Raising Capital in Turbulent Times for Sustainable Ventures

An afternoon session at the LOHAS Conference gave aspiring entrepreneurs a chance to ask panelists in the financial world about raising capital, especially during this economic environment.  The panel included Joseph Durnford, CEO of JD Ford Associates, Joseph Anzalone, Vice President of New Resource Bank, Rich Frankenheimer of Touchpoint Trust Group, and Deb Parsons, Co-Director of Investor’s Circle.

It was a very interesting discussion, as the speakers represented the perspectives of investors at various stages of business.  Parsons noted that many investors along all scales of this spectrum are sliding their investments away from earlier stage companies, as common logic says that risk decreases with the maturity of the business.  Durnford, coming from the investment banking world, where companies they invest in are typically farther along in terms of their growth, answered the first question by outlining the 10 P’s (or ten pillars, as he put it) of a company they might be eager to invest in, even in poor economic times.

These were:  people, purpose, planning, promotion, packaging, product, partnerships, process, protection, and profitability.

A few of the biggies:
People–Getting the right people on board, even if you’re seed stage, is tantamount.  If you’re a one-man show, the key is to know what you know, and know what you don’t know (or are not good at), and outsource your needs.
Promotion–You need to be out there promoting your company so investors know you are serious, and are pushing it.
Product–All of the panelists agreed that without a fantastic product (even if your product is a service) is perhaps the most important element.
Partnerships–This can be a customer relationship, a peer partnership, a distributor, or wholesaler, but showing that you have a partnership in place is sort of a third party endorsement of your company, and reflects well on you.
Profitability–Even if the company is not profitable, which it might not be for a long time, you need to have a plan for eventual profitability, and a clear vision of how that’s going to happen.

These keys are, not surprisingly, key to a successful business.  No matter what stage you’re at, these keys are important.  At a seed stage, you’re likely to be asking friends and family.  If you’re at later stage and you have something that has traction, you can start to talk to the angel investors.  They’re more willing to take risks on early stage companies.  At a later stage, if you have pro-formas, and a lot of financial data to drive from, you’d be likely to go to Venture Capitalists.  But no matter where you are, if you take these ten P’s seriously (and they actually added an extra “P”, preparedness, which should apply no matter who you’re pitching to), your pitch will have a higher chance of success.

Their closing words for success?  “Believe in yourself.”  “Stick to your vision, don’t get distracted by noise and offshoot opportunities.”  “Bring energy and passion with you wherever you go.”

Scott Cooney is the author of Build a Green Small Business:  Profitable Ways to Become an Ecopreneur (McGraw-Hill), and Principle of GreenBusinessOwner.com, a small business membership website focusing on sustainable strategy for small business owners.

Scott Cooney, Principal of GreenBusinessOwner.com and author of Build a Green Small Business: Profitable Ways to Become an Ecopreneur (McGraw-Hill, November 2008), is also a serial ecopreneur who has started and grown several green businesses and consulted several other green startups. He co-founded the ReDirect Guide, a green business directory, in Salt Lake City, UT. He greened his home in Salt Lake City, including xeriscaping, an organic orchard, extra natural fiber insulation, a 1.8kW solar PV array, on-demand hot water, energy star appliances, and natural paints. He is a vegetarian, an avid cyclist, ultimate frisbee player, and surfer, and currently lives in the sunny Mission district of San Francisco. Scott is working on his second book, a look at microeconomics in the green sector.In June 2010, Scott launched GreenBusinessOwner.com, a sustainability consulting firm dedicated to providing solutions to common business problems by leveraging the power of the triple bottom line. Focused exclusively on small business, GBO's mission is to facilitate the creation and success of small, green businesses.

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