There are a variety of funding options and different types of support available for social enterprises.  As part of our Impact Investment Readiness Programme, Paul Grant from The Funding Game is running a session for us titled “17 ways to fund your social enterprise”, where he shares his tips and tricks for raising funding.
One of the 17 funding options is ‘equity investment’, which often involves approaching angel investors. Equity investment isn’t for everyone – some ventures don’t have the right legal and financial structures in place for it, such as companies limited by guarantee. However with the number of impact investors (VC’s looking for blended social, environmental and financial returns on their investment) and social enterprises limited by shares rising, we thought it was time to take a look at the seven things, as put forward by Paul Grant, to think about when approaching angel investors:
1.         Exit, Exit, Exit
When business angels get together, this is what they talk about – exits. What’s your exit strategy? Are you planning to exit in 5 years through a trade sale? Or are you thinking you might be acquired?  By who and why?  Show the angels that you have done your homework and have thought ahead. If you don’t want to exit, then maybe angels aren’t for you.
2.         Do you know who they know?
Having a non-executive director with a lot of industry experience can give you immediate credibility in the angel community.  Even better if that person is already known to them – it gives you social proof. Are the angels going to recognise the name of anyone on your team? 
3.         Proof of concept
Being able to prove there is already a market for your product / service, and show traction, should reduce the risk of investing in your venture. This might also increase the value of your company too.
4.        Your Unique Selling Point
Can you describe your USP in one sentence? This is usually very difficult to master. If you’re having trouble with this go to your customers or users and ask them to describe your product / service, their perspective can prove extremely useful.
5.        Executive summary
This is your one page marketing tool to get you meetings with angels. Make it eye catching, and look to model yours on templates that others have used successfully. 
6.         Valuation
It has to be at least roughly right. Sky-high valuations before any trading or proof of concept will put investors off. As a rule of thumb, pre-trading valuations are usually lower than £500,000.
7.        Pitching
You’re going to have to share your idea verbally, one way or another. You need to be able to do this in a way that is both compelling and professional.  Bring your passion and your confidence, and practice before your pitch – but don’t sound like a robot in any meetings – let the angels talk too!
If you are interested in learning more about finding finance for your social enterprise, apply now for the Impact Investment Readiness programme. 
 
By Richard Brownsdon,
Impact Investment Readiness programme design