Getting Ready for Social Investment: A Simple Guide for Charities and Social Enterprises

By Jem Stein, Founder of Daring Capital and Ella Forums member.

Social investment can have a transformative impact on the trajectory of a charity or social enterprise. But, before you apply, you need to make sure you have a few bits in place first.

The Business Plan

First, you need a business plan. This is your roadmap, the story of your organisation that shows investors why they should believe in you. Start by laying out your goals. What’s the big picture? What social issues are you tackling? Make sure to include both short-term and long-term goals. Investors want to see that you have a clear vision.

Next, be specific about how you plan to use the money. Whether it’s expanding your services, launching new projects, or buying equipment, detail where every penny will go. Clear plans show that you know how to manage funds responsibly. Finally, explain how investors will see a financial and social return on their investment. Show them how their money will make a difference and how they will make a return

The Financial Model

Next up is your financial model. This is where you prove that your numbers add up and you can manage the money wisely.

Before starting on your Excel model, make sure you have thought about your key assumptions: how much will you charge for your services or products; what will they cost; and what volume will they sell in. This should be based on your trading data so far. If you haven’t started selling your products yet, then you should do research on what others are doing.

Remember: it’s good to be ambitious but you also need to be realistic about the costs of running a business and the time it takes to ramp up. I see hundreds of financial models every year and a lack of realism is usually the biggest problem!

The financial model should comprise two parts: a cash flow projection and a profit and loss projection (‘P&L’). For the profit and loss, you should model this on an annual basis for at least three years from the date of receiving investment. Remember to include all of your costs, such as VAT, employer pension contributions and employer’s national insurance.

For your cash flow projections, you should present at least the first year broken down month-by-month. Remember to leave some wiggle room for unexpected costs or lower-than-expected income. As a rule of thumb, the monthly cash balance should never dip below three months running costs to ensure you have enough breathing room in case things go wrong.

The Pitch Deck

Your pitch deck is your chance to wow potential investors. It’s like a snapshot of your business plan, but more visual and easier to digest. Your pitch deck should be clear and straightforward. Use simple language and visuals to get your points across. Investors don’t want to wade through jargon. Make sure your pitch deck covers these areas:

  • Start with the social issue you’re addressing. Use real data and stories to make it relatable.
  • Explain your approach and why it’s effective. What makes your solution stand out?
  • Show off your achievements. This could be the impact you’ve made, partnerships you’ve formed, or milestones you’ve hit.
  • Highlight your growth and future potential. This could be increasing users, revenue, or expansion plans.
  • Make sure you cover the competition – what are they doing and what are you doing differently?
  • Give a summary of your financial model. Include key figures from your profit and loss statement and cashflow projections.
  • Talk about your team, including the founders and other key roles.

Getting these components ready will make you a lot more attractive to social investors. It helps you clearly articulate your mission, strategy, and potential impact. For more tips and resources, check out the Good Finance website. They’ve got loads of useful information.

By putting together a solid business plan, a strong financial model, and an engaging pitch deck, you’ll be in a great position to secure the social investment you need to take your organisation to the next level. Good luck!

About the Author

Jem Stein is the founder of Daring Capital, a network of impact investors that invest equity into early stage, purpose driven businesses and social enterprises. Prior to that, he was the founder and CEO of an award-winning social enterprise called The Bike Project which provides second-hand bikes to refugees and asylum seekers.