How to pitch your work to mission-driven investors

Achieving the Sustainable Development Goals will require impact investment and venture capital, as well as development finance. But how can entrepreneurs working on shared global challenges access that money? Perhaps the single best way to learn how to pitch to investors is by sitting on the other side of the table. Last week, Devex had the unique opportunity to do just that — evaluating startup pitches as part of a social impact and mission-driven investor panel at the Silicon Valley Open Doors conference. “When I look at an investment, even one I think might have a chance of social impact, I look at — does it have a chance of succeeding, and does it have a reasonable risk-adjusted return?” said Alisa Yaffa, who founded Step Up Funding, which aims to accelerate the investment process for entrepreneurs. Her comments point to how mission-driven investors consider not only how an organization might make an impact, but also whether the company is positioned to succeed within its own market, and potentially scale. Yaffa and other investors on the panel heard from companies tackling challenges including early earthquake warnings and breastfeeding diagnostics for mothers. They scored each one according to the following categories: At conferences like this one, entrepreneurs often opt out of the sessions, instead walking through the halls, looking at nametags in search of venture capitalists. “Build what you build and build it well,” said Roy Glasberg, global lead for Google Launchpad, the technology company’s accelerator and startup program. All too often, entrepreneurs are going to market counting on venture capitalists to invest in them — an approach that can lead to failure, he said. Instead, they should start by doing something well, growing their user base, and drawing investors to them through their success. “I really focus on the triple bottom line” — economic value, social responsibility and environmental impact — said Ben Laufer, an impact and angel investor. He concentrates on companies that will potentially maximize financial returns, but have an even greater benefit to society and the environment, he said. “They are not necessarily mutually exclusive.” He called for entrepreneurs from other startup sessions at Silicon Valley Opens Doors — in categories including machine learning and artificial intelligence, virtual and augmented reality, and big data — to consider how they might adjust what they are doing, without redirecting the resources that are fundamental to their growth, to have a greater impact on society. “When you bring good capital to underserved communities it can be truly catalytic,” said Loic Comoli, co-chief executive officer of NESsT, which supports sustainable social enterprises that address social problems, create jobs or serve at-risk communities in emerging economies. NESst supports entrepreneurs in three ways: Through a technical assistance facility, which provides mentoring and business coaching; a grant facility for entrepreneurs who are not yet ready for investment capital; and a lending facility, which provides loans to companies that are more advanced. Comoli emphasized that this sector needs more stories of what is working in mission-driven investment in order to draw capital to these markets. For example, Natalie Pistunovich, CEO of Connta, framed the opportunity of the m-commerce, or mobile commerce, sector when pitching her enterprise: “More mobile phones + more financial inclusion = more offline stores going online.” “Those companies that never got started before because traditional venture capital was not interested, these days will get started because there will be angel investors who are more socially conscious.” --— Ilya Strebulaev, a professor of finance, Stanford University The role of venture capital in emerging markets is fundamental and underappreciated, Ilya Strebulaev, a professor of finance at the Graduate School of Business, Stanford University, told Devex — and it will only become more important in the future because of the dramatic reduction in the past five years in the cost of starting new companies. “Those companies that never got started before because traditional venture capital was not interested, these days will get started because there will be angel investors who are more socially conscious,” he said, ahead of a presentation of his latest paper on how venture capitalists make decisions. “I expect, based on my research, there will be a dramatic move from a Silicon Valley-centric [outlook] to a global spread [of] innovation.” He emphasized that the development community plays a key role in supporting global entrepreneurship, but argued that too many efforts focus on supporting entrepreneurs directly, rather than building the systems that allow them to grow, such as access to local capital. View the full panel from Silicon Valley Opens Doors here, and stay tuned for more Devex coverage of the role of venture capital in global development from the upcoming Emerging Markets Venture Forum hosted by the International Finance Corporation.