How can a social enterprise gauge their readiness to approach investors?

Christopher Emmott, Associate Director, Investing in Energy Access, Acumen 

Hi, my name is Chris Emmot, and I lead the energy investing work at Acumen.

From an investor's perspective, the advice I'd give to entrepreneurs is to make sure you understand what you're raising money for. What's that pathway to scale? What milestone is this going to help you to reach?

You've got a team in place that really covers some of the core basics. So there is sales and business development. There is financial management.

We often look for audited accounts, and so that is a key element and an important thing to be focused on, depending on the stage of company you are. But really, quite much earlier on than what entrepreneurs often think is important, they actually do need to have accounts which have been audited so we can have a bit more confidence in their financial management behind that.

The other is how, their strategy for scale, and do they really understand how they're going to get to the next level and what that next milestone is?

We often talk to companies and tell them to come back to us a little bit later when they've really worked out, what is their next strategy for the next phase of growth and how can we help them to get there? 

And then finally, do you understand the impact that you're actually having? What is the theory of change behind your business? And do you understand how that plays out in your operations?

The other element, which is really key, is communication. It's really important that when we're reaching out to companies, that we feel they're being responsive and they're answering our questions. And if they don't know the answer, they're being open about that and they're telling us these things. Then we can help them to answer those questions themselves.

It also works the other way. We always try to be communicative about our process. We're often looking at a lot of different companies and sometimes we're very focused on closing one deal, and so we don't have time for talking to new ventures.

It's really key to just continuing to reach out and giving updates every now and again. Check in with investors, see how they feel, make sure that they know what progress you're making and showing that you are making, really growing and building traction.

Key takeaways 

Reach out to impact investors when you have:

• Defined purpose for raising money and the milestones it will achieve

• Strong team in place for business development, scales, and finance

• Solid financial management with audited accounts

• Defined scaling strategy with a clear path to achieve it

• Clear understanding of your impact and alignment with the theory of change

• Capacity to communicate consistently with investors