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#SOCAP14: What does it mean to be investment ready?

SOCAP Global September 4, 2014

Social entrepreneurs require capital to create impact, and impact investors with capital are
looking for investment ready deals. But what does it really mean to be investment ready? That
was the question posed at a session this afternoon. With a vibrant panel representing a range of
perspectives, there were some great nuggets to take away.
 
One of the key points reinforced throughout the panel discussion, was that being investment ready
can mean a variety of things – all of which are wholly dependent upon where the enterprise is
located along the process of development. That idea was encapsulated most wonderfully by Tevis
Howard, the Founder and CEO of Komaza who shared with the audience that as an entrepreneur
he was investment ready from day one. The real question that he had to answer was, “what kind of
investment am I ready for?”
 
During the earliest stages most enterprises are only ready for investments from family and friends.
They are then able to graduate to the next stage and continue to climb the investment ladder,
from seed funding to raising different rounds of capital. Consequently, to be investment ready the
entrepreneur must understand where they stand in the funding cycle, the demands of each stage
and most crucially, when to graduate to the next stage.
 
A more in depth and structured look at the different stages of investment readiness was presented
by Andy Lieberman of GSBI – Global Social Benefit Institute at Santa Clara University. They have
been working on a paper entitled the “Social Enterprise Stage Assessment Tool” which presents a
tool they have developed to guide the development of a social enterprise from conception to full-
scale implementation. The social enterprise lifecycle is described by four stages through which it is
possible to assess the readiness of an investment.
 
The four key stages identified are:

i. Blueprint – Developing the blueprint for the future business

ii. Validate – Testing and refining the business model

iii. Prepare – Enhancing the conditions required for scaling

iv. Scale – Rolling out the model to reach large numbers of customers and / or suppliers

One of their roles as an accelerator is to help ventures work out which stage they are at and help
them to prepare accordingly. The session was completed with clear pieces of advice from the
investor perspective and the key questions social entrepreneurs should be asking themselves in
order to ensure that they are investment ready. Some highlights were:

• A clear ask: know how much money you are trying to raise, what it would be used for and the

type of capital you are seeking

• A smart ask: know where you are in the life cycle of an enterprise and approach appropriate

investors who are interested in investing in that stage

• The Team: have you built the right team with the right dynamics to make your venture work?

• Competitive advantage: make sure you understand your competition and your competitive

advantage. You must be able to answer the question “what is your competition?” with

something other than “we do not have any competition!”

• Metrics: Ensure that you can explain in depth the numbers which feature in your presentation

Danielle Abraham is the Co-Founder of ID2 Invest for Impact – an Israeli venture facilitating the
connection between impact capital and Israeli enterprises with technological solutions for the BoP
and emerging markets.

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