Per definition, entrepreneurship is an activity with an intrinsic coefficient of risk. In the case of social entrepreneurs, the perception of risk is even greater since, compared to traditional for-profit entrepreneurs, it is much more difficult to estimate the actual feasibility of their idea (due to the many uncertainties characterising their domain of action), let alone the profitability.
Considering the way financial institutions typically react to investments that are too risky and unpredictable, social entrepreneurs can rely on a multitude of socio-economic actors that intervene themselves as investors and financers (i.e., they offer financials aims in exchange of an interest rate). Unlike banks, these kinds of stakeholders are specialised in funding and providing economic supports to social initiatives: they are well aware of the risk they are undertaking and are perfectly comfortable in supporting such kind of business.
In the context of this module, you will be asked to familiarise with the many targets operating within this support network and work by yourself on a catchy and appealing presentation of your idea so as to gain their trust and interest (and finally, their willingness to finance your initiative).
First of all, you need to familiarise with the many categories of stakeholders (i.e., groups of interest) participating within this ecosystem. Your role is to “do your research” for each of the listed category and outline a user-friendly and easy to understand presentation detailing the very essentials of your idea to later show them.
Here below, we provide you with a comprehensive list of stakeholders, people and methods that might be of relevance for you.
- Super Angels. We are talking about your parents and closest relatives, people that expect nothing from you other than seeing you succeed in what you do
- Angels. They are private investors (or networks of private investors) willing to invest their own money in intriguing and innovative ideas with high profitability potentials. Angels are very common in the “traditional” private sector, however, in consideration of the growing momentum of social entrepreneurship, many Angels started diversifying their portfolio and opened their resources to social entrepreneurs (from there the name Impact Investors). The easiest way you can reach for them is by consulting one of the many platforms as crunchbase (https://www.crunchbase.com/) specifically designed to intermediate and facilitate networking dynamics between entrepreneurs and investors.
- Social Venture Capitalists. A venture capitalist is a private equity investor that provides capital to companies exhibiting high growth potentials in exchange for an equity stake. Lately, markets are populating of social venture capitalists that collaborate with for-profit social enterprises (and even non-profit initiatives) in return of financial gains.
Disclaimer: at this stage of your planning – meaning, now that you settled-up the essentials of your business – you just need to know their existence and function as Venture Capitalists are interested in organisations that are the verge to commercialised their idea, in other words organisations that have already established an identity.
- Crowdfunding. As we all know, the Web provides for numerous opportunities for networking and visibility, crowdfunding is the practice of funding a project/business idea by raising small amounts of money from a large number of people. At the moment, crowdfunding is recognised as the most solid, mainstreamed and reliable alternative finance model.
Typically, what happens with crowdfunding is about gathering financial resources from strangers and normal people (i.e., not necessarily professional private investors) in exchange of a “prize”. Of course, the higher the contribution, the most prestigious the prize (e.g., an exclusive prototype/design of the product, etc.)
The first examples of crowdfunding dates way back to the 1700s, and our modern history is full of crowdfunding examples. For instance, in 1885 the city of New York has been able to provide funding to build Statue of Liberty’s granite base thanks to a local newspaper-led campaign that collected small donations from more than 160.000 citizens.
The opportunity to crowdfund one’s idea became a business model on its own with many web-based platforms specialised in bridging supply and demand:
- Kiva, https://www.kiva.org/
- Indie GoGo, https://www.indiegogo.com/
- Kickstarter, https://www.kickstarter.com/
- GoFundMe, https://www.gofundme.com/
- MicroVentures, https://microventures.com/
- EU Structural Funds. The European Commission works in close collaboration with Members States to assure the economic, social and cultural development of its territories. The Regional Policy for EU structural and investments funds includes five main instruments in line with the objectives of Europe 2020:
- European Regional Development Fund(ERDF)
- European Social Fund(ESF)
- Cohesion Fund(CF)
- European Agricultural Fund for Rural Development(EAFRD)
- European Maritime and Fisheries Fund(EMFF)
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Disclaimer: the fact that you are a young aspiring entrepreneur and that your business idea generates positive social outcomes is clearly a clear advantage to access structural funds as nurturing youth’s entrepreneurial mindset and social development are both key strategic priorities of EU’s policies. However, structural funds’ regulation is delegated to regional policy makers. This means that each EU region has a different regulation for structural funds. If you want to know more about funding opportunities for young aspiring social entrepreneurs you should consult and visit in person your regional office for EU investments and opportunities.
Before approaching any of the aforementioned categories, you want to make sure to be as impactful as possible in delivering your idea so as to generate a real “wow” effect. You are free to use the format your better feel most comfortable with, however, for now, we recommend you to stick to a PowerPoint presentation as this format never goes out of style...
- Who are you: background, education, profession, expertise, whatever you feel like to share with us…
If you have any colleague that is sharing with you your idea, please mention their profile as well.
- Outline of the business idea, very brief presentation of the needs/opportunities you are trying to address.
Please, try to support your statements with qualitative and quantitative data providing insights on why your idea matters, what is the scale, and why people should “join-in” i.e., why it is appealing. If you have statistics, percentages and numbers proving your point please mention them and quote the source. Graphs are welcome as well as long as they are consistent and relevant – but most importantly – easy to understand.
- The actual presentation of what you have to offer (service and/or product).
This is when things start to get serious: based on the aforementioned needs/opportunities, what is your solution? During this specific section we expect from you to highlight the following features:
- Innovativeness, i.e., what distinguishes your offer and what really makes you stand out
- Covered Market, i.e., target audience and recipient of your offer – who will benefit from your idea?
- Sustainability, i.e., the “why” and “what” of your social impact
- Stakeholders, i.e., groups of interest and socio-economic actors that will potentially be part of your support network
- Communication, Advertising and Marketing.
In point no.3 you told us who you want to reach, now please provide information on how you are going to do so. Try to outline the essentials of your branding strategy, for instance, many rely on “influencers” and sponsored promotions, if you are planning to do the same, we are interested in knowing what are the reasons behind this specific choice. Please try explain us the “tones” of your communication strategies and how you are adapting them to your audience.
- Cost structure and Revenue Streams.
Prove us that your idea is profitable and financially sustainable, i.e., REVENUE > COSTS. How can you guarantee positive margin profits? Always remember that even tough the bulk of your idea remains the social impact and benefits you are able to generate, your business must prove to be self-sufficient in the long run.
Finally, the rules for drafting a business pitch are not written on stones. The five key points you just saw represent its “simplified” version, feel free to experiment with the guidelines above and come up with your own format delivery
- Do not “read” the material you are relying on for your presentation, try instead to take us on a journey with you. Evocative pictures for instance represent a very powerful resource to catch audience’s interest and trigger their imagination.
- Remember about the K.I.S.S. principle: keep it simple and smart, the attention span of the average person in very low.
- Please, consider to remain below 12/13 slides: you do not have too much time to convince your audience to hop up on your wagon.
Practice makes perfection. Your goal is to be so confident in your delivery that you won’t need any supporting material to prove your points.
- 2.19) I can persuade others by providing evidence for my arguments.
- 2.20) I can communicate imaginative design solutions.