How to Raise Investment for Social Enterprises?
Investment and capital are crucial to any organization and more so for social enterprises. For social entities, raising funds is a wee bit more challenging in a world where investors are primarily interested in betting on companies to maximize profitability and return, however, there also exists a large pool of investors and lenders that go beyond this conventional narrative and look at reaping profits while also supporting a cause that adds value to society and environment. How to raise investment for social enterprises?
Undeniably, rightfully projecting yourself as a social entity that has the right mix of impact vision as well the ability to be profitable is a tricky one. Raising funds for social enterprises can still be challenging in today’s socially aware era as investors and stakeholders put on a critical lens to sift through a barrage of companies and single out substance from fluff and attempts of greenwashing. This blog is a quick piece on the process of raising social investment – tips, tricks, thumb rules, et al.
An ideal social enterprise is a balanced amalgamation of the business aspect as well as social accountability and impact creation and should be able to prove its success in both these aspects.
Let’s go in some depth and assess what are the core points investors are concerned about before and while selecting a social enterprise, especially with regards to the business aspect. An investor would like to see if the investee has a strong understanding of:
The business aspect
- Market fit – involves price and a solid understanding of its customers base. How many customers are you selling to?
- Unit costs – robust understanding of cost per unit – how much money is being spent to produce a single unit of a product/roll out service and how can it come down in the future. This involves labor costs, products sold on a weekly, monthly basis plus other operational costs
- Ability to handle funds and financial matters. An understanding of burn rate – how fast you spend the money/resources. A good governance mechanism is in place.
Now, coming to the social aspect, how can an entity make sure that it makes the cut with its prospective investors concerning its social aspect? Take a look at the following:
The social aspect
- Social strategy – an enterprise must be convincing, able to convey not just its social mission but also the strategy and the plan to achieve its impact vision, its journey and initial successes and breakthroughs if any.
- The ability to measure and manage the impact and communicate the same with a range of stakeholders and investors with evidence and data.
Thumb rule: Always be up to date regarding the information and data that you have and intend to present to your investors and stakeholders. Remember, the crux is real-time, synthesized and relevant information.
Speaking of funding, a social enterprise can explore from a sea of options ranging from government support, impact investors, incubators, corporates to one of the emerging and popular ways of gathering financial resources—crowdfunding.
There are many tools available in the online market which can help social entrepreneurs in their impact journey.
Artemis Impact can be an ideal fit as it provides various tools & a strong knowledge base for social enterprises to show the fit & results for the social aspect.
Artemis Impact Platform is a one-stop solution for all concerns tied to impact creation and measurement. The platform offers both a top-down and bottom-up approach for impact measurement and allows more transparency and accountability in CSR and sustainability.
Artemis Academy, on the other hand, is a free knowledge hub for people in the impact industry and facilitates learning through courses, resources, and much more.
Artemis Impact is a network of corporate, donors & non-profits. With our corporate enterprise solution, we aim to empower companies to build human-centered impact stories and create sustainable impact with their CSR programs & core business.