Staff Blog: Notes on the Future of Impact Investment - Generocity Philly

Apr. 2, 2014 11:31 am

Staff Blog: Notes on the Future of Impact Investment

As businesses and nonprofits alike struggle to cope with sustainability in an era of limited funds, social enterprise startups face a particular challenge to not only prove their worth as entrepreneurs, but also their social impact. An “Investor Roundtable” hosted by the Philadelphia FundingPost at Benjamin’s Desk was organized to address this topic. A group of investors, […]

As businesses and nonprofits alike struggle to cope with sustainability in an era of limited funds, social enterprise startups face a particular challenge to not only prove their worth as entrepreneurs, but also their social impact. An “Investor Roundtable” hosted by the Philadelphia FundingPost at Benjamin’s Desk was organized to address this topic.

A group of investors, entrepreneurs and service providers discussed what it means to be a triple bottom line business and how impact investment, civic tech and social entrepreneurship play a role.

Moderated by Yuriy Porytko, Philadelphia manager of the FundingPost, a small panel of experienced investors gave their views on the current state of social impact investment and how to best communicate with investors:

  • Garrett Melby, GoodCompany Ventures
  • Michael Cox, Managing Director, Hub Cities International
  • Bahar Gidwani, CSR HUB and Angel Investor
  • Kevin Brophy, VUID and Meidlinger Partners
  • Paul Wright, Director at Comcast, Greater Philadelphia Area, Information Technology and Services

Here are some of the best tidbits discussed during the roundtable:

Investors want to see profit.
Melby began the conversation by saying that “social entrepreneurs need to understand the expectations of investors; although these investors are interested in seeing social improvements, their main focus is still on making a profit.”

“Nonprofits and NGOs are struggling to solve problems in today’s market, and there is a dramatic need for business-driven solutions,” said Cox. Although he does not see impact investment ever becoming the only way to do business, he notes that the government is getting involved with programs like FastFWD, and this way of thinking is starting to move into the mainstream discussion.

Also, Melby described the landscape as, until recent years, primarily family investment, tied to the preferences and emotions of a particular set of individuals. While this can mean positive investment into the community, this system is not a scalable one, he added.

Take your piece of the pie.
Gidwani said social entrepreneurs should not focus on solving 100 percent of the problem: try to solve 70 percent of the problem and run a good business. He highlighted the fact that social entrepreneurs need to be better than their non-mission-driven competitors. When considering a pitch, investors may view a passion for a cause as a hindrance, since less than 100 percent of the entrepreneur’s goal is not to make profit.

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Perfect the pitch.
“It’s hard to convince them that you’re not only trying to save the world.” Gidwani stressed that many social entrepreneurs fail not because of a bad idea, but because they did not equip themselves to give a good pitch and were not able to communicate properly to potential investors.

Prepare for rejection.
“I’ve been rejected more than any of you,” Gidwani said. But he emphasized learning in the experience. The importance of the long process of recruiting investors is that you take each experience as a learning moment. “Ask them who else you might be able to go to. If they reject you, ask them why and take notes.”

Gidwani noted that even if an investor declines the pitch, keeping in touch is an important piece of the relationship.

Relationships matter most.
Cox likened an entrepreneur/investor relationship to a marriage. “You have to really get along, it’s an important relationship. Not all money is good money. Make sure they’re on your side, and that you are ok with the requirements that they are putting on you.”

“There’s no formula. Find investors that are on your page and believe in your product. Build relationships informally, through emails and phone calls. Never, ever stop working,” Brophy said.

“The main thing that I look for is coachability,” Melby said. “You need to earn my engagement with you. It’s a complex process, be ready for advice and be ready to adapt to those changes.”


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