Can you speak the language of Impact Investors?
What kind of language do they speak; Which founder behaviours stand out?
by Servane Mouazan.
I was excited to convene Impact Investors Evan Patronik, Head of Ventures Selection at Unreasonable, Zoe Peden, Investment Manager UK at Ananda VC, and Monique Meulemans, Investment Manager at Pymwymic, at the Impact Investment session of the September MeetFounders event. As the indefatigable organiser Andrew Bott says:
Startup investment and raising finance is often an opaque hidden mystery to most seeking it.
The session shed light on how impact investors assess purpose and profit together; the “language” they speak; the future of impact investment, and what does impact investment really mean.
We broke through the noise and got the following insights:
Network like there is no tomorrow
Impact Finance is a small world. Engage with other entrepreneurs. As we saw on the panel, for instance with Zoe Peden or Evan Patronik, some move on from being entrepreneurs to becoming VCs themselves, or part of accelerators. Start relationships early with staff in investment organisations, attend their events, learn from team members’ webinars. It takes time to get to a point of trust and sustain a good reputation. Being on the investor’s radar for a while also gives time to 3d party connections to speak highly of you (investors do their research…). Don’t limit yourself to a pitch deck.
If you are a founder looking investment, you need need to “listen loudly”, to your advisors, potential investors, finance providers and other key people in your networks. Then step back and map the learning and insights you’ve acquired. For example, listen to them when they are repeating over and over that your claim you will dominate X % of the market in 5 years time is not enough to build a business upon. Promises such as these to investors won’t make you get money, nor run a successful venture.
You need to be nimble and proactive in the face of nonlinear events: stay focused, disciplined with finance, and able to share what your long-term plans are (taking into account potential extraordinary events, like those we had this year and could very much happen again in another shape or form).
Never settle with a linear business plan that expects more of the same. The world is full of surprises. Tomorrow, your niche business might become totally out of scope, irrelevant.
What Kind of Entrepreneur Are You?
There are entrepreneurs by heart, and entrepreneurs by chance. Know yourself. Which one are you? Do you have in your team or are you the person who sees the opportunities quickly, who connects the dots, understands foresight practice, and delivers? You’ll definitely need them.
Done, Rather than “Perfect” is Better.
You can spend your life trying to find the perfect investment, build the perfect product, but you will only know how to make it better if you ship some of it and get essential feedback in time before you are obsolete or out of scope!
Understand what “Impact” means for the investor you are targeting
From “ESG oriented” to “Impactful”, the nature of expected returns on investment, the measurements used to qualify impact (SDGs)… Are they interested in the governance of the company and how the mission is being safeguarded in the long term? Do they help you push the impact YOU have decided to pursue? Be clear about their philosophy.
Integrate Financial results with Social/Green Performance
There is no need to make a big fuss about the fact you are running an ‘impact’ only company, but your impact and financial goals need to be fully integrated and work seamlessly. Impact investors will look at how the whole machine works and how/if you deliver, if you can grow, with others as well, and how you are making the world a better place, quicker and at scale, without making a hole in your (and their) purse.
No means no, but…
Founders shouldn’t be phased out by a “NO” when they pitch or try to get an introduction, it’s just that investors also have remits, boundaries – a lot of them are investing other people’s money! – they have specific timely objectives. So you need to keep connecting and looking at who is the best fit for your purpose… Do your reverse due diligence, and keep on searching.
Everybody in the mainstream
Ultimately impact investors want “Positive Impact businesses” to be the mainstream style of business. And they want their investing style to be the mainstream style too!
Make this world better, faster, with others.
If you liked these “Insights” from impact investors, check our other articles for and by women in the social entrepreneurship ecosystem.