Triple bottom line efforts need capital. But securing this capital is often challenging, despite impactful value propositions and promising ROIs. Meanwhile, options for funding are expanding, creating a dizzying array of options for the entrepreneur. In this workshop, you’ll work with two experienced social enterprise funding advisors to get your efforts “game ready” for funding. You’ll learn how to package your venture to successfully raise the funds you need… and from the right type of capital source.

1. Getting Your Venture
“Game Ready”
for Funding
Jenny Kassan
CEO
Cutting Edge Capital
Drew Tulchin
Managing Partner
Social Enterprise Associates
Net Impact Conference, Silicon Valley
October 25, 2013

2. Workshop Outline
I. Introduction & Background
II. What does it mean to be “Game Ready”
Foundational Elements to raise money
Traditional Capital
Alternative Forms of Capital
I. Pros / Cons of Each Capital Type
II. Fundraising Role Play
III. Discussion: Steps to Readiness

3. I. Introduction & Background

4. About You!
Who’s is in the room & interests
Why are you here?
What questions do you want answered today?***
***Ask questions as you have them anytime

5. About Social Enterprise Associates
Impact Investing Focused Consulting Firm
Network of experts offering consulting & capital raising to
triple bottom line efforts- for people, profits, planet
Registered ‘B Corporation’, recognized:
2011 'One of the Best for the World' small businesses
2012 Honoree Sustainable Business of the Year
Drew Tulchin, Managing Partner, MBA
•
•
•
•
Written >100 business / strategic plans
Efforts raised >$100 mil. in capital
Biz plan winner - Global Social Venture Comp; raised $1.2 mil. in social investment
Judge in national social enterprise & social business competitions

6. “Game Ready” Consulting Examples
Solar Energy Loan Fund: Wrote business plan, financial
projections and located investors that led to $400 K in funding
SW Native Green Loan Fund: Structured term sheet that
recruited $1 million in impact investment
World Food Program: Devised five year plan for $400 million
private sector engagement strategy
Sea to Table: Coached entrepreneurs and orchestrated $1
million funding package from multiple sources
Restore the Earth Foundation: Developed investor pitch that
quantified social value of 10,000 acre wetland reforestation

7. Get Us Started
Group Brainstorm
New, creative capital raising forms?

8. II. What does it mean to be
“Game Ready”?

9. Need Your House in Order
• Accounting: Accurate financial statements - updated at least ¼,
taxes tracked, vendors paid
• Legal: Incorporation, ownership, IP, employees
• Systems & IT: Be organized, show it! Email, accounting, CRM,
database, info management, online tools, etc.
• Branding & Mktg: Logo, website
Identity, materials

10. People You Need for Success
Direct
Management
Team
You - CEO?
CFO
CIO / CTO
Biz Dev / Sales
Indirect
Advisors
Board Members
Key Vendors
Banker
Lawyer
Bookkeeper/CPA
IT
PR

11. Baseline Documents
1. Business Plan
Feasibility
Market Analysis


1. Financial Projections &
Scenarios
Fundraising – what goes here?
1.
2.
3.
4.
5.
Pitch packet
Brochure / Exec Sum /
2 pager
E-mail intro
Website
Social media

12. The Pitch Deck
What is in a pitch deck? How many slides?
Your 10 slides should be:
• Nice / clean
• Easy to read. Few words. Tell a story (use visuals)
• Very much you
• A bit different, but not too much
I believe in Guy Kawasaki’s Art of the Start
http://blog.guykawasaki.com/2012/01/how-to-create-an-enchanting-pitch-officeandguy
http://bestpitchdecks.com

13. The Hand Off

14. Strategy and
compliance for
creative capital
raising
Software tools for
capital raising
Full-service law
firm for social
enterprise

15. Entity choice
has an effect on capital raising
choices

16. Entity Options
1. Corporation (taxed Subchapter S or C)
2. Benefit Corporation / Flexible Purpose Corp
3. LLC (taxed under Subchapter S, C, or K)
4. Non-profit (many kinds! 501c3, c6, etc.)
5. Cooperative (many kinds!)
Or a combination…

