How do some social startups get funding and others don’t? Is it all just a game of chance or is there a tried and tested way that savvy entrepreneurs are privy to? 

If you guessed the latter, then you are on the right track. 

While every business idea and angel investor vary in different contexts, there are foundational elements that remain the same. At the core, these are what investors are looking for, and they are, therefore, what you should be mastering and incorporating into your social enterprise and pitches to win them over.  

We’ve listed some of the most effective ways to persuade your dream angel investors for buying into your social enterprise. 

Engage by Delivering a Compelling Story

The most memorable presentations don’t start with data. They start with a compelling story. You are, after all, representing a social advocacy.

Develop a conversation that connects with your angel investors. Stories should not just be emotional and powerful. They should also be relatable and straightforward. Often, the most helpful narratives are those with a clear and identifiable villain (the problem you’re trying to resolve) and a hero (either your social enterprise or your product). 

Your consuming passion as you deliver this story makes a strong statement. They tell your angel investors that you believe in your idea and you’re going to make it happen with or without their help. This will drive them to listen and ask themselves, “How can I be part of their success story? How can I help them drive the world forward?” 

Remember, angel investors have a pool of social enterprises waiting to deliver their pitches. They have all the freedom and opportunities to jump from one investment option to another. You need to stand out from the crowd. 

When all the facts are laid out and eventually forgotten, it’s your story and passion that’s easily remembered. 

Outline a Sound Business Model 

Powerful stories are essential, but it won’t get you far if your business idea is unconvincing. Once your narrative is strategically introduced and passionately delivered, you must prove quickly that you know what you’re talking about or your dream angel investors will stop listening. 

It’s not enough that you tell them what the vision of your social enterprise is and how it will change the world. Show them how to operationalise this vision and how to sustain it in the long run. Remember, it’s a common misconception that just because you’re running a social enterprise, you don’t have to be profit-oriented. Even social entrepreneurs think about sustainability and profit. 

Saying “my change idea is awesome enough that customers will flock by word of mouth” will not cut it. Outline your market size, your customer profile, your competitive advantage, your competitors, and your customer acquisition strategy. Demonstrate interest from potential customers. Show how your product or service meets real need. Discuss your execution. 

And most importantly, prove that your business model can be scaled. 

If you want angel investors to follow you and buy into your social enterprise, show them the executable and scalable business plan behind the powerful story. 

Provide a Comprehensive Financial Plan

Angel investors are investors. They’re here to evaluate if you’re worth the investment you’re asking for and what they can get out of it. You’re not only competing with other social enterprises in need of funding, you’re also up against other investment options. Make sure your social start up is a sound financial investment.

When you present your financial plan, remember the “ask-give-exit” outline. 

The first part of any financial pitch is asking for money. When you ask for it, don’t just throw in the question or express how honored you’ll be if they decide to believe and invest in your idea. Angel investors are entrepreneurs just like you. They need to know the details. 

Say exactly how much you need and itemise where it will be spent. In some cases, it may be best for you to briefly defend your budget allocation for the biggest expenses. Enumerate your funding requirements and include a buffer amount for contingency purposes in case things don’t go as planned. In fact, your angel investors might even appreciate if you can include possible deviations with corresponding changes in budget allocation. This shows your angel investors that you studied possible contingencies and have laid out backup plans. 

The second part is giving back earnings of your angel investors. Most presenters commit one fatal mistake: they don’t show how their angel investors are going to make money out of the investment. This is the core of your financial plan. Demonstrate the profitability of your idea. Angel investors could love your story and idea, but if they don’t think you can give returns, they will share their wealth to a social enterprise that will. 

Many presenters think the first two parts are all there is to cover, but there’s one more question that angel investors thirst to ask: If things don’t go as planned, how do we get our money back? 

This is the third part of your financial plan. Provide your angel investors with an exit option in case your startup does not generate revenue. Things don’t always go as planned. Your angel investors understand this, and they want to be assured that you do too. They will take the risk with you, but they also need to know that they have options.

Communicate Trust

A compelling story, a sound business strategy, and a comprehensive financial plan — these three are fundamental in your pitch, but they leave one question unanswered:

“Why should we trust you?” 

Angel investors are looking at you and your management. Their experience in business has shown them how a bad partnership can ruin a business, no matter how perfect the fundamentals may be. Your leadership and your team dynamic should inspire confidence and communicate trust, not raise suspicion, and doubts.

As a company with a social advocacy at its core and fundamental to its existence, ensuring that your investors trust you and the cause you stand for is an imperative. This isn’t just an ordinary startup funding situation. They also need to trust in your advocacy, how you’re going to implement it and what’s in store for them.

Aside from your leadership and team culture, it’s also important to demonstrate technical competence. Is the team well-rounded and capable of execution? Do you have experts that can lead specialised functions? What are your industry experience and entrepreneurial background before founding the social enterprise? Is your team capable of establishing strong and lasting relationships with the communities you wish to serve or partner with?

These questions evaluate if you and your team really know what you’re doing.

Your goal is to communicate that your team is exceptional for this idea and perfect in building this particular social enterprise. 

Lastly, assure your angel investors of your commitment. Commitment means that you truly believe how your change idea can transform the world. Commitment means that you understand the potential of your social enterprise and the risks that come with it. Commitment means that you promise to be there for the long haul even when things don’t go as planned. 

And of course, the most fundamental element in any pitch is still preparation and practice. Make sure to give you and your team ample time to prepare and deliver that best presentation you can.

Best of luck to delivering that pitch, and we hope the tips listed above will help you win over those angel investors.

How To Convince Angel Investors To Back Your Social Enterprise