Purpose-driven companies are all the rage. At the time of writing, we’re in the midst of a pandemic, and despite the overwhelming negative impact it’s having at all levels, it’s not necessarily bad news for impact ventures when it comes down to getting funded.
The focus of this blog is usually crowdfunding but, as I wrote in the article called Crowdfunding and other types of finance, you will likely need to rely on other forms of funding. In particular, we’ll look at how to impress potential investors. But let’s start with the basics…
What is a purpose-driven company?
A purpose-driven company stands for and takes action on something bigger than its products or services.
This is not only great for the people and the planet. It also makes absolute business sense: Forbes reports that purpose-driven companies evolve faster than others. Fast-Consumer Moving Goods companies like Unilever have also reported that their purpose-driven brands have grown 69% faster than the rest of their portfolio.
Get your mission and messaging right
Keen investors in the green economy will easily see through an empty marketing message. Your intention to do good has to be core to your company, right from your mission and vision to your early employees, embedded at every stage. If it’s just a ‘marketing campaign’, investors will see through it.
A lot of the investors want you to align and deliver tangible results against the UN Sustainable Development Goals. It’s a great idea to familiarise yourself with them and think about how you formulate your business objectives around them.
You’ll also need a robust methodology to measure your impact. Even if it’s too early for you to report on it, you should have a clear idea on how to do it once you have your Minimum Viable Product in the market.
If you can, get certified
Certification from third parties is a great asset, even during the early stages, as it’s recognised by investors. The golden standard is getting Certified B-Corp status. These are businesses that meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose.
If applicable to your product or service, do consider also other certifications like Fairtrade, Rainforest Alliance, Forest Stewardship Council, a Vegan Certification, Cruelty-Free International, recyclability of your packaging (by bodies like the On-Pack Recycling Label (OPRL)).
How to pitch to business angels and VCs
Here are a few tips:
- Do your research: who’s investing in purpose-driven companies? Who’s investing specifically in your sector, stage and region?
- Prepare your one-pager and business pitch. For the latter, make sure your purpose-driven mission and vision are woven into the whole document both explicitly in a separate slide and in the other slides. It’s also good practice to include a slide on how you’re tackling the UN SDGs and early indications of impact (or how you’re going to measure it). I described both documents in more detail in my article 5 key documents for equity crowdfunding.
- Don’t forget that they’ll want to see a viable business that is sustainable in the long run. You can only have an impact if you’re still operating!
Once you get your ducks in a row, it’s time to approach them. As I’ve discussed, it’s always best to have a warm introduction, but if not, I have an article with an email template.
Equity Crowdfunding is a great option for purpose-driven companies
I’m not going to expand this too much as I wrote a full article on how sustainable companies can benefit from equity crowdfunding, including lots of examples. The conclusions can easily be extrapolated to more generic purpose-driven companies.
Wrapping it up
Even before the pre-pandemic world, there was a case to build a purpose-driven company. The early indications are that it’s going to be even more important in the future. Hopefully, I have given you some pointers on how to fund your purpose-driven start-up. If you have any questions, don’t hesitate to post them below or contact me through my form.