Start-up social organizations should look to tech companies for how to raise money

May 8, 2021 by No Comments

Tech companies know how to raise money. Nonprofit startups and social businesses should take their lead as a potential way to raise funds. If you know anything about the tech industry, you know that they are great for raising investment capital.

So my question is, do you just have to rely on the old methods and models of raising money for your new social enterprise? Or, can you think outside the box and see how to raise capital, take your foot off the perpetual pedal of philanthropic fundraising, and then switch to focus on programmatic goals?

The mentality

When looking to fund your social sector start-up organization, you need to have a clear fundraising mindset. The most successful tech companies that raise millions of dollars early on are looking for a specific amount of money. In addition, they are also clear about the objectives they seek to achieve with that money.

Having this kind of thinking is vitally important and is a mindset shift from traditional philanthropic fundraising. You see, most nonprofit executives view their fundraising as an ongoing part of their operation. It happens every day and at the same time they seek to run their programs.

In the tech industry, a company will raise its startup capital and then focus on getting the job done. They dedicate all their energy to achieving the objectives and showing their followers that they have what it takes to make this happen. Then when they have achieved those goals, they enter the next fundraising stage.

Imagine being able to run a fundraising campaign, raise the capital, and then put that work aside and focus solely on the programs!

Investment in talent

Tech companies are not afraid to invest money in talent. If you are looking to establish a new non-profit or social business, you need not fear that investment. This is the deal, you want the best people on your team. To be successful, you must hire the best program director. You want the best marketer to bring your brand to the masses.

But with that, you should be prepared to explain this to your backers. I have written several times in the past about the rejection that nonprofits receive from donors and the payment of their staff. That’s because the social sector has done a terrible job communicating and explaining why it makes sense to pay for the best talent.

By investing in talent, you get a team of professionals who will make it happen. Your investment goals will be met if you have the right talent to work with you. That requires competitive money.

Demonstrating impact

The days that a donor donated to their pet’s charity with little expectation of results are long gone, as they should be. Today’s donors want to see results and impact. They want results. Technology and the low cost of obtaining tools to process the data has caused more donors (even gift givers in general) to want to put their money where they can see tangible results.

You need to get the data. Everything in the world today is measurable. Don’t think it isn’t. Be prepared to present your backers with the metrics and data they need to know that you have been successful. And, when you start a second or third round of fundraising for another goal or project, they will be more willing to support your vision.

Where to look for financing

Traditionally, nonprofits looked to major donors, institutional donors, and the government to raise funds. Although crowdfunding has been around for a long time, technology has allowed the social sector to be more creative about how they raise funds.

But beyond that, if you are thinking about fundraising for your start-up social business, then you need to think differently about your fundraising.

  • Angel investors can support your first stage financing for program and operational development.
  • A single institutional funder or a handful of large funders can take a significant part of your initial goals off the ground.
  • Venture philanthropists look for the most innovative and innovative organizations to fund.
  • A co-founder with a lot of money can support you with your fundraiser in whole or in large part. You can have the idea and the programmatic piece and your co-founder can help fund it during the initial stage.

Whatever you do, if you are looking to start a new social business or non-profit organization, don’t just think of the traditional fundraising plan as the way to achieve success. I encourage you to consider the technology industry as a model for getting that initial round, and beyond, of capital that you will need to be successful.

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