Are you a start-up and just started thinking about social investment? We have some questions to get you started.
Think about risk
Investing in start-ups can be risky for both the borrower and the investor as they do not have a track record. You might have some evidence that people are interested in your product or service but you will never know for sure till you start.
Unlike their private sector equivalents, social sector start-ups will not be able to offer huge financial returns to investors who are willing to take a big risk - this is because how equity works where investors can sell shares when the company grows fast. Most social sector organisations might not be able to offer equity or shares might be locked within the community.
Before you start
- Whether anyone wants to buy your product or service
- Whether your customers will buy at the price that will help you create a sustainable business
- Assess what sort of funding is best suited to the business at this stage
What do you need the money for?
- Product/service design and development
- Testing services and products with customers
- Sales and marketing
- Investment in systems (IT, online, data)
- Legal documents, contracts and structures
- Staffing costs
- Your own organisation: investment from your charity’s reserves
- Friends and Family: small investments
- Crowdfunding: lots of small amounts of money from supporters. Usually through an online platform; around £2,000-£50,000
- Community Shares: lots of small amounts of money from people in your community. Average raised is about £200,000
- Accelerators and Incubators: investment and other support
Get the guide
Get our simple social investment guide for more information on getting started.