Female Founders Raising Capital: Social Missions Over Profits
Raising capital often comes with the prospect of profitability and big returns, but for social enterprises, the fundraising landscape is different.
While funding social missions can generate rich opportunities that fuel economic growth and improve people’s lives, there is a lack of funding going towards social causes and it remains one of the major challenges for many social enterprises.
With social entrepreneurs prioritizing social gains over profits and spending most efforts on delivering large-scale social changes, their companies’ missions don’t often translate well when raising capital from conventional investors — equity investors, banks, bond funds, venture capitals — who focus on the fundamental questions: Can they generate enough revenue? Can they attract enough investment to scale and provide healthy returns?
To understand key challenges social entrepreneurs face, Connecting Founders discussed with Jenn Weidman, founder and CEO of Space Bangkok, who shared her experience raising capital and ways social enterprises can navigate fund.
Jenn Weidman is no stranger to the darker sides of difficult work. The founder and CEO of Space Bangkok had witnessed her fair share of crises and burnout that had left her and many people she worked with no spark or energy to draw on. As she accompanied professionals through their own crisis and burnout experiences for years, Jenn realized it didn’t have to be this way and that was the start of her mission.
In 2016, she launched Space Bangkok to foster resilience in workplaces helping teams, individuals, and organizations with resilience building, process facilitation, peace building, leadership development, and training. As a social enterprise, a significant portion of the profits goes into reinvestment to make their services accessible for all.
It’s not all about profits
Jenn was looking to raise about 20,000 USD for working capital as she worked on building a roster of clients and hiring staff. Though not a large sum of money, Jenn has calculated that it would be enough to cover about three months of operations. With more people joining the team, Jenn wanted to make sure she had enough funds to bridge any potential hiccup in cashflow.
“The whole idea of asking for money is challenging”, Jenn admitted, “especially when you are not promising large returns. I was initially very shy about it. I knew that even if we got to the point where we could give dividends, it would be some years down the line and certainly it wouldn’t be what venture capitalists are normally interested in”.
From Friends to Stakeholders
Jenn ‘followed the money’ by attending networking events and seeking conversations with potential investors. But she quickly realized that raising to fund operational costs was a hard sell to Bangkok-based investors, who are mostly looking for the newest tech start-up. She also realized that, as a foreigner, she was disadvantaged and did not have the right network or connections to draw from – something that is very important to raise capital in cliquish Bangkok. This led her to pivot her efforts towards looking for angel investors and those admittedly rare investors more focused on impact and less on making significant returns from their investments.
But as it turns out, it was a conversation with her longtime friends that granted Jenn the funding she needed.
Starting off as a friendly curiosity about Space Bangkok, the conversation quickly moved to inquiring about its social mission, the difference it will make to society, and the capital it would need to stay operational, revealing much more than a passing curiosity. Unexpectedly, Jenn found investors in her friends, aligned in their vision and keen to support a business with a committed leader and a strong social mission.
While her fundraising was ultimately successful, Jenn’s experience reflects the challenges that many social enterprises face when fundraising. With investors and social entrepreneurs focusing on different goals — returns vs. social impact — many social enterprises never have a chance to take off.
As a female founder
Several research — Fundera, SCORE, Venture Capital — indicates that female founders tend to be less aware of the range of funding options available and to ask for less money than men when they raise capital, often assuming that asking for little might make the fundraising process easier and faster.
With Thailand’s investment landscape being driven largely by connection-based and male-dominated networks, Jenn being a female and foreign founder means she had no insider connections to leverage her position which more or less excluded her from accessing funding opportunities. “If you have connections, there are never ending opportunities”, she said, “But if you don’t, accessing capital is still possible but you really have to hustle a lot more.”
Given such an environment and the fact that she didn’t want to take on straight debt, Jenn had to look for alternative funding options prompting questions such as “What is the lowest possible amount I need to run my business?”
She advises entrepreneurs in her position to always be prepared and know their numbers cold – revenues, expenses, how much they need, what it will cover. When opportunities arise, they may need to present their businesses on the spot and need to be ready to vocalize what they are looking for with confidence. Also, don’t be shy about asking for money – you are offering an opportunity. It’s not something to be embarrassed about.
More from the Female Founders Raising Capital in Thailand series: Connections Get Your Foot in the Door