Richard Branson on Finding Funding

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Entrepreneur | BY | Feb 24, 2014

Richard BransonEditor's Note: Entrepreneur Richard Branson regularly shares his business experience and advice with readers. Ask him a question and your query might be the inspiration for a future column.

Q: I am a social entrepreneur, striving to develop a business in Africa that makes a difference, but my struggle is the same as that of millions of others: finding funding. I come from Denmark, and potential investors always tell me, “The idea is great, but please prove that your business model works first, and then come back.” Should I look abroad for funding instead? -- Christian Høegh-Guldberg Hoff, Nairobi, Kenya

More and more often I hear from people like you, who are in our field for the right reasons. It’s very encouraging to see enterprising social entrepreneurs prove that they want to help people and the planet by doing good business.

It can sometimes be more difficult for social entrepreneurs to secure funding than for those proposing to run purely commercial, profit-driven enterprises. Getting your message across to potential investors can be particularly challenging, since they may assume that because you intend to solve a problem or help people, you must be adopting the nonprofit model.

Your local community is often the best place to start when looking for funding opportunities, but if you can’t find anyone suitable to work with, the logical next step is to broaden your search to the national or even international level. And if you do have the option of bringing in foreign investors, this may be to your advantage in the long run. Your business could gain some important contacts, while their outsider perspectives on your business may offer some interesting insights. When you’re ready to expand the business internationally, the process will be a lot easier if you have contacts already in place.

View:  Crowdfunding is essential for innovation and job creation

There are many organizations aside from venture capital funds or banks that socially responsible startups can try in their search for funding. Virgin has been involved in the Dutch Postcode Lottery for years, and last year I chaired its sustainable competition jury, which provides a lot of funding to green businesses. Included in the prize are opportunities to work with a mentor, which are just as important as cash. On a similar theme, I was also on the jury for the $4 million Zayed Future Energy Prize, based in the United Arab Emirates, which encourages entrepreneurs to find innovative solutions “that will meet the challenges of climate change, energy security and the environment.

Another great way to generate excitement about your idea and raise funds is through crowdfunding, an option many startups are choosing. Thanks to websites like Kickstarter and EquityNet, it’s now easier than ever before to drum up interest around your new idea or innovation and find small loans and pledges that supply the money you need to take things forward.

There are other benefits to taking the crowdfunding route. Pitching an idea to a room full of investors can be tricky; while preparing a pitch for an online forum is not easy, it does require a different set of skills -- perhaps this is an area where you and your business idea shine. Gaining momentum is also very important: The crowdfunding process may create a buzz about your business as the money begins to roll in. If things go well, you could soon find people from all over the world hoping to buy your product or service --so make sure you’re ready to provide it.

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