4 Strategies to Use When Raising Money for Your B Corps How to fundraise without compromising the triple bottom line.
Opinions expressed by BIZ Experiences contributors are their own.
When Donnel Baird needed seed capital to continue developing his B Corporation in 2013, he figured impact investors were the ticket. One year and 250 investor meetings later, BlocPower—Baird's online marketplace that connects investors with clean-energy projects in underserved communities—hadn't raised a dime.
In 2014, Baird, who is based in New York, decided to try his luck in Silicon Valley. There, he landed a seed round from VC firms Kapor Capital and Andreessen Horowitz, plus more useful advice than he'd received in the previous 250 meetings. "In Silicon Valley, they said, "Oh, are you two guys with a laptop? Great idea. Let's invest.' I think they're just more accustomed to that," Baird says.
There are more than 1,300 Certified B Corps—as certified by nonprofit organization B Lab—from 41 countries and 121 industries. As more for-profit startups become B Corps, it's worth examining how this designation factors into fundraising. Whether you're an aspiring B Corp or are already certified, here are the strategies you should know.
Look beyond impact investors.
Some experts advise focusing your roadshow on investors who specifically target socially conscious businesses. Andrew Kassoy, co-founder of Wayne, Pa.-based B Lab, disagrees. "Most investors aren't that interested in whether you're a B Corp," he says. "They're interested mostly in: Is this a really talented BIZ Experiences, and is this a good idea?"
Yes, you want to align yourself with investors who support your vision and values, but that doesn't mean a company that's mission-driven "has to go out and find a bunch of investors with Birkenstocks," Kassoy says. "There are plenty of mission-driven businesses that are raising money from mainstream venture capitalists."
Lead with the opportunity.
Your inclination may be to open your pitch with how your business model will help reduce pollution or feed the hungry. Quash that impulse.
"One of the mistakes we made initially was that we led with impact, talking about job creation, green energy and the financial savings for low-income families," Baird says. He quickly discovered that even impact investors place a premium on profitability. "They're not willing to take a discount on their financial returns."
Diving headfirst into the profit potential proved a better route. "Then the impact side of the business becomes cool for the investors. They're like, "Wonderful, I'm not just investing in Uber for dogs,'" he says. "It's frosting on their investment cake."
Place a premium on product.
Commendable morals won't score a financing deal. Without a killer product, you're sunk, says Mark Fischer, founder and CEO of the B Corp credit card processing company Inspire Commerce, which offers special rates for charities.
"Our goal is to always get the product to a state where it would be funded by a VC or private investor because it's awesome," says the Boulder, Colo.-based BIZ Experiences, who has raised $750,000 in seed funds from friends, family and angels. "The "better for the world' conversation is one we have after the value of the product offering stands on its own."
Include metrics.
Some mission-minded investors will ask how you plan to measure your venture's impact, says Steve Schueth, president of First Affirmative Financial Network, a socially responsible investment advisor based in Colorado Springs, Colo. Include these metrics—be it anticipated mouths fed, children clothed or textbooks donated—in your pitch. And update investors on the data at least once a year.
