Financing your social startup

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When you have a scalable idea that might save the planet and make you money, you are talking about building a social business. But like any business you will need money to grow and scale. Saving the planet or a group of people from social catastrophe might be your mission but investors also want to make sure they make good on their investment. Typically startups in the social scene have a few options. I will share with you what I have learned while starting a social business.

Beyond Green Prophet I am building a company that listens to Mother Earth to automate food production, fish farming and a whole pile of other processes. It’s called flux.

1. Self financing. Start by finding a team that has some financial security or is willing to take risks. Either you start your company when you are at an age when you don’t care if you live in your friend’s basement, or you start it when you know you can pay the mortgage and buy diapers. It’s harder in the in-between stage and may create too much tension between you and your family and loved ones. Determine how many months/years you can work without a salary, and how much you can contribute from your savings. It’s easy to spend other people’s money. Harder to spend your own. A lesson in frugality.

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2. Friends, Family, Fools. Called the FFFs – see who in your close network might be able to contribute some cash for good financial return. Meaning if they invest early, they get a good and healthy return on their money when your business takes off.

3. Expand a bit into the world of angels. These are private people who can use private money to invest in your company. They may be experienced in your field, or happy to share saving the world inside your adventure.

4. Grants. Social impact companies may be eligible for grants. See what’s in your country and field. The forms can be a hassle, but so can not having any money to grow.

5.  Eligible bank loans: depending on your business plan and model, you may be eligible for bank loans and financing through traditional means. Book a meeting with your local business bank to see.

5. Venture Capital funding. This is often a last option and Venture Capitalists often offer really poor terms on what they invest and what they control. It’s usually better for Series A and when you are in a serious growth stage so that you can dictate in your terms how the investment should look like.

6. ICO – startups have started launching their own currencies to fund their own growth. An interesting way to invest in social in the future.

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