Tips for How to Raise your First Impact Fund
If you’re planning to raise money for your new impact venture fund, get ready for a long, challenging and uncertain road. From our successful efforts with Unitus Ventures (formerly Unitus Seed Fund), and our colleagues’ efforts with Elevar Equity and Unitus Impact, I can tell you it’s a very competitive world out there. In fact, because the impact sector is still a nascent marketplace, corralling impact investment is sometimes more art than science. There are plenty of worthy companies and funds chasing a limited amount of impact-focused funds, especially in higher-risk early stage areas.
Still ready to go for it? If so, here are some important, high-level tips for the tough, but potentially earth-changing, journey ahead:
- Optimize you story. Be sure to refine and optimize the words and imagery you use in your pitch deck, investor summary, emails and conversations. Edit, edit, edit. It will be a process that never ends, as you continue to improve your messaging to potential investors. Remember that the goal of any pitch is not to answer every question, but rather to connect to and evoke great questions from your audience. If their questions are really good, it means you’ve hooked them.
- Clarify impact vs. profit. It’s vital to be clear on how your investment opportunity will deliver impact and profit. Which are you optimized around? Where do you draw the line (of not enough impact or not enough profit)?
- Develop a robust FAQ document. Anticipate the important questions you’ll get from investors and continue to capture them along the way. Be sure to develop crisp and accurate answers, and continue to refine those answers along the way. Investors expect you to answer every question and you don’t want to backpedal later.
- Start your outreach with friends and colleagues. Your immediate network of friends and business contacts are more likely to hear your pitch, give constructive feedback, invest in someone they know, and refer you to other potential investors. If they won’t invest, it’s probably an indication that the idea needs rethinking, or the presentation needs big improvements, or both.
- Reverse engineer the process. Identify individuals, institutions and foundations that have funded, supported or partnered with similar impact funds or enterprises. If they’ve already bought into impact investing and support programs in your space, they’ll at least be interested in hearing your story. Do your research – you don’t have time to waste, and funders don’t like having their time wasted by off-the-mark pitches.
- Prioritize your outreach. Based on the targeted sectors, geography and size of your capital raise, you must prioritize your efforts. Rank the largest potential investors who are most likely to be interested and allocate more of your time and energy in connecting with them early.
- Keep a database of the process. Be sure to maintain a detailed record of who you need to pitch, why they may be interested, who referred you, where they are located, and more. And if they turn you down, be sure to keep track of their rationale to inform future outreach.
- Don’t give up! If you can raise a significant portion of the total raise – let’s say around 40% – in under a year, there’s a good chance you’ll reach your target. Many investors, particularly institutions and foundations, are followers and often decide to invest at the 11th hour. Persistence pays dividends.
Good luck and good hunting!