The logistics of creating a startup is overwhelming and often confusing. Attracting investors or funding is a primary concern for new business owners, and is often the deciding factor for the success of a startup. When it comes to sustainability-focused businesses, there are even more barriers in place due to the stigma that eco-friendly goods and services are more expensive than their competitors- when in fact the contrary is true. To help ease your worries, here are our tips on how to raise funds for your green business.
With new innovations like biodegradable plastic, organic farms, and alternative protein sources, the world of sustainability is growing exponentially. The purpose of a green business is to reduce waste and lower negative environmental impact. Since sustainability is trending, starting an eco-friendly business can allow you to generate a wide customer base, attract new customers, and lower the cost of company spending. Like all startups, it is hard to figure out a starting point, here is our guide to getting funding for your green business, including tips on how to master the art of pitching.
Establish a Strong Media Presence
Before seeking out investors and funding, the first step is to build your brand’s profile and media presence. Investors are now turning to digital media as a first step in the investment process, and besides properly targeting specific audiences for your product or service, this can also be used to showcase your social proof. Investors will decide if they want to fund you by looking at your business’ analytics for engagement and milestone growth. The best way to build a strong media presence is to engage with your followers everyday by posting no more than 580 times per year. Another way to build a media presence is through writing and collaborating with green media platforms to give insights into your company’s beliefs and sustainability goals.
Seek Out Investors
Typically, a startup should generate at least US$10,000 per month, per founder in revenue. A startup with no revenue should look to calculate their valuation– a high value will indicate to investors that there will be a bigger return on investment (ROI), and vice versa for a low evaluation.
A venture capitalist firm works with small businesses in managing their funds and ensures the company’s growth by presenting low-risk investments. Unlike venture capitalists, angel investors are not part of a company. They are individuals who invest with their own money towards high-potential companies to gain back equity stakes.
Master Your Pitch
Sustainability has been trending in recent years. Many investors are competing against each other in seeking green startup firms, however, 56% of APAC institutions indicate that greenwashing has become a strong obstacle in the process. Greenwashing is when brands mislead consumers with environmentally-friendly claims to cover up the reality of the harmful impact they have on the environment. Avoiding this label is simple and will make your business more sustainable, like practising green procurement, or changing packaging to plant-based materials, etc. Give a clear and distinctive message to your investors that show you are not greenwashing your business.
A crucial step for mastering your pitch is research. Finding a venture capitalist investor that matches your company’s focus and values makes a huge difference; you can have a strong and profitable business concept but never receive funding due to not being matched with the right investor. Besides researching the investor’s background, you also need to familiarise yourself with your company and the industry market to create a realistic business plan before presenting your pitch. Investors want to know if your green business is worth investing in, which is why your proposal needs to include the profit estimations, predicted company direction, and how much funding is needed to meet these goals.
Be Open and Honest
Start your pitch with a story, people tend to invest in people, they want to know more about your background, experience, and reasoning for creating your green business. Asking questions and being open-minded can give you more guidance in improving your business, as well as having the right amount of confidence.
Even when you don’t have all the answers, or haven’t figured everything out, being passionate about your green business can persuade investors to invest in your company. Venture Capitalists typically gauge how passionate business owners are through their level of time commitment. If you are not that invested in your business, then why should the investor fund your business? Telling a story allows someone to understand who they are working with, whether or not they will work well together, and to get a grasp on the company’s vision. This promotes trust and comfortability since they are able to hear about the struggles and hardships, making investors feel excited about your business, and look forward to seeing more growth.
For more tips on how to craft a winning pitch, take a look here.
There are often times when you cannot find any investors to fund your business or any investors who are the best fit for your company. This is why government funding is available. Be sure to do your research and make sure the funding is available in your location, and see how it will benefit your specific business needs. Nowadays, many governments are investing in green initiatives, so thorough research may lead to promising funding channels.
Besides applying for government funding, you can also crowdfund your business. Using the loyalty of your strong social media following, crowdfunding is a great way to raise the amount of money you need, but make sure to be aware of which sites to use as some require you to disclose your funding goals or pay a fee.