Working with a wide range of social start-ups, it has become clear to us that considering investor requirements up front, is a fundamental – but often missed – part of building social business models. While impact and sustainability are obviously core drivers, without designing to be attractive to investors, your idea sadly won’t fly, or at least not as quickly as you wish.
To help you keep the investor perspective in mind, here are some key questions to ask yourself…
1. Have you considered the financial model from the investor perspective?
When you set out developing the financial and operational flows as input to the model, are you considering the investor perspective? For example, at what point does money get owed, on what basis, in what timeframe, and with what certainty. Getting the right balance of risk reward between your customers, partners, investors and the business is key, so let’s give the investor equation some thought up front.
2. What skills, experience and profiles will add credibility to your team?
What skills, experience, track record and profiles should you seek when building your team, to give credibility, increasing investor confidence in both your ability to deliver, and run our business effectively. When on a limited budget, it is easy to go with people on the scene who are readily available. However stepping back to consider the qualities investors will be looking for in your team and advisors, may throw up some interesting considerations and opportunities.
3. What are the key business risks your investors will want addressed?
Rather than wait until investor due diligence, it is best to be proactive in considering your business risks from their perspective early on. Whether it be undertaking some research, adapting the business model/rollout plan, or seeking out an expert opinion, it may avoid roadblocks and delays later on.
So that’s a few thought prompters from us! If you have some experiences of attracting investment you would like to share – the successes and challenges, – do come along and join the debate over a croissant and coffee. Register for our ForGood.breakfast to be held in September on attracting social finance. Let’s work together to learn, share and innovate!