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Targeted Investor Research Guide PDF Document
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Step 3: Conduct Targeted Investor Research and Score Your Investors

Use the investor databases and shortcuts in the Targeted Investor Research Guide to broaden the pool of investors on which you can apply your filters.  Use Tab 2 of the Investor Alignment Tool to track investors you find through the process. Use Tab 3 to apply your filter criteria and score investors for easy comparison.  See which investors align with your needs, and filter out the ones that aren’t truly compatible.  Emerge with a short-list of top investor targets worth your time to actively pursue.

Step 4: Assess Your Top Target Results

Are you in good shape, with some strong investor targets?  If not, consider going back through the process and try to enlarge your pool of potential investors by:

  • Reprioritizing your filter criteria
  • Using more tips in the Targeted Investor Research Guide
  • Considering different investor types

Additional Investor Research Resources

Conferences, fellowships, incubators, and accelerators are all great ways to get yourself face-to-face with investors. But these events and programs can also take up a lot of your time. Use the short guides below to be strategic in how you use these opportunities to pursue funding.

Investor Alignment Tool Excel Document
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Step 2: Understand & Document Your Filter Criteria

What filter criteria should you use to achieve a good fit between your venture and investors?  Use Tab 1 of the Investor Alignment Tool to document two important filters you will use to triage investors: Knockout criteria and Fit criteria.

Video Transcript: 4 Steps to Identify and Prioritize Top Targets Document
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Video Summary: 4 Steps to Identify and Prioritize Top Targets
(Video coming soon)

Are you wasting precious fundraising time chasing dead-end leads?

Entrepreneurs tell us they spend SO MUCH of their limited time on the fundraising process, often with limited success.  But there is a better way!  Through a simple 4-step process, you can identify and prioritize the investors worth your time to target – increasing your chances of success and impressing investor targets with your strategic approach.

Investor Type Profiles Document
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Step 1: Identify Promising Investor Types

What are the motivations and constraints of different types of investors, and how does that impact their potential to invest in your venture?  Use the Investor Type Profiles to understand how they differ and identify the most promising types of investors for your venture.

Capital Action Plan PDF Document
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Directions: Capital Action Plan
Document your actionable strategy to further evaluate the most promising types of capital for your organization.  This tool builds upon your work in the Types of Capital Comparison Tool, allowing you to document the pros and cons for your organization and identify next steps to answer the questions that remain.

 

What do you think?

Please share your feedback on Module 4. Were the resources useful to help you identify the right types of capital for you?

The Basic Three: Grants, Debt, and Equity PDF Document
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The Basic Three: Grants, Debt and Equity
Before you dive into the many types of capital available to impact entrepreneurs in the Types of Capital Comparison Tool, you should be familiar with the key aspects of the Basic 3: grants, debt, and equity.  If you need a refresher, download this cheat sheet to get up to speed.

Types of Capital Comparison Tool Excel Document
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Directions: Types of Capital Comparison Tool
Use this tool to narrow in on the types of capital best-aligned with your venture.  Start by answering five big questions about your growth and ability to make payments; your answers might eliminate groups of capital automatically.  Compare the remaining types of capital across key considerations for alignment, including due diligence burden, governance and strategy implications, and more.

Types of Capital Primers

Need more in-depth knowledge about any specific type of capital? Look no further! Each primer includes the benefits, drawbacks, biggest misconceptions, next questions to consider, and additional resources.

Additional Resources

Why Type of Capital Matters

Are you raising the best capital for your venture?
Impact ventures have an increasing number of capital vehicles available. Beyond the main types of grants, debt, and equity, there are more innovative vehicles designed to address the needs of impact enterprises. Understanding the nuances of these vehicles is critical to selecting one that is well-aligned and to negotiating favorable terms with your investor.
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Five Big Tips

How can you start to find the right investment vehicle for your venture?
Check out our five big tips to get you started, and then dive into our tools to help move you through the process.
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Capital for Stages of Growth PDF Document
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Capital for Stages of Growth
What does your stage say about the types of capital that are best-aligned with your venture?  If you’re in the early blueprint stage, you need flexible capital to experiment, iterate, and show traction.  As you improve your unit model, produce profitable units, and move toward scale-up, you can turn to capital with less flexible terms.  Use this chart to get a sense of where you stand.

Types of Capital Chart PDF Document
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Types of Capital Chart
What is the range of capital available to impact entrepreneurs, and what are their distinguishing characteristics?  Download the Types of Capital Chart to see the spectrum of capital types with straightforward definitions.  In the next section, we provide you with a more in-depth interactive tool to compare key elements across these types of capital and narrow in on the ones best suited for you.

Now it’s your turn – custom build your own financial model!

Use the instructions and a blank template to produce your own model.  Calculate and play with your own funding gap, and use the model’s metrics to inform your investment strategy.

Multi-Product Financial Model Files

The Multi-Product Model meets the needs of companies with multiple product or service offerings.  It differs from the simple Single Product Financial Model (below) in the way that revenue and variable costs are calculated.  In this model there are two different ways to estimate variable costs:

  • Percentage-based analysis: you estimate growth in total revenues and total costs for each product/service line
  • Volume-based analysis: you estimate the number of units sold in each product/service line, unit price, and direct material costs of each unit.

You can also use a combination of these two methods, using a percentage-based analysis for some product/service lines and a volume-based analysis for the others.

