by Servane Mouazan
We put up this post together as we have had several conversations about the rationale behind funding and how to “recruit” supporters for your social business.
Do you really want a
funder that is looking for safe bets, and polished, problem- free
companies? You might have a decent track record, but you also have
issues to fix and learning to do. Most of the time, when a venture philanthropy organisation says “We will not back you”, it really
means no, and it’s because there’s a legal or strategic reason. But when they - maybe - want to back you, they might ask a few things from you before signing off the deal.
When you select your future financial supporters, think of the following:
1. It’s important you understand the perspective of the donor/investor you have selected. Do the due diligence on the donors. Are they clear about why they are backing certain organisations above others? How easy are they to work with? Look at the skills of the board and also the portfolio of ventures they have backed to date, they constitute the knowledge capital that will come on top of the funding. They give away the values that underpin the organisation. Look in the organisations that the funder backs, ask yourself what was the growing pain that needed to be dealt with.
2. You want a funding organisation that will help you move forward and take you out of the “awkward stage”. So don’t be afraid to show weaknesses and your failures in the past and talk about how you have learned from them. If you don’t, your pitch will sound unrealistic. The backers need to know how they can help you.
3. Put together a flexible due diligence pack- a simple file folder with the basic key information - the material the management works with to manage the business.
The clearer you are about your own business and your data, before you approach funders, the better the relationship will start.
Be ready to have the
pack relevant to the type of funders you are going for. It’s about where
you are at now, make sure to remove any outdated information!
4. Don’t try to fit funding agendas at the cost of your mission and real social impact!
5. Keep practicing – there is a conversion process between the charity world to the venture capitalist’s world.
6. Yes paperwork and data are important, but it’s not all about ticking boxes. Professional investors also have instinctive skills they use when judging your proposal. They are also interested in people who have the right attitude and a clear story to tell.
7. You can’t escape it, you have to know your numbers.
If you can’t talk about that number on the spreadsheet, rest assured it is
the detail the board will ask you about! When you pitch, stay clear and
succinct, make sure the board can feel authenticity, direction, and
8. Choose your professional volunteers carefully, as it can sometimes turn into a nightmare. Some venture philanthropists do spend a lot of time in the matching of volunteers with social businesses. A healthy support organisation will have board members who are very hands on and get involved as executive investment committee members, using their broad skillset. Candidates go through their sniff test, based on years on experience of seeing companies fail or succeed. They are engaged by taking a partner role, like a mentor, and also tap in their network to bring in additional people.
So, yes indeed, impact investors too should be able to deal with growing pains and hurdles…
Check the other posts on this ImpactWomen blog to grow your skills around fundraising, governance, operations, etc. Let us know how you are progressing!
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