Key things to bear in mind when fundraising for your social enterprise

It’s possible to start a social enterprise with nothing in the bank, but most will benefit from an injection of cash – no matter how small.

Finding the right cash for your social enterprise is where the trick lies, and that means finding the investors with whom you can work positively and who understand what it is you’re trying to achieve from both a social and business perspective.

The right investor is out there, and if you lean on our tips below, you’ll raise funds that will enable your enterprise to grow and prosper.

Don’t take every offer placed on the table

If you’ve hit upon an idea for a social enterprise that’s raised a fair amount of interest already, you’ll probably receive several offers for funding.

When you’re just starting out, it can be tempting to accept every bit of cash thrown your way, but it only takes one bad funding decision to rock the boat further down the line.

Equally, ‘too many cooks’ is a saying you’ll need to keep in mind when you’re building a social enterprise and need a capital injection. It’s far better to have one engaged investor than four who might be somewhat disconnected.

Tell the story of your enterprise

The investors who are worth their salt will want to know the story that lies behind your social enterprise before they hand over their money.

Raw sales projections and cash flow forecasts will of course be vital, but the best business plan in the world probably won’t excite an investor if it doesn’t tell an enticing story.

This is your opportunity to explain why you need the money. How is society going to profit from your social enterprise, and why would it be such a good idea to be involved?

Avoid incremental investment

A common mistake made by social entrepreneurs is to raise funds sparsely, with small investments here and there from various sources.

Little injections of cash might help you in short term, but they probably won’t support growth. It’s far better to seek investment in bigger chunks that enable you to take the enterprise to the next level.

Seek investment incrementally, and you’ll spend far too much time doing that rather than running the enterprise.

Create a fear of missing out

The key to piquing an investor’s interest is to make it clear they’re missing out if they decide not to fund your social enterprise.

This comes back to the story, but also your ability to add some urgency to each investment round. As risky as it might sound, try putting a closing date for investment applications; the mere presence of such a date will add an air of excitement about the opportunity and might just bring a few more potential funders out of the woodwork.

And finally: look beyond funding

Don’t just look for numbers when fundraising for your social enterprise. The best investors will offer far more than cash, after all.

Along with that vital injection of capital, you’ll want to be able to call on external expertise. Your investors should become mentors, too, and those who are in it for the long term will make it clear they’re ready to offer advice and guidance whenever needed. It’s in their interest to do so, remember; the more they can help you, the bigger their potential return.

We hope our tips help you find the perfect investor for your social enterprise. Go get ‘em!