to your principles. Samir Ibrahim, the Founder of SunCulture states: “If you’re trying to raise good money, you stay true to your values and you stay true to your business model and you move forward”.
These tips will definitely make help aspiring changemakers, who are looking for investors, better at the pitching game and help them gain investments for their ventures. While you obediently follow these few steps, it is also important that you practice your pitch with friends and family and get their feedback to improve and strengthen your weak points.