When it comes to raising funds so that your business can grow, finding investors who are the right fit and who align with your own values, passions or beliefs can make for a much more fruitful and long-lasting relationship.
And whilst raising capital is not an easy process, the number of investors and VCs who are keen to put their money behind ‘for good’ businesses are on the rise. Reported by The Guardian in 2017, research by Triodos Bank found that “two-thirds of investors would like their money to support profitable companies which make a positive contribution to society and the environment.”
If your vision is to have a positive impact in some way, be that socially or environmentally, then those investors who share and believe in that vision may be more keen to forge a relationship, and be more likely to stick around.
So how do you make sure you’re doing all the right things to attract the investors you want? We had a chat with both an investment analyst and a startup founder with more than a few tricks up their sleeves for finding fundraising success, to impart some valuable advice for your next round.
Know what your values are
It may sound like common sense but if you want to attract investors who align with your own values then you need to be sure of what those values are. The aim should be to answer the questions about why you do what you do and what you and your business stand for.
Be transparent, publish your values on your website, maybe as part of your mission statement (like Monzo did recently), or in a white paper. Not only will the process help you think about them in detail but it’s a great thing to have publicly available for investors (or anybody else) to read too.
Natahan Elstub, Chief Investment Officer at impact investment charity, Nesta explains that “Investors are generally interested to know what your long-term goals are, what you are planning to do with their investment and what you expect the results of the investment activity to be”. According to Nathan, the other benefit of setting out your values is that it then gives you “a way of measuring how well you are doing at meeting your goals in a way that will enable you to take action to ensure that you are delivering as effectively as possible.”
As important as your vision to build a world-class startup that’s going to change the world, is displaying to potential investors that you can deliver all that you say you will. Even the impact investors who want their money to work for good are still going to want reassurance that their investment is in safe hands.
Hannah Barkan, an investment analyst at Big Issue Invest who provide investment for business and social enterprise says: “Being well prepared makes it much easier for investors to feel confident, because they want to feel confident that [businesses] have thought about what investment would mean, what they would be using that for and how they would repay it.”
I very much felt that my faith in humanity and belief that the world can become a better place was also quite inextricably linked to our success in fundraising with OLIO
Know who you want to target and stick with it
Fundraising can be a stressful and uncertain time and if you are aiming to find investors who align with your values then it pays to be selective. Tessa Clarke, co-founder of OLIO who raised $6million in Series A funding in July 2018, explains: “We were looking for a very specific type of investor, we weren’t going to persuade people to believe something other than what they already believed, therefore it was a matter of identifying investors who shared that same approach and philosophy.”
She adds: “I spent the full year before going to market, out and meeting with investors and essentially pre-screening them. That meant that, by the time I was going to market, I knew broadly who I was going to target and who was a good fit for us. And so that made the whole fundraising process far more efficient.”
“For us, the first criteria is that they are at the very least mission aligned and ideally mission obsessed. And if they don’t tick that box then we’re not going to work with them.”
Be realistic though, there’s a fine balance between wanting the ‘perfect investor’ and your business being the right investment for them, as Tessa explains: “The impact investors that were 100% mission aligned did not work out because we were too early on in our monetisation journey. And then the classic VCs who are much more relaxed about monetisation, sadly weren’t mission aligned.”
Investment success for OLIO was incredibly closely linked with their finely tuned and value-led mission and for investors, investments in startups with positive impact missions are no longer seen as unprofitable. Today, with millennials twice as likely as the overall investor population to invest in companies with social or environmental goals, it’s more important than ever to ensure your values are an essential part of your investment strategy.
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