On November 23rd, we hosted the final webinar of our four-part impact measurement series with Integrative Solutions CEO and Senior Consultant, Dr. Deepti Sastry: “Winning Over Funders With Impact Data.”
In this session, Dr. Sastry was joined by special guest Sinethemba Mafanya, an Investor & Consultant at Palladium Impact Capital. Together, they shared practical guidance and advice to help social enterprises identify what types of data funders are looking for when making investment decisions, and determine how to best package that impact data to support future growth.
You can access the full recording here, and below, we’ve summarized 8 key takeaways from the session to help you more effectively package impact data to attract funders and secure investment.
1: Show the investor high-level data about the scale of the problem, and your solution to it
Throughout the session, Sinethemba emphasized the importance of speaking in language that the investor understands — namely, quantitative data. Take the time to do your research and incorporate numbers from a trusted data source, like the World Bank. Pull out metrics that paint a high-level picture, like the number of people impacted globally by the problem you’re trying to solve, and the number of people in the subset you’re targeting. At this stage, you want to give the investor a sense of the “universe of opportunity” involved both for your company AND for them as a potential investor in solving this problem.
2: Show the investor impact traction through data, and why you are best suited to solve the problem
Demonstrate your impact traction by showing your team’s actual professional and sector experience in trying to solve the problem. This lets the investor know that this is not a first time experience for your team — it’s something you understand, and have done before. Use metrics of success to demonstrate this: for example, repayment rate of microloans if you’re a microfinance social enterprise. These success metrics connect the problem you’re trying to solve with the team itself, and helps demonstrate that you have the right team to deliver on your impact thesis. When an investor considers your pitch, they will want to match your success metrics with the impact data about the broader problem in order to evaluate the potential scalability of your solution, and likelihood that they will get a return on their investment.
3: Show the investor how your product works and its key success metrics for impact
Every business rests on a series of assumptions that it can generate revenue and create an impact. These assumptions combine to create an impact thesis about how your company can grow. To build confidence in your thesis, present subsets of metrics that show the level of traction you have in acquiring new customers, enabling customer success with your product or solution, and retaining those customers. The subset of metrics at each stage speak to the momentum, or cadence, of your business. Investors are looking for businesses that accelerate over time (while reducing cost) as an indication that the solution is scalable and could reach the target you’ve set for yourself. If a customer doesn’t make it through the process along each point of the journey, then your impact thesis of getting to scale can’t be justified. Your goal is to justify that impact thesis through data about how customers actually use your product or solution.
4: Show the investor the unmet sector and/or customer need for your product through specific impact data
At this stage, you want to take the high-level data presented earlier in section 1 to make it as relevant as possible for your particular company. This is where you get into the details, segmenting out by geography, customer, product set, etc. Again, investors are looking for evidence, so make sure your data is connected to a credible source of information and actual results from your own business. If your impact thesis can be proven by an outside party, it will make it easier for the investor to accept your assumptions. Focus on both current and future state: Sinethemba recommends using this data to walk an investor through how you’re thinking not only about today, but also about the future and your potential for expansion and scale.
5: Show the investor the market, competition, and your plan through specific impact data
Pull out important data points related to the market and customer demand that can be quickly understood by an investor. Like all of us, investors can experience information overload — so lean more heavily on graphs and charts rather than line after line of text. Investors want to understand at a granular level what the unmet need is for your target user, and how much risk you take on with each new customer. When it comes to competition, talk about other key players in the space and pull out relevant data from trusted sources. In explaining your plan, make sure you understand your unit economics, how they compare to global standards, and how they relate to the impact you’re trying to create.
6: Show the investor the future impact prospects & vision across geographies and future product evolutions
Investors always want to see that you have thought about the future evolution of your solution, both in terms of geography and product sets. Demonstrate that you’re attuned to the specific needs of the different regions and customers you plan to address, and have considered how to adapt your solution to them. Again, lean on reliable data sources to go one level deeper and justify why you’ve chosen specific categories or areas to expand into in a way that fits into the larger arc of your impact story.
7(a): Show the investor the financial model and assumptions underpinning the impact data
As Sinethemba explained, this is really where the rubber meets the road. Everything covered so far needs to be backed up by a financial model and set of assumptions underpinning that impact data. Here, you’ll want to show income statements, profit, revenues, and expenses, ideally projected forward over the next 3 years. Build out multiple possible scenarios – the one you’re targeting is somewhere between the big ambitious “everything goes right” version and the worst-case “everything goes wrong” version. In the “everything goes wrong” version, address how you’ll mitigate those risks, and how the investor may be able to help mitigate them too. This demonstrates to the investor that you’re being ambitious, but also realistic. Use sector-specific data to interpret how many customers you would need to acquire to reach your goals.
7(b): Make sure the investor is the right fit for YOU
We’ve shared a lot about the importance of taking the investor’s needs into account, but it’s equally important to be able to tell the investor what YOU need. Sinethemba recommends flipping the question back to them – what can the investor offer you to help you reach the target number of customers to make your model work? For example, the investor may be able to facilitate connections along the supply chain, or tap into existing relationships in new geographies. It’s vitally important that you find the right fit in an investor you can form a symbiotic relationship with. The investor needs to understand what part they’re providing you to help you reach your goal – whether that’s debt or equity – and how you may plan to supplement from other sources.
8: Show the investor the next level of impact data
Everything we’ve covered so far is basically what it will take to get in the door. From there, the investor will want even more research, collating of different data sources together, and detailed information about your levers for impact. The larger your investment ask is, the more data will be required to increase confidence in your impact thesis from the investor’s perspective. This could include things like your business model, ancillary information like contract revenue, case studies, and academic literature. Remember: only pull out the key data points that are most relevant to your specific business, and present BOTH the upside and the downside involved. Sinethemba also recommends sharing what hasn’t worked in the past, and what you’ve learned from that to do things differently in the future.
If there’s one common thread in each of these takeaways, it’s that investors are heavily influenced by pattern recognition and impact data. Remember to rely on credible sources, pull out only the key data points that are most relevant to your business, and use them to tell the story of how your business works and will grow in the future. If you’re looking for support developing a winning pitch deck and making connections to potential investors, we invite you to join us on the TRANSFORM Support Hub!