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Financing Strategies for Impact Ventures

Insights from Impact Encounters in NYC

On 22 May 2024, Impact Entrepreneur hosted the first in a series of in-person gatherings at Impact Hub New York Metropolitan. Financing Strategies for Impact Ventures brought together over 70 investors, entrepreneurs, students, and supporters of the New York ecosystem in the 5th Avenue co-working community space.

In-real-life events have regained their allure, and this one was no exception, as the buzz of diving right into the substance of a values-based conversation was perceptible throughout the evening.

Laurie Lane-Zucker, founder of Impact Entrepreneur, moderated a conversation with esteemed panelists Carol Caruso, Josh Cohen, and Peter Strugatz who shared insights on the financial vehicles and strategic imperatives that make funding a social venture more likely — if not easier — than ever before.

Unsurprisingly, balancing impact and financial performance took center stage in the discussion.

Finding vision alignment with funders and team members

Carol and Peter explained that finding, and caring for, team members should be a priority from the outset to establish mission alignment and the foundations for co-creation, systematic learning, and sustained performance.

To ensure these long-term results, Peter stressed that crafting a future org chart should be a recurring strategic exercise to identify the right roles and retain mission-aligned folks at various stages of growth. Even before your first hire, looking at how to mitigate risk must be a key consideration.

Attendees of Impact Entrepreneur's Impact Encounters Event May 22 2024

Photo by Isabelle Swiderski

Reduce risk

Indeed, risk remains at the heart of the conversation on securing VC funding. In Josh’s experience, there is no such thing as maintaining balance in that space, particularly due to the time-compression and rate-of-return expectations for venture capital. But, a trend he’s observed rests on finding a fit within 5 considerations, to bolster an early-stage impact venture’s chances of funding success regardless of the financial instrument being sought:

  1. Sector
  2. Geography
  3. Asset class
  4. Impact strategy
  5. Return profile

Measure performance as well as impact

In both dimensions of impact and financial performance, as Carol pointed out, evidence is key. It is never too early to start measuring — in the field, regularly, and rigorously. Because, more often than not, Josh interjected, lack of measurable (and adequate) performance, is the main trigger for issues with investors. If you can “make it work with your first check”, future successful relationships will flow from it.

Beyond VCs

On defining the path to funding, Carol offered that the key questions always rest on the nature of your business and the success you generate. Tried-and-tested starting points include bootstrapping, friends & family or angel rounds, crowdfunding platforms (donation- or equity-based) and, as you gain traction, SAFEs or revenue-based lending.

Building on this, Peter outlined that “straight equity and straight debt should not be the only things to look at” and mentioned alternate avenues to consider as you clarify your funding needs in relation to your venture’s stage of maturity, such as layered USDA loans and grants, tax credits, or opportunity zones.

Beyond funding, Josh reminded the audience that a good match is one where both partners benefit: money, and bespoke support in exchange for a rate of return that is risk- and time-appropriate.

Networking at Impact Entrepreneur's Impact Encounters event in NYC May 2024

Photo by Isabelle Swiderski

Success breeds freedom

One idea emerged as underpinning all others: demonstrating traction will deliver the freedom to grow your venture in alignment with your vision and values.

You might say all entrepreneurs seek this freedom, whether they self-identify as social impact entrepreneurs or not, and you would be right. But perhaps this freedom feels harder won when entrepreneurial structures and market forces evident in late-stage capitalism —and pervasive in our daily lives as economic agents and as citizens — remain largely unchanged in what they value — even without minimizing the undeniable growth of impact investing globally.

As the evening ended, there were expressions of gratitude. For wisdom, for connection, for finding space and words for dialogue, for bearing witness to the steady progress of the new economy.

Stay tuned for upcoming events in a city near you as this series unfolds.

All Photos by Isabelle Swiderski

Isabelle Swiderski founded her design-for-impact agency Seven25 in 2007 to help values-driven organizations leverage the power of design. Marrying an MBA and MA in Design, Isabelle facilitates systems change and social justice and innovation work in partnership with NGOs, universities, governments, entrepreneurs, and ecosystem builders globally. She also serves as ... Read more
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