Jason Graham-Nye of gDiapers, Shaula Massena an Angel Investor, and Don Shaffer of RSF Social Finance gathered with a room full of attendees to discuss the big picture on social finance. While there was a great amount of interaction and numerous ideas that got discussed, the big take-aways from each speaker can be distilled down to three elements each.
Jason Graham Nye’s tips for business owners looking to bring in money:
1) Know what your motivation is for taking outside money.
2) Make sure that money is in alignment with your mission.
3) Nothing (no package) is standard.
Shaula Massena’s suggestions when looking to Angel or VC funding:
1) Understand dilution. The pie gets bigger the more money you take in.
2) Have a full path to become cash flow positive.
3) Don’t be addicted to control.
Don Shaffer shares questions that RSF uses in its decision making process:
1) What is the management like? Do they invest in people? What are their intentions?
2) If it a business that has raised funds – Who are their other owners and are they also committed to the triple bottom line focus?
3) Why are they coming to RSF for financing? – RSF prefers to work with those that are not just looking for the best rate, they are looking for unconventional funding?
Overall these guidelines provide a good perspective to a business owner who is looking to bring in money. Understanding the mindset of all the parties and how and why they make their decisions is an important factor to deciding which route to use.
But even “traditional funding” sources are trying to get more creative. Three Twins Ice Cream self-described ‘indirect direct public offering’ in which they company raised $610,000 out of a needed $675,000 from its customers by using a small sign in their stores. Another novel route to funding involves employing alternative legal structure, something Criterion Ventures Structure Labs is promoting.