- How can I identify my financing needs?
- Which financing instruments would fit my needs?
- How do I approach and select impact investors?
VIVA Idea and the Social Finance Academy co-created this “how to” course based on practical experiences and proven concepts from the field. It is wrapped around a signature framework that explains – step by step- how the process of obtaining financing will typically unfold in real life, from getting investment-ready via signing a financing contract, to establishing good investor relations, avoiding mission drift and approaching the next financing (or responsible exit).
This course is relevant for you if...
...you are an early-stage social entrepreneur who is looking to raise your first round of investments beyond angel investors, family and friends.
Course format and timing...
- The course is a self-paced course.
- Modules are built upon content of the previous module, nevertheless can be consumed independently.
Unit 1: Define your individual starting position
Before entering the course, participants without knowledge of social entrepreneurship and/or impact investing may use this orientation to define their individual starting position and get acquainted with three basic concepts. You will be introduced to the most common organization types, specific to the definition of social enterprises. This will enable you to find out where your organization fits in best. You will also learn about the main types of investors in the market.
Unit 2: Understand if and how impact investment can support your mission
This unit will outline the "18-step framework" for preparing and raising impact investment, which is the basis for the entire course. Find out where you are on the staircase and if and how impact investment can support you in your mission. You will get an overview of the entire process of raising impact investment as well as insights into the financing model (including hybrid financing) to find out if impact investment is an option to finance your scaling.
Unit 3: Find your way within the social capital markets and understand how to manage your impact
This unit will give you an overview of the social capital markets and the types of market actors involved. You will also get an explanation of what a theory of change means. You will gain an important understanding of how the social finance ecosystem is currently structured and where you can find the relevant supporters for your organization. You will also receive insights about how to effectively manage and communicate your impact to stakeholders by using the “I-O-O-I” framework.
- Financing Needs & Options
Unit 4: Identify your needs and options for financing
The unit will provide insights into how to identify the financing needs of your organization. It will highlight the basic options for financing with respect to two common legal forms of social organizations as well as introduce the concept of a “structural hybrid.” You will learn how to identify your organization’s financing needs by using the cost-income profile and projecting your future cash flows. In addition, you will gain an important understanding of the basic interdependencies between legal forms and options for financing. You will also receive insights into hybrid models and how they may help social enterprises to find a tailored financing solution.
Unit 5: Understand the different financing instruments and their main features
The unit will outline the main characteristics and ‘side effects’ of different financing instruments. It will also present the concept of hybrid financing instruments and illustrate how these solutions can be tailored to the specific needs of social enterprises. You will learn how to evaluate various financing instruments from the point of view of their suitability for your organization. You will expand your horizon by being introduced to hybrid financing models and a concrete example: the revenue sharing agreement.
- Investment Readiness
Unit 6: Find out to which extent you are “investment-ready”
The unit will explain the concept and importance of investment readiness. It will provide a methodology of how social enterprises can initially assess their investment readiness and identify gaps as well as find support in closing them. You will understand and evaluate the level of your organization’s investment readiness.
- Investor Approach & Negotiation
Unit 7: Create a plan and material to approach investors
The unit will share key insights into suitable processes and attitudes to identify and approach different types of investors. It will highlight how to effectively research and narrow down the list of suitable investors and prepare compelling material to initiate first contact. You will develop a structured plan for researching, selecting and contacting potential investors for your organization and learn how to tell your story in a convincing and structured way.
Unit 8: Prepare for investor due diligence and negotiations
The unit will describe the nature, components and typical characteristics of an investor’s due diligence process on your organization. It also illustrates how to prepare for negotiations on the financing contract once the due diligence has been concluded successfully. You will learn what a typical due diligence process involves and how you can effectively prepare yourself to answer all investor questions in a timely, structured and efficient manner. You will understand how you can use this process for getting important information about your potential future investors and how to stay on top of the continued process by coming up with a draft term sheet.
Unit 9: Establish effective investor relations and avoid mission drift
The unit will provide guidance about how to successfully set up and manage investor relations and reporting processes so that both social enterprises and impact investors will benefit from the experience. It will also highlight how to tackle the danger of mission drift and make sure that potential future financing rounds will be well prepared. “After the fundraising is before the fundraising”: You will learn best practices to maintain excellent relations with investors and engage them long-term by using effective communication tools and reporting instruments. You will understand how to preserve your mission in challenging times and approach a potential future financing or exit situation in a responsible, mission-aligned way.