(Photo courtesy of United By Blue)
Whether you’re a serial entrepreneur stepping into the social sector or an aspiring social entrepreneur ready to launch your first enterprise, you’re going to need to come to the table with impact metrics if you want to secure venture capital. But how do you measure the good your company is doing?
“There’s a lot of evidence that shows for these kinds of traits within a product or company, the impact is being considered as part of the value of that company,” said John Moore, principle at venture capital firm Investors’ Circle Philadelphia. “That manifests itself for me in many different ways. With some of my investments like United By Blue or Wash Cycle Laundry — two consumer-facing companies — I think they personally have an advantage because of their social mission.”
How did United By Blue, a retail company and coffee shop that cleans trash out of waterways on a volunteer basis, raise over $500,000 from ICP? Moore said there’s a strong alignment between the company’s mission and its metrics: For every piece of retail sold in their stores, the company promises to clean one pound of trash from the world’s waterways.
“They have a relatively clean, easy metric for us to look at,” Moore said. “We can see it go up. It’s great.”
But what happens if the company scales? Let’s say UBB sells one million products. How will they depend upon a volunteer workforce to clean up one million pounds of garbage?
“That was one of the questions we had when we made the very first investment,” said Moore, explaining that partnerships like the one UBB currently has with Subaru can be leveraged to ease the mounting pressure of high-paced scalability — more exposure, more volunteers, for instance. “Quite honestly, if they sell a million products in a year and have to find a way to clean up a million pounds of trash around the waterways, that’s a great problem for us to have. I’m really looking forward to trying to solve that problem.”
Moore said social entrepreneurs gearing up to pitch investors should be able to define their impact with clarity and explain how that impact will scale with their business.
There are tools being developed to help early stage companies measure their impact potential. Good Company Ventures‘ upcoming Social Impact Projection is one of those tools for collecting and assessing impact data. Similarly, for more established companies, B Lab‘s B Impact Assessment allows businesses to benchmark their impact transparently and competitively.
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And investors aren’t the only folks digging into your data.
“[Consumers] really care about this,” Moore said. “They’re using this information to inform their purchasing decisions.”