How to Pitch Your Social Enterprise

So you want to build a business that does good, right? ...and also look for money? Cool!

I'm here to give you some guidance on how to pitch your social enterprise.

A bit of background

Before I jump right into it, my name is Ravi Kurani and I am the CEO and co-founder of a company in the SF / Bay Area called Sutro. We’ve built a device that tells you if your water is clean or not.

Who am I to tell you about this?

I’ve worked at two impact investing funds (Village Capital and Better Ventures). We reviewed a ton of social enterprise business plans -- the biggest gap in the #socent area was two-fold.

  1. for investors -- deal flow (the amount of companies that are applying for funding), and

  2. for entrepreneurs --  quality impact investors. Traditional VCs didn’t seem to jive with the profit + social aspect).

(BTW, the guys at Better Ventures and VilCap are amazing!)

I’ve also built two social enterprises: We built a database that mapped both impact investors and social enterprises. The intent was to provide deal flow for investors. A device that measures pool chemistry and auto-delivers chemicals for the 15M pools and spas in the US. The intent here is to better manage our most precious resource, water. The goal after the pool industry is to enter agriculture, fisheries, and municipalities.

Let’s get to the pitch. What do VCs want?

We’ve all heard the common adage of risk vs. reward. VCs want to mitigate risk while maximizing return. Social enterprises have added risk, they’re trying to maximize social return plus financial return.

Traditional VCs want to (generally -- wave-of-the-hand) minimize 3 types of risk(s):

  1. Market risk. Do users actually want to buy this thing?

  2. Tech risk. Does the product do what the market wants?

  3. Team risk. Do the people behind the venture have teeth to build this thing?

When pitching to an impact investor there is a 4th risk to solve:

  • Impact risk. Will you actually make a difference in livelihoods or the environment?  

So, how do you mitigate risk?

As an entrepreneur your one job is to mitigate risk. You have decisions and opportunities galore; who should you hire, should you pivot, is the market telling you to build something else, have you raised enough capital, the list goes on. Below are some ways that you can mitigate risk in these 4 areas (this is not an exhaustive list).

  1. Market risk. Do users actually want to buy this thing?

    1. Do you understand the customer?

    2. How are you going to sell your product?

    3. Have you built a “test case” from customer acquisition to sale?

    4. Who will you distribute through?

    5. How many prototype units have you deployed?

  2. Tech risk. Does the product do what the market wants?

    1. Metrics around tested the product in the lab?

    2. If you’re building a hardware product, do you have a BOM ready?

    3. How stable is your product?

    4. Is this actively being used in the field?

    5. What does your MVP look like?

  3. Team risk. Do the people behind the venture have teeth to build this thing?

    1. What are the credentials of the people on the team?

    2. Have the team members built something like this before?

    3. Do you (or your team) have experience in the markets you’re launching into?

    4. Do you (or your team) have experience with the users you’re speaking to?

    5. Have you felt this problem?

    6. What is the founder story?

  4. Impact risk. Will you actually make a difference in livelihoods or the environment?  

    1. How do you build your model to rely on your profits?

    2. Have you studied all the externalities of what your product may (or may not) do?

    3. Do you have a B-Lab certificate?

    4. Have you taken an impact assessment?

    5. What does your additionality (i.e. if this does not exist, this is what the user segment would do) look like?

The Imaginary Example

Let’s say, you have an imaginary solar lantern company that distributes solar lanterns to the rural populations around the world).

  1. Market risk.

    1. I interviewed 100 farmers in the Gujarat, India. Here is what the persona looks like, and here is who I want to target

    2. They all stated that electrification is a large concern

    3. And, hey! I’ve also spoken to farmers in Nigeria and Brazil. The demographic analyses are like the Indian farmer.

    4. I will first target the Indian farmers with the Vodafone POC

    5. This is an underserved market. The majority of non-profits focus on market X, we’re going to focus on a subsegment that’s market Y.

    6. There is an underserved 1,000,000 users who fit this demographic.

  2. Tech risk.

    1. We'll be purchasing solar lanterns from an Indian manufacturer. We are not developing any new technology.  

    2. They have sold over 100,000 solar lanterns and here is the data around the life, testing, and robustness.

  3. Team risk.

    1. I worked with the Peace Corps in rural India with these very populations.

    2. I built a POC with the Peace Corps on this very model and we distributed 100 lanterns with

    3. My cofounder worked in Nigeria for 3 years on a very similar project.

    4. I am an engineer that built solar lanterns in my previous life.

  4. Impact risk.

    1. We’ve ran an impact analysis with the Peace Corps. We’ve actually improved work-time by 50% which allows users to make an extra $5/day. This is an increase in their daily income by 25%.

Again, this information is false (and at times facetious), but you get the point. You may still have an idea on a napkin. There is always research that can be done on the user to see if this is something that would be valuable.

A side note

We’ve been shooed out of investor board rooms, due to our swimming pool model not being “social enough.” I get it, we’re helping wealthy people manage their pools, but we’ve consciously chosen the swimming pool market as our beachhead. Why? The pool industry is a playground for gathering data. It provides us with the tools to build a predictive water algorithm to tell us when water goes bad. We’ll be able to move into other industries using this (i.e. agriculture, fisheries, and drinking water).

We’re social at our core. The very mission of Sutro is to create a map of water quality, so we can provide insights for this finite resource.

Lastly, try and keep trying.

Entrepreneurship is an execution (and a risk mitigation) game. Because of this, it’s always good to remember the following:

  1. Ideas are a dime a dozen. If you're that scared about talking about yours, it's likely been built.

  2. Building a business takes A LOT of work. Think about how much work you’ve already put in. It’s hard for people to take the jump.

  3. Time to market is key. With (1) and (2), also realize that time to market is the largest advantage you have.