Four tips for raising capital as a social venture
A few weeks ago I had the pleasure of presenting at a MaRS Best Practices event on the topic of raising capital as a social venture. I work as manager at the MaRS Centre for Impact Investing, supporting our social ventures through initiatives such as the Certified B Corp Hub, SVX and Impact8. My presentation was titled “Social Impact Ventures and Raising Capital: B Corporatrions and the Social Venture Connexion.”
Some define social ventures as companies that intentionally create societal or environmental benefit alongside profit. You may know social ventures as companies that consider the triple bottom line of people, planet and profit. However, today more startups are identifying with the idea of “doing well by doing good.” Here are some important tips to consider if your business is a social venture.
Tip No. 1: Understand why your business is a social venture and what makes it unique.
Social ventures are unique from traditional ventures because they often have more than one value proposition. They may create a solution that fills a market gap, but they also address a societal or environmental solution. It is important to be able to articulate your additional value and mission, as well as to protect them.
Tip No. 2: Get your startup B Corp certified.
Social ventures looking to measure their social or environmental impact and communicate their mission can get their companies certified as B Corporations. Similar to how Fairtrade International and other fair-trade organizations certify exports such as coffee, cocoa, sugar and handicrafts that are being produced with higher social and environmental standards, the non-profit organization B Lab (a MaRS partner) certifies businesses on standards of governance, workers, community and environmental practices. You can easily access the B Impact Assessment for free online
In a market environment of increasing mistrust between consumers and employees of businesses, such a certification is necessary to differentiate your business from those of your competitors. The B Impact Assessment is also a great tool for helping to guide you toward best-in-class sustainable and responsible business practices.
Tip No. 3: Raising capital is hard, so take advantage of the options available to you.
Raising capital is difficult for any entrepreneur, but it can be even more difficult for social entrepreneurs as there are more stakeholders to consider. A particular type of investor may not share or be aligned with your values as you grow and scale. However, there is an emerging group of investors who care about investing for impact. These investors include certain angel investors, foundations, community finance organizations and loan funds, as well as some financial institutions (see the RBC Generator Fund) and credit unions. A recent report on impact investing in Canada, which is discussed here, provides more details on these types of investors.
Tip No. 4: Have your business registered on SVX.
A great way for social ventures to access new channels of funding is to register on SVX. The Social Venture Connexion, which launched in September 2013, is an online platform that connects social ventures with impact investors—think eHarmony for impact investing. It’s a unique place where impact investors can find ventures that need capital and create social or environmental value while generating financial returns.
SVX is for social ventures that have some operational activity and are looking for capital to scale their impact. The listing process requires documentation including a business plan, financial statements, background checks and the amount you are intending to raise. All of this information is confidential and available to registered accredited investors only. You can learn more details on the SVX website.
Watch the rest of my MaRS Best Practices lecture below.
Next MaRS Best Practices event: Tips for Selling Into the Education Ecosystem on May 5, 2014