1. Practical tip: Set fundraising milestones

The first step in preparing to approach potential investors is to make sure you keep a clear control about your cash requirements over time. The most practical way to do it is by visualizing your company’s cash burn rate and projected development milestones.

This means, you should know how much money you use each month and how much time is needed to achieve each particular milestones of your project. By checking the remaining cash balance in your account you will have a clear view of how far you go.

Having a clear picture of your investment needs will make the whole fundraising process more consistent and enhance the chances for success when approaching potential investors.

(1) Identifying milestones:

→ There are many different kinds of milestones that you can develop and use to keep monitoring of your company development over time. The relevant aspect when planning milestones is that you can decide on which relevant aspect you wish to focus, that is, what you will be working on and put all your efforts into achieving them.

Once you have decided on which kind of issues you want to focus (i.e.: market growth; product development; human resources; funding etc..), you can create customized milestones, such as:

• Product solution market fit
• Prototype
• Key employees hiring
• Product launch
• Key metrics achievements (n. of users)
• …

(2) Estimate your financial needs according to identified milestones:

→ You need then to calculate how much money you need to achieve each of the identified milestones.
In fact, any investor might want to review your cash needs referring to your stated milestones and check the structure of your monthly cash burn rate.

How to calculate your burn rate? Get your guide here:

2. Accelerator programmes

→ Get here all the info to get into an Accelerator:

3. Equity Crowdfunding

Equity crowd unding is a tool that – similarly to venture capital – allows you to offer investors a stake or % of your business. Therefore, same fundraising approach and strategy applies, as you will be approaching investors, although mechanism differs, whereby equity crowd funding rely upon online platforms.

Issues you should have clearly defined when approaching equity crowd funding include, among all:

(1) Company’s Founder & Key Team Members

→ Get prepared to explain how your working team is composed, skills, capabilities and expertise of your crew, to make sure they fully reflect one of your most valuable assets. Make sure your company’s founders and key team members have updated LinkedIN profiles, and get them validated by their professional network (through recommendations and endorsements).

(2)  Available Market

→ You will need to demonstrate that the market for your product or service is large and growing, therefore all related questions about market potential, size and segmentation should be under total control!

(3) Your Products and Services

→ Your product or service is the core of what you are trying to get funding for. Investors are looking to back something with a unique selling proposition (USP) that solves a particular customer problem. This include also an updated and realistic competitors analysis.

(4) Marketing and Customer Acquisition

→ Investors are going to be very interested in how much you have done on your strategies for making money through sales. Be prepared to answer questions as:

• How much does it cost to acquire new customers?
• What is the lifetime value of a customer?
• Have you done focus groups? What did you learn from them?
• What is your marketing plan?
• Describe the typical sales cycle from initial customer contact through closing the sale?
• What is the client’s cycle? Are there opportunities for up-sales or repeat business?

4. Venture Capital

How to engage with your Venture Capital ?

If your green start-up is growing, at some point you will likely be seeking Venture Capital. Because Venture Capitals deploy large amounts of capital and expect significant returns, the process of raising money from these investors can be a complex, costly and time-consuming.

Before approaching a VC you have to understand their funding process thus each VC has a process and there are similarities and differences between them. However they will always ask you a detailed business plan together with track records and presentation / elevator pitch.

→ How to elaborate an effective elevetor pitch presentation?

Remind: always send the Powerpoint Pitch presentation in advance.

→ Get the Green Entrepreneurs Power Point pitch guideline and prepare your pitch according what are the most important things for Venture Capital:

1. Overview: One or two sentences about what you do, for whom.
2. Team: VCs want to know what qualifies you to execute your idea successfully.
3. Market: What is the problem, why does it exist, and how big is the opportunity?
4. Solution: Your value proposition: how you solve this problem faster, cheaper, and smarter.
5. Business Model: How do you make money? Who pays, how much, from where?
6. Customer/user: Who they are and how many? How will you reach/acquire them?
7. Competition: List the major competitors; understand their processes and what your competitive advantage is.
8. Financial Overview: What are the expected revenues, expenses three years out?
9. Funding: How much are you raising and how are you going to use the money?

5. Bank loans

To obtain a bank loan or overdraft, management must prove to the lender that the business will generate the income and cash to both repay the facility according to the terms of the loan, and service the loan by meeting interest payments.

→  Social impact:

Theory of Change – What is the theory of change?

It is vital to gain a detailed understanding of the current and expected social impact of the SPO. It not only reduces the risk of making the wrong investment, but also creates a common understanding of the impact of an organisation among all stakeholders and allows the VP/SII and SPO to ‘speak the same language’. If a SPO is claiming a certain outcome then they need to prove it. If the SPO cannot deliver the data, the VP/SII must consider whether they will bring in the expertise and provide the necessary support so the data can be collected or question whether the SPO is an appropriate investment at all.

Impact measurement systems – Track record of execution; impact measurement steps; social impact targets; monitoring and reporting on social performance

It is useful as part of the due diligence phase to check whether the impact monitoring system the SPO already works with is sufficient to meet the requirements of the VP/SII. Otherwise, the VP/SII may need to contribute to improving it through non-financial support and those costs should be factored in before making an in should be factored in before making an investment decision.

→ Financial Sustainability:

Market:

Market size, growth, developments, segments; relevant other initiatives/competitive positioning. The appeal of a specific SPO can also make the VPO overestimate the future development of a market: the recommendation here is to try to be prudent when making predictions about it.

Sources of income:

Funding trends and funding mix.

Financial:

History (results, previous financings); budgets and forecasts; funding gap/financial ask; co-financing; terms of investment, financial reporting and control process in place.

→ Organisational Resilience:

Organisation:

legal structure; quality of management; governance; transparency of results, board quality. Dysfunctional SPO’s boards are time-consuming and can constitute a major problem. Extensive reference checks on the management team are important not to overestimate the capabilities and the entrepreneurial spirit of the management team of the SPO.

Operations:

What the SPO does to deliver on its strategy, including details of the organisation’s income-generating model, if relevant. A technical review of the appropriateness and solidity of the product or service the SPO delivers/ performs may be a part of the process.