Innovative individuals are spearheading social enterprises, but a good idea won’t travel far without investment.
‘Investment readiness’ is a term that can intimidate even the most ambitious entrepreneurs, and exposing the heart of a fledgling social enterprise to investors can be a hard leap to take. But if you’re smart in the ways that you research, plan and ultimately present your venture, being investment ready could be the key difference between success and failure.
Ready, set, grow
In 2016, the UK was identified as being the third-best place in the world to be a social entrepreneur, based on criteria such as access to investment and the ability to make a living from your enterprise. The number of networks dedicated to providing support to new social enterprises trying to secure a place in the market was also a significant factor in the UK receiving this accolade.
“Wherever you are in the country, there will be someone available to advise you,” says Gareth Hart, co-founder of Iridescent Ideas, a Plymouth-based social enterprise support provider. “Get advice. Don’t sit on your own wondering what you could do. Get out there and talk to people about it. Engage and build partnerships.”
In 2011, Hart was made redundant from his job as a business adviser and became inspired after attending a conference on social enterprises. After just two years, he led the bid that saw Plymouth named as one of the UK’s first social enterprise cities.
“As part of my previous role, I’d worked with a lot of social enterprises and I realised, I want to be what I’m trying to advise.” says Hart. “Fundamentally, the key is having an amazing idea and a ‘do it’ attitude. I love entrepreneurs who go out and try things.”
Understanding social value
There are plenty of other factors that need to be considered before you can start pitching to potential investors. Social enterprises don’t adhere to a standard business format with a single bottom line, but they aren’t charities either. Like any other for-profit business, they must generate revenue, so it’s crucial to put forward a strong business case in an investment pitch.
“I believe good business is business that does good,” says Finbarr Carter, student enterprise officer at the University of East Anglia, where he helps student and graduate entrepreneurs find investors.
“Sometimes when people pitch a social enterprise they only emphasise that it does good without explaining why it’s viable. Social enterprises work when the social value it delivers has a commercial basis.”
Making values valuable
If you have a drive for social change, you may be tempted to speak in broad terms about your enterprise’s vision for a better world. But ambition must be balanced with a sound, step-by-step plan for achieving your goals. If there’s no demand for what you’re offering, or its associated costs are prohibitive, the chances of receiving investment are slim.
“You can’t ration your passion,” says Carter. “But occasionally entrepreneurs concentrate on the values and fail to show how they’re going to materialise them. You have the vision, but what are the steps to make that happen?”
Fortunately, most social enterprises punch above their weight when it comes to innovation. According to the State of Social Enterprise Report 2015, 59% of social ventures provided a fresh product or service compared with 38% of SMEs. An inventive offering lets social enterprises carve a valuable niche in their market, boosting their chances of survival, as well as raising public awareness for their cause.
Learning the ropes
Tara Askham and Natalie Sharpe were working in mainstream colleges when they had their thunderbolt moment. In 2014, they identified a lack of flexible opportunities in the education sector and launched their own social enterprise, Infused Learning, to provide easier access to distance learning.
“If students were late to class, they were given disciplinaries, even if they were taking children to school or working night shifts to support themselves,” explains Askham, who is director of finance and business development at Infused Learning. “We wanted to make education work for students, not the other way round.”