Seed Stage Impact Investing: Finding Your Best Investor
When you are starting a business, your most burning questions are usually related to money. Specifically, how can you get more of it. Obvious answers include revenue, savings, loans from friends or family, grants, crowdfunding… and of course, selling equity.
Ask any entrepreneur: the hardest part of a business plan is knowing when – and how – to raise capital. And within that question lies another: how do I attract investors from whom to raise capital in the first place? This is even more important for impact entrepreneurs.
Image credit: Erik Sandybaev
First things first: you need to decide what it is you’re looking for in an investor. They will inevitably become a very big part of your business, and just as you spent time defining which customer would be best-suited to your product, so too should you invest time in figuring out who is your best investor. Instead of asking “where can I get money fast,” ask yourself: who is my ideal investor?
This is an important question. Unlike a customer, who may buy your product just once and leave happy, an investor is buying into your entire company and has no intention of leaving… possibly ever… at all. So consider the person that you want in your life before you accept a cheque. Which investors do you think will add the most value to your business’ long-term plan? Finding an investor that can inform your path and offer advice or prior experience is such a leg up over an investor who writes a cheque and then calls in every few months to ask how their share is shaping up.
Here’s how we lay things out. When you are coming up with your list of investors, focus on these areas to create a more harmonious, long-term relationship.
Investors who have been in your industry,know how it works, who the players are, and the market. These are the folks who can help you avoid rookie mistakes, and open doors to new, big opportunities. This is worth its weight in gold: rank such investors accordingly.
Business Model Experience
Whether you are retail, software as a service, or anything in-between, a business model expert investor can help you learn quickly from where others have gone before, how to optimize the business model quickly and connect you with folks in the know. This can be especially helpful when learning from early customer feedback and making changes to your business model post-launch to adapt to the market.
Keith Ippel, Co-Founder at Spring during our last Capital Raising Bootcamp
Functional Area Experience
Often overlooked, but often an investor can bring experience in a part of the business that you don’t have, are not strong in, or is a gap in the team’s collective experience. In this case, look for investors who may be willing to be more active as an advisor or even in the day-to-day if you want and/or need it.
Network of Contacts
A network that can add value to you and your business is really broken down into three groups. First, if you are raising money they have a network of fellow investors that can help you raise this, and/or future, investment rounds. Second, they have a network of potential customers or partners in your market. Third, they have a network of talent that can be called on to help answer tough questions or to grow the team as you start to scale.
Investors are invaluable for us when they are close to where our customers are, and can help us navigate the local markets. It’s also ideal to have at least one or two investors locally who know our local market, culture, and are available to meet in person when we need them.
BE PART OF THE CONVERSATION
SEED18: A Gathering of the Seed Stage Impact Investing and Entrepreneur Acceleration Ecosystem
We are excited to be a program partner for the first ever SEED – Gathering the Impact Ecosystem, a new event for accelerators, incubators, seed funds, funders, philanthropists, and consultants working within the seed stage impact funding and acceleration ecosystem. Taking place April 19-20 at Impact Hub San Francisco in collaboration with SOCAP, ImpactAlpha and Real Leaders, SEED 18 will convene a wide variety of seed stage ecosystem organizations including:
● Echoing Green
● Food Systems 6
● Better Ventures
● Points of Light/Civic Accelerator
● Miller Center for Social Entrepreneurship
● …and many others
This gathering of the ecosystem players for seed stage impact investing and entrepreneur acceleration will take a deep dive into what’s working and what’s next, locally, regionally, and globally.
SEED18 will be a forum the seed stage impact investing sector needs for open sharing, collaborating, and creating the kinds of partnerships that catalyze growth. This deep practitioner convening will allow for the exchange of winning strategies, and sharing of near and long-term development plans. There will also be a curated showcase of exceptional entrepreneurs sourced from leading accelerators and investors.