Single Product Financial Model files

This is our simplest financial model, so it is best used as a learning tool or to model a relatively simple organization.  Here are some of the cases in which you may use this model:

  • You want to learn more about modeling the financials of a business and want to start simple
  • Your organization is already operating and has only a single product or service offering
  • You have an idea for a brand new organization offering only a single product or service that you want to test
  • You want to generate a simplified model of a more complex organization using rough estimates.  Specifically, you plan to model your entire organization as though it provides a single product or service, using an average price, an average number of units sold, and average COGs.

Pricing Analysis Tool

This tool is designed to inform your analysis of how the price you set for a single product or service will impact time to breakeven for that product or service.  It is important to note that breakeven analysis is only ONE input into your decision about price setting.  You will also want to evaluate other factors, such as what price the market can bear and what competitors charge.

Audio: Advanced Tips from CFO Alden Zecha
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What do you think?

Please share your feedback on Module 3. Have you used the resources and templates provided to build or improve on your financial model?

Calculating Your Funding Gap: Making Sense of Your Outputs

What financial statements and calculations results from your inputs?
Your inputs produce an income statement, balance sheet, and cash flow projection. Plus, our model brings together some of the key metrics in a summary page - including the calculation of your funding gap! After watching these videos, you are now ready to customize your own financial model.
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Financial Model Practice Questions

Test your understanding of how to make changes in the model, and the impact on your summary metrics.

Calculating Your Funding Gap: Building Business Input Projections

How do you input your own data and projections into the financial model?
A sample company helps us easily explain the elements of the model, and how you input your own data and make projections. Even if you have your own model, this video will help you better understand the elements, and can give you ways to improve it.
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Calculating Your Funding Gap: Funding Gap Overview

What is important about your funding gap?
Investors want to know how much capital you need to raise to get to break-even and, importantly, the underlying assumptions. Your financial model is a crucial framework for investment decisions; see the key concepts you should keep in mind before diving into your own model.
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The instructional videos in this module walk you through the process of using and interpreting a simple but robust multi-product financial model for a business with multiple products or services.

COVID-19 Update: Here is advice on financial modelling from our How do I Raise Capital During COVID-19? Guide:

Stay afloat.

  • Don’t run out of cash. If you don’t have a business or organization, you won’t have any impact. The name of the game right now, as outlined in Mulago Foundation’s excellent resource: Lessons from those who’ve been here before, is simple: to stay in business as long as you can. You need to know EXACTLY what your cash runway is, or how many months of cash you have on hand or can generate to survive.
  • Get friendly with Excel. Open Excel and start running scenarios to define your cash runway.  Module 3 provides templates for cash projections and step-by-step guides on how to enter data and understand outputs. Get ready for some long Zoom calls with your CFO. No CFO? No worries, you can do this yourself. You need to run projections for revenues and expenses under various scenarios. What if the economic shutdown lasts for 3 more months? 6? 12? 18? Most experts we talked to say: start with the worst case. Model out what can happen to you if this continues for 18 months. Then backtrack and see what are the biggest costs that need to be cut in each scenario.
  • Probe each input. What are revenues likely to look like during each of these periods? What growth or loss rates are likely for different products or segments of the business? Which customers will be affected and might cut contracts or stop purchasing from you? What costs can you cut or slow down? Ultimately, how much cash runway do you currently have? How far can you stretch it just based on internal actions? Try for a minimum cash runway of three months and your goal is to make decisions now every week or month about how to make it longer.
  • Now is not the time for optimism. Consider removing all non-confirmed funding and revenue streams from your projections, even deals that were almost signed. Deal with what you have in hand.
  • Prioritize. As you think about various revenue lines, prioritize the initiatives, products, or services that will deliver the most value. Define different kinds of value and use those as a guideposts.

Explore your options

  • Consider staffing carefully. Think about how to handle staff costs. Could you do an across the board pay cut to save all jobs for a while? Which jobs could be changed into something that others value more during this period? For example, during the webinar, Anushka Ratnayake of MyAgro who is based in Senegal, explained she had made tough decisions about staff, reducing their global team (US-based) slightly to preserve local jobs. They also turned half of their 200 sales reps with great telephonic skills into “call center agents.”
  • Go Macro. After you have a cash runway based on internal factors, Macro Scenario Planning is a very robust way of trying “what-if?” scenarios. In our experience, most entrepreneurs do not run enough of them. You want to organize your scenarios around major assumptions so that you have a list of concrete activities to take if certain things do end up happening. We really like this Macro Scenario Runway planner from a guide put together by a set of investors in India. The instructions include a matrix to help you methodically consider options.
  • Engage stakeholders. You also want to think about scenarios not just with internal information, but with good external information. Now is the time to reach out to all your stakeholders, customers, suppliers, investors, board members, funders, lenders, peer collaborators, and ask them what they are predicting for their own business going forward. How do their plans or constraints affect yours?

 

What template should I use?

If you have a simpler model with a single product or service, you can use the single-product model instead.  For types of models, we offer different timelines to suit your needs: 5 year, 10 year, and 60 month. In addition, we have a pricing tool that any business can use to analyze how the price you set for a product or service impacts time to breakeven for that product or service.

We recommend watching the instructional videos to better understand the concepts and data needed for the model, and then visiting section 3.4 for the full list of template and example files available to you.  A summary of that list is here: