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What does it mean to Raise the Right Money from the Right Investors?

What does it mean to Raise the Right Money from the Right Investors?

I was at a great event last week called Food Funded. Kate Danaher of RSF Social Finance was speaking on a panel and said that she meets too many entrepreneurs who tell her that they have certain goals for their business but they have already raised money from investors in a way that is completely inconsistent with their goals.

A few years ago, I started telling entrepreneurs that they need to raise the Right Money from the Right Investors because I was seeing something similar to what Kate was talking about.

The Right Money means that the type of investment you are offering is designed so that your investors‘ interests and expectations are aligned with yours. For example, if you offer equity and never plan to pay any dividends, your investors are likely to expect you to sell the business as quickly as possible so they can get paid. If you don’t want to be pressured to sell the business before you’re ready, you should offer something different!

The Right Investors means that your investors share your goals and values, as well as your vision for the future of your business. They won’t pressure you to take things in a direction that doesn’t feel right to you.

Unfortunately, there are still far too many entrepreneurs that (usually inadvertently) take on the wrong money from the wrong investors.

If you are thinking about raising money for your business, I would love to talk to you about your strategy. My Women Raising the Right Money from the Right Investors mastermind program summer cohort is starting soon. If you’d like to learn more, click here.

What is a Social Enterprise?

What is a Social Enterprise?

CORE Foods team

A social enterprise is a business (for-profit or nonprofit) that, in addition to striving to be profitable, takes actions that in some way make the world a better place. Such actions could include paying a living wage, using environmentally friendly practices, supporting improvements in the business’s community, and so on.

I often refer to such businesses as socially responsible, heart-centered, or mission-driven enterprises. In fact, if you read my blog posts or get to know me to any degree, you’ll often hear me use the terms interchangeably.

While it may seem like a delicate balance to pursue profit while also contributing to a better world, plenty of organizations have been successful in pursuing this business model. And so can you! In fact, evidence exists to support the notion that socially responsible businesses can actually be more profitable than businesses focused solely on profit.

Structurally, as I mentioned, social enterprises can be organized as for-profit or non-profit companies. Depending on the country or locality in which they are established and the preferences of their founders, they may choose to organize themselves as co-operatives, traditional corporations, limited liability companies, benefit corporations, community interest companies, or charitable organizations, to name just a few possibilities. Some create “hybrids,” combinations of two or more entities that work together to achieve the business’ goals.

These days, because of growing public outrage over socially irresponsible companies, many businesses say they are socially responsible. But are they really?

The truth is, many companies add socially responsible activities to their operations because they perceive that, by doing so, they will make their overall conduct more palatable to consumers. In other words, social responsibility does not drive the mission of these organizations. Such activities are added as icing on a cake to make it sweeter to the consumer. From a terminology standpoint, such companies are not social enterprises but merely organizations that operate various “corporate social responsibility” programs.

True social enterprises place mission at the center of everything they do. Many codify their missions into their charter documents. When they raise money from investors, they ensure, through properly drafted agreements, that the investors will not interfere with the long-term pursuit of the company’s mission.

There are infinite ways in which social enterprises can be structured and investor agreements drafted. And there are many wonderful examples of companies that have designed very creative structures to ensure long-term fidelity to mission, even after bringing on investors. Here are a few great examples:

It is a great time to be a social entrepreneur!

Many organizations have already led the way, and you can stand on their shoulders.