How to get funding or obtain an investment as a social enterprise: 101
- Funding vs. investment
These are two very different types of social enterprise financing — and it is useful to know the difference.
The funders of social businesses mark their main priority as the cause and the mission when choosing a start-up to fund, at the same time ensuring the business model will be able to support and facilitate the idea.
Meanwhile, an investor is usually taking into account the financial return and profitability from a product that offers a social solution firsthand, however also considering their relevancy in regards to the certain social issue. In this case, investors are also willing to accept a lower return on investment opportunities due to the product’s socially or environmentally beneficial nature.
2. Evaluation points
What are the assessment points of an investor or a funder? What should you consider about your social business when seeking funding? Here are a few main things to answer:
- How is it innovative?
- Have I measured the market opportunity?
- Do I have a realistic step-by-step plan on how to make my business yield substantial social or financial returns?
- How does an investment of a certain size help to scale the business?
3. Measuring the success
To ensure that the funding or investment was fruitful, before the financing, the relationship has to be defined by identifying the impact measure points. Answering what value shall be given and how the social impact will be measured shall come useful — consider writing a high-quality white paper.