How to raise your first $100K?

Social entrepreneurs play an instrumental role in solving global development challenges. However, from attracting talent to instituting governance, they face numerous challenges to scale. 

In our work with local entrepreneurs in East Africa, the Beyond Capital team has observed lack of investment readiness as a key scale challenge. The ability to fundraise successfully often determines the survival prospects of an innovative solution. In recognizing our role as an early ecosystem builder, we have endeavored to provide tangible fundraising solutions to entrepreneurs.  

Earlier this year, Beyond Capital, in partnership with other investors and the Aspen Network of Development Entrepreneurs, organized a series of workshops helping entrepreneurs in Nairobi and Kampala learn first-hand what investors expect. Our goal was to give entrepreneurs access to tools that can help level the playing field. In this article, I share advice, ideas, and resources that can give you a head start as you prepare for your first investor pitch. 

Getting that pitch deck ready

If you’re an entrepreneur, you’re often told the first step in fundraising is to get a pitch deck ready. What you’re not often told is the importance of research, brainstorming, iteration, and reflection that should precede this exercise and that can prove useful in building not just a solid pitch deck but also a sound business strategy. Most investors prefer simple-to-read decks that convey key elements of the business model. Venture Capitalists spend an average of 3 minutes, 44 seconds on a deck, so be sure to make your slides count by clearly and concisely including relevant details about your business model. 

Here is a list of questions you can use to brainstorm your business idea with your team/advisors. The list below is intended to get the ball rolling for a thought process that pays off beyond fundraising. 

1. Why are you the right person to be building this solution? - One way to distinguish yourself from the get-go is to communicate the depth of your understanding of the market and why you and your team are uniquely positioned to build the solution you’re proposing. This could be rooted in your founding story or the work/life experiences you’ve had. 
2. What are your customers doing now? - In the absence of your product/service, how are your potential customers addressing their pain points? Know that many times a solution involves inducing behavior change. For your solution to be viable and adaptable, you have to hit the right notes on a few different dimensions. The first is simple but not always intuitive: Are you making it easier to access your solution than the compared alternative? If not, your product/ service might only appeal to a handful of early adopters. Break down the number of steps it takes for a customer to use your solution vs. their go-to alternative. The second dimension is affordability. Is the solution more expensive than the go-to alternative? Finding the balance between the first and the second is tricky. Even if the product makes the life of your potential user easier, most mid-to-low income consumers are price sensitive. Many enterprises have played around with the pay-as-you-go (PAYG) model to solve the problem of upfront affordability. (I also talk about the risk-averse nature of customers in my previous article, here.)
3. Why now? - Often a novel solution can invite skepticism around its feasibility. Why has no one done this before or why is now the right time to build a solution such as this? It is worth including a slide to your pitch deck that lists enabling factors that improve the viability of your solution now vs. years ago. Examples of such a change could be increased ownership of smartphones, lower cost of data accessibility, change in the cost of raw materials, etc.   
4. Investor alignment - What is often missed is finding and communicating alignment with the investors you’re targeting. On the impact paradigm, whether your investor cares about jobs created, carbon emissions reduced, or another social outcome, do your research and don’t forget to share how these impact goals stack against internal priorities of your business and what you have achieved so far. On the business paradigm, think about what your investors will bring to the table in addition to capital and whether their value-add aligns with the stage of your business. Shivani Siroya of Tala explains this concept beautifully when sharing her investor alignment strategy in this Forbes interview (timestamp 1:14 to 1:57).  

Image: Seed-stage investment planning workshop, Kampala, Uganda (April 2019)

It is also important to reflect on the limitations of your model (ask yourself what can go wrong, hint: Murphy’s law) and think about mitigation strategies that will combat the perceived challenges. 

The goal of a pitch deck is to get an investor interested in engaging further with you. Think about what will get them excited and include that in your deck. It could be the traction you have built, the technology behind your solution, the complementary skill sets, and the unique experiences that have prepared your founding team to execute effectively. 

Resources

1. Business Model Canvas, Value Proposition Canvas and Progress Board by Strategyzer - I have found the Business Model Canvas and Value Proposition Canvas by Strategyzer very useful in visualizing a Business Model. These templates are available for free. This is a great tool if you are thinking about pivots or finding a product-market fit. 
2. Watch 11 inspiring examples of social entrepreneurs pitching their Social Ventures put together by Acumen. 
3. Developing your Social Enterprise Pitch Deck by Margot Dushin and Nathalie Laidler-Kylandar. Margot Dushin heads the Social Enterprise Initiative at Harvard Business School. Nathalie is a Managing Director at DRK Foundation, and I’ve had the opportunity to benefit from her class on Management, Leadership and Decision Making at Harvard Kennedy School. 

?About: Mehak is an Investment Associate at Beyond Capital, where she is responsible for sourcing and evaluating investments. Beyond Capital is a seed-stage impact investment fund that invests in for-profit social enterprises serving the low-income, underserved population segment in India and East Africa. I want to credit Lyndsey Vandament from Global Partnerships for coming up with the catchy title “How to raise your first $100K?” to the workshop series, which I have borrowed for this article.