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Getting ready for social investment

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If you’ve been doing some research on social investment, you’ve probably heard the term ‘investment readiness’. Follow this checklist to help your organisation get ready for social investment.

What does being ‘investment ready’ mean?

If an organisation is ‘investment ready’, it means it has the necessary structures, skills, business model and track record to attract funding from the right type of investor. Although an investor might be interested in what you do, if you’re not ‘ready’, they may not want to take the risk of investing their money in your organisation.

How do we get investment ready?

‘Investment readiness’ can mean different things to different investors, so it’s important to find out as much as you can about what your potential investor expects from you. A social investor is giving you money because they want to see a social and a financial return. You need to make them feel confident that you can deliver both.

Most investors, whether they are individuals or organisations, will look for:

1. The right people

  • Have you assembled a strong team with the right skills to deliver your plans?
  • Can you show a passion for what you do?
  • Do you have experience of your sector and a strong understanding of your area of impact?
  • Do you have a strong board or group of trusted advisors who add credibility to your plans, or who fill gaps in your knowledge (for example, in legal, financial or technical areas)?
  • Do you have a track record of delivering these (or similar) products or services?

2. A robust business plan

  • Do you have thorough and well-researched information about your products or services, the marketplace you operate in, your management structure, competitors and partners?
  • Do you have a clear plan for marketing and communicating with customers about your products or services?
  • Do you have a clear and realistic growth plan, with milestones and timescales?
  • Can you show how you’ve calculated how much investment you need, what it’s for, and when you’ll need it?

3. Good financial planning

  • Do you have well-informed cashflow projections, sales forecasts and plans for growth?
  • Can you show evidence of a sustainable income mix (do you have secure income from other sources)?
  • Can you show evidence that you’ve considered other funding options and why you’ve selected this type of investment as the most appropriate?
  • Can you show a track record of at least two years’ sales income (unless you’re asking for investment in a start up)? 

4. Real social impact

  • Can you demonstrate your impact through meaningful monitoring information and data?
  • Do you have clear plans to monitor your social impact on an ongoing basis? 

5. Robust governance

  • Do you have a board who understand your organisation’s ambitions, and who are clear about their roles and responsibilities?
  • Does your board bring relevant skills and contacts?
  • Does your board have a process for assessing and monitoring risk?
  • Are your governing documents fit for purpose (ie do they allow you to carry out planned enterprise and growth activities that will enable you to repay the investment)?

6. Partnerships and networks

  • Do you have strong relationships with key partners?
  • Do you have strong relationships with suppliers?
  • Have you built a good relationship with the investor and other funders, and responded to their advice or feedback?

This may seem like a long list, but if you’re going to take on investment, you are taking on risk – since you (usually) have to repay an investment. The more work you can do to get your operational structures, business model, people and processes in order before you start, the less likely you are to run into problems later.

Most social investors (particularly the social investment finance intermediaries) will want to work with you to prepare and manage the investment. It’s in their interests that you succeed, so try to find an investor that you can build a good relationship with. Remember, if you’re not ready, or if the investment isn’t right for your organisation, don’t do it. However, if you are ready to grow, working with social investors can be the stepping stone to increasing your impact and learning a lot from experienced people as you do it.

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Page last edited Oct 09, 2019

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