By Lisa Curtis
You have a great business idea. All your friends say they would buy it. So now all you need is a little bit of capital to turn that idea to your first prototype. Raising money shouldn’t be that hard; it’s a great idea, right?
Four years ago, I thought I had a great idea that would fund itself. Coming out of the nonprofit world, I mistakenly believed that financing a for-profit business would be a lot easier than the donation-wringing of the nonprofit sector. After all, isn’t that the whole point of making a profit?
While fundraising for Kuli Kuli, I quickly found that while for-profit social enterprises should ultimately be self-sustaining, they rarely begin that way. Instead, different types of fundraising are needed at different stages as the business grows. Here’s what worked for me:
The Wild Gift Foundation provides a $10,000 prize to young, environmentally-oriented entrepreneurs, plus an unbeatable three-week wilderness trek. Ashoka’s Changemaker platform offers a range of opportunities from cash prizes to boot camps. And there are even more opportunities for students, ranging from the Global Social Venture Competition for MBA students to the $1 million Hult Prize.
Chances are, you won’t win most of these competitions (we certainly didn’t), but the process and the feedback you receive will be valuable in the long-run for developing your venture and increasing your prospects of getting funded.
Joining an accelerator program is a great way to quickly build your network while learning a thing or two along the way. Similar to business plan competitions, accelerator programs vary in whether they supply funding directly or simply connect you to a network of investors. The Unreasonable Institute and Echoing Green are perhaps the best-known social enterprise accelerator programs, but there hundreds of other accelerators, many of which are searchable on the Enable Impact database.
For Kuli Kuli, being ready to crowdfund meant researching bar manufacturers, printers and ingredient vendors to figure out exactly how much we’d need to crowdfund for our first manufacturing run. We then created a prototype so that all of our funders could get a sense of exactly what they would receive when they selected that perk for moringa bars. We also spent about three months planning our campaign.
As I’ve written before, you can crowdfund thousands of dollars in a short amount of time if you put in the proper amount of planning upfront. For best practices, check out Kickstarter and Indiegogo and, for some insider tips, see Mike del Ponte’s now classic “Hacking Kickstarter.”
Most likely your first funders will be your friends and family and, hopefully, your newfound supporters from your accelerator program. After those networks are tapped, if you plan your crowdfunding campaign right and offer some cool perks for donating, there is a good chance that the crowd will come through.
Not only does Kiva offer zero-interest loans, but it also provides access to an engaged network of lenders with a high potential to become future customers. The downside, of course, is that $5,000 might not take you that far. For larger methods of financing, look into SBA and community bank loans or less traditional, newer methods like Accion and Lending Club.
Raising money at this stage requires a solid executive summary, a great pitch deck and a lot of hustle. I spent six months attending every pitch event I could find. Here’s a list of the top angel groups and another list breaking them down by what they invest in.
For an impact investor specific network, Investor’s Circle is great. If you’re a woman-founded social enterprise, I highly recommend the Pipeline Fellowship and Golden Seeds. In terms of finding individual angels, a great way to start is by combing AngelList to see who has invested in companies similar to yours.
One great way to get all of these angel investors in one place and to create buzz is to do an accredited-only crowdfunding campaign, for which there is a plethora of platforms available. We used AgFunder and found that, though most of the investors came in through our network, having a campaign created a real sense of urgency.
The amazing thing about starting a social enterprise is that you aren’t doing it for yourself. You’re doing it because the world needs it. So, keep your chin up, work your butt off and never forget your purpose.
Image credit: Flickr/401(k) 2012
Lisa Curtis is the founder of Kuli Kuli, a social enterprise that sells delicious food products made with moringa, a green superfood. Lisa Curtis’s experience ranges from working in the White House to serving as Peace Corps Volunteer in a small Nigerien village and working with women entrepreneurs in India. For more about Lisa, check out www.kulikulifoods.com or follow her on Twitter @LisaCurtis and @KuliKuliFoods.