17. Traditional Forms of Capital

18. Types of Investments
•
•
•
•
•
•
•
•
Common stock
Preferred stock
LLC membership interests (units)
Loans (aka notes, debt)
Revenue share/royalty – equity or debt-like
Co-op memberships
“Memberships”
Presales

19. Capital: Traditional Ways to Raise
It
Banks
Angels & VCs – Accredited investors only
• Rule 506, Regulation D
• Allowed to have up to 35 unaccredited
investors under Rule 506?
• New Rule 506(c) - allows public solicitation
• Usually convertible notes or preferred stock
• Exit via acquisition, IPO

20. TOTAL US
ECONOMY:
Two equal halves
Employees:
56 million
Employees:
56 million
Production:
$7 trillion
Production:
$7 trillion
Giant Multinational
Publicly Traded
Companies
Small Independent
Businesses
Almost 100% of Americans’ investments are in only
one-half of the economy – Wall Street companies

21. Source: http://earnmbadegree.com/jobs-act-crowdfunding-infographic/

22. So, you can go to the 1% (OK…the 7%)
But, money from VCs, Angels
is scarce and comes with strings attached.
OR . . .

23. Alternative Forms of Capital

24. Direct Public Offerings

25. What is a DPO?
• Made to the public
• Made to unlimited # of accredited
AND unaccredited investors
• Directly to investors (no middleman)
LEGAL NOW!

26. Legal How?
1. Federal exemptions
2. State level registrations
3. Any kind of security can be offered
4. How does this relate to Title III of
JOBS Act (crowdfunding exemption)?

27. DPO Examples
Farm Power Northwest

28. • Interest paid in credits
toward product
• Raising funds from
California residents –
multi-year offering
• Have raised over
$300,000 so far

29. • Massachusetts Worker
Cooperative
(conversion from sole
proprietorship)
• Offered non-voting
preferred stock
• Raised $500,000 from
VT & Mass residents in
2 months

30. • Offering common stock
• Open to Washington residents
• $100 minimum

31. People’s Community
Market
$800,000 + so far!
• Offering non-voting preferred
stock, discount AND gift cards
• Raising up to $1,000,000 from
California residents

32. • Offered 5-year revenue
sharing agreements
• Raised over $150,000 from
California residents

33. III. Pros / Cons of Each Capital Type

34. Activity: List Pros / Cons of Each
Consider time, complexity, cost, paperwork needed,
who funding is for, etc.
Traditional
• Debenture
• Private placement
• Grant
Others?
Newer
• DPO
• Crowdfunding
• Memberships
• Pre-sales
& more…

35. Activity: Funding Match
Match the type of funding to the appropriate audience
Audience Type
• Friends & Family
• Bank
• Angels
• Foundations
• Impact Investors
Which others?
Traditional
• Debenture
• Private placement
• Grant
Newer
• DPO
• Crowdfunding
• Membership
• Pre-sales

36. VI. Fundraising Role Play

37. Activity: Fundraising Pitch
Form groups of 3 / 4
• Pick a venture (your own, or one example)
• Choose a target market to pitch
• Identify form of capital for that group
• Develop pitch
What is the hook?
What kind of funding & why?
How much, for what?
What questions would potential investors ask?

38. Recap: Financing 2 Cents
Foundational thoughts:
• YOU must be credit-worthy
• Organization needs to document why worth investment
• If you don’t put skin in game, why should an investor?
• Be realistic; know market based risk costs
Options:
• Go to outsiders earlier than later
• Self finance: bootstrap, leverage assets, watch credit card debt
• Friends, Family, Fools - put in writing with real docs
• Peer to Peer Lending, Crowdfunding - caveat emptor

39. Recap
• What have we learned?
• What questions do we still have?

40. Thank you!
Questions?
Answers?
Jenny Kassan
Cutting Edge Capital
Drew Tulchin
Social Enterprise Associates
www.cuttingedgecapital.com
jenny@cuttingedgecaptial.com
www.socialenterprise.net
drew@socialenterprise.net