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    Top lessons in engaging funders

    BagoSphere's success story provides an important lesson for innovative startups looking to support developing countries. CEO Zhihan Lee shares his insights and includes 10 key questions to ask funders.

    By Lisa Cornish, Jenny Lei Ravelo // 28 May 2018
    CANBERRA — BagoSphere's success story provides an important lesson for other startups with innovative ideas to support developing countries. And lessons from their success is something BagoSphere Chief Executive Officer Zhihan Lee, is happy to share. He discusses with Devex his top lessons in engaging with funders for increased chances of success. Establish long-term relationships For Lee, whose organization connects large companies with disadvantaged youth — giving them experiential training and promising job opportunities, fundraising is all about people, and he believes that genuine relationships have to be fostered before approaching the money issue. Building strong and long-term relationships based on shared goals are important. “The best way is to raise money when you don’t need it,” he said. “When building a long-term relationship, we are building trust. To build trust, we have to learn about our mutual interests and just like dating, I believe in taking small steps to get to know each other, and really listen.” Practical management systems help Lee grow and develop relationships. “Someone wise once said, if a relationship is not getting stronger, it’s getting weaker,” he said. “I have adopted sales processes that help qualify leads, plan the engagement and reminds me to follow up. Being the only one in my team working on fundraising, I have to automate as much as I can. I use Asana to organize my fundraising timetable and follow ups. Choose funders wisely “With limited time and resources, we have to choose carefully what funding and funders we go after,” Lee explained. Typically, BagoSphere prioritizes referrals from their funders and stakeholders to progress. Investigating funders further is important in understanding who you are potentially going to do business with and whether they will be complementary to your work. “I do everything I can, including going to LinkedIn to research on the key people in the organization,” Lee said. “For a while, we worked with Smarter Good, a social enterprise that provides strategic fundraising, finance, and organizational support services for social sector organizations. They helped us to qualify organizations based on keywords such as ‘job-readiness’, ‘jobs or employment’, ‘workforce development’ — and whether we had a first-degree connection to funder, among other things such as geographical focus.” Develop a minimal viable product A minimal viable product, or MVP, is a product with just enough features to satisfy early customers and to provide feedback for future product development. Lee recommends developing MVPs to demonstrate capability beyond words. “In 2011, with just a few thousand dollars we bootstrapped our way to train 14 students as our pilot,” he said. “With the result, we then raised over 100,000 dollars as our seed round in 2012. We would have had a much harder time trying to fundraise without demonstrating that we had more than an idea. People like it that there is some early success, no matter how small it was.” Ask the right questions The questions Lee asks looks at how funders define their success and their priorities. For organizations with non-profit and for-profit models, Lee said funders come with different expectations, questions for them will investigate how philanthropic or commercial their intentions are. “For BagoSphere, at least in the beginning we were focused on getting impact investment that allows for a long-time investment horizon so that we have ample time to build the business,” Lee said. “We ended up getting a great bunch of investors who were invested in the long-term impact and sustainability of the company. That said, we were not a good fit, or had to turn away investors who wanted a much faster return of their investment. “Today, we are evolving to be a hybrid organization and have been able to unlock more philanthropic capital to lengthen our runway, and make the company ready for a growth stage and institutional funding to scale.” According to Lee, there are 10 key questions to ask of funders: 1. When was the last time you made an investment? 2. What is a successful investment to you? 3. What have been your most successful investments? 4. What social return do you seek and how is it measured? 5. What financial return do you seek? 6. How do you typically exit investments? 7. What is your minimum funding amount? 8. Who else do you co-invest with? 9. How does our business fit within your portfolio? 10. How do you interact with funders after investing?

    CANBERRA —  BagoSphere's success story provides an important lesson for other startups with innovative ideas to support developing countries. And lessons from their success is something BagoSphere Chief Executive Officer Zhihan Lee, is happy to share.

    He discusses with Devex his top lessons in engaging with funders for increased chances of success.

    For Lee, whose organization connects large companies with disadvantaged youth — giving them experiential training and promising job opportunities, fundraising is all about people, and he believes that genuine relationships have to be fostered before approaching the money issue. Building strong and long-term relationships based on shared goals are important.

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    About the authors

    • Lisa Cornish

      Lisa Cornishlisa_cornish

      Lisa Cornish is a former Devex Senior Reporter based in Canberra, where she focuses on the Australian aid community. Lisa has worked with News Corp Australia as a data journalist and has been published throughout Australia in the Daily Telegraph in Melbourne, Herald Sun in Melbourne, Courier-Mail in Brisbane, and online through news.com.au. Lisa additionally consults with Australian government providing data analytics, reporting and visualization services.
    • Jenny Lei Ravelo

      Jenny Lei Ravelo@JennyLeiRavelo

      Jenny Lei Ravelo is a Devex Senior Reporter based in Manila. She covers global health, with a particular focus on the World Health Organization, and other development and humanitarian aid trends in Asia Pacific. Prior to Devex, she wrote for ABS-CBN, one of the largest broadcasting networks in the Philippines, and was a copy editor for various international scientific journals. She received her journalism degree from the University of Santo Tomas.

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