Impact venture finance

1. mpact enture inance

5. 1．Why fundraising matters? -4- © KIBOW All rights reserved.  Time  Cash  Expenses  R&D  pay for staffs rent offices ads etc.  Income  sales Prepare Launch Grow There is a time lag between expenses and income. The deficit will continue until income exceeds expenses. Deficit

12. Repayment Involvement In decisions Size Note 2．Which type of capital? -11- © KIBOW All rights reserved. Grant Debt Equity Not required Not required Required (principal + interest) None High Low Small Medium Large NPOs cannot raise equity investment Types of capital comparison ーー

13. 2．Which type of capital? -12- © KIBOW All rights reserved. Debt Equity The appropriate type of capital varies depending on the growth curve you aim. This is because equity investors expect capital growth and debt investors expect stable interest. growth growth time time Exponential growth Linear growth Growth curve and type of capital

14. 2．Which type of capital? The optimal investor varies depending on the stage of growth as each type of investor has different motivations. -13- © KIBOW All rights reserved. • Family & friends • Crowd-funding • Government • Foundation • Angel investor • Government financial institution • Regional financial institution • Impact investing fund • Venture capital firm • Corporate develop and improve your product have an idea build a business model grow impact & profit Impact Maximization Capital for stages of growth Planning Validation Business Modelling

15. 2．Which type of capital? -14- © KIBOW All rights reserved. Family & friends Crowd-funding (donation) Government Foundations Type Grant (donation) Grant (donation) Grant Grant Motivation Personal relationship Various Public interest Social impact Note Mixing business and personal relations can be difficult Platform fees (10-20%) Restricted purpose In the planning stage, grant is common.

16. Angel investors Government Financial Institutions Regional Financial Institutions Type Equity Debt Debt Motivation Various ・Public interest ・Financial return (interest) ・Community development ・Financial return (interest) Note Not necessarily investment professionals Need repayment with interest 2．Which type of capital? -15- © KIBOW All rights reserved. In the validation stage, equity by angel investors and debt by government/regional financial institutions are common.

17. Venture Capital Firms Impact Investing Funds Corporates Type Equity Equity Equity Motivation Financial return (capital growth) ・Social Impact ・Financial return (capital growth) Business synergies Note Reputation of investment professional Limitation of collaboration with other companies 2．Which type of capital? -16- © KIBOW All rights reserved. In the business modelling & impact maximization stage, equity investment is common.

18. 2．Which type of capital? -17- © KIBOW All rights reserved. Impact investments are investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return. Impact Investing Fund Pre-investment （investment decision） Post-investment（hands-on support） Financial return Impact × × Mgmt support Impact support Impact investment funds not only evaluate impact when making investment decisions, but also provide support to maximize impact after investment. Venture Capital Firm Financial return Mgmt support Impact investment

20. 3. How to fundraise? -19- © KIBOW All rights reserved. Criteria for selecting investors Tips for pitch Investor’s perspective Find the right investor Pitch to investor Respond to investor’s due diligence 3 steps for fundraising 1 2 3

21. Geographic area 3. How to fundraise? -20- © KIBOW All rights reserved. Criteria for selecting investors Industry Stage Investment size Support To select a promising investor efficiently , check the investor's target area, industry, stage, investment size, and support. Is the investment size enough for your business? What kind of support the investor offer? Is your business included in the target area? Is your business included in the target industry? Is your business aligned with the target stage?

22. 3. How to fundraise? -21- © KIBOW All rights reserved. Avoid these investors Investor is like a marriage partner. Be careful of the following types of investors. No respect for entrepreneurs Lack of understanding of social issues Poor quality of post-investment support

23. Type Description Time Elevator pitch Short and concise pitch 15-30sec Contest pitch Pitch for the public held in a contest format 5-10min Investor pitch Pitch to investors 30-60min 3. How to fundraise? -22- © KIBOW All rights reserved. Tips for pitch There are 3 types of pitch. In this lecture, we will focus on investors pitch.

24. 3. How to fundraise? -23- © KIBOW All rights reserved. Tips for pitch  Know your audience  Research audience’s profile  Match pitch with audience  Get trust  Show your weakness to overcome  Be interactive  Prepare for Q&A 10 tips for pitch prep and delivery  Attract your audience  Start with a short overview  Tell your story with numbers  Show examples  Avoid jargon  Improve  Get feedback and improve

25. 3. How to fundraise? -24- © KIBOW All rights reserved. Tips for pitch 1. Social Issue 2. Customer & Product 3. Market Opportunity 4. Business Model 5. Management Team 6. Growth Strategy 7. Impact Strategy 8. Competitive Advantage 9. Financial Performance 10.Financial Plan Prepare for these components of the pitch. 1. Social Issue, 2. Customer and Product, and 5. Management Team are the most important. 10 Components of pitch

26. １．Social Issue 3. How to fundraise? Investor’s perspective -25- © KIBOW All rights reserved. Vision (TO BE) Current situation (AS IS) Social Issue (GAP) □ Is your vision attractive? □ Do you have an objective view of the current situation? □ Do you identify the leverage point to change?

28. 3. How to fundraise? -27- © KIBOW All rights reserved. 2．Customer & Product □ Is there a strong need and can your product meet that need? □ What is the value for the customer? □ Why do customers continue to use your product? □ How and when your product will be improved in the future? Investor’s perspective

29. 3．Market Opportunity 3. How to fundraise? -28- © KIBOW All rights reserved. Market Size □ Is the market size large enough? □ Is the basis for calculating the market size clear? (target area, population, income level, etc.) Market Growth □ What was the past market trend and why? □ Why now? □ What is the future market trend and why? Market Share □ What percentage of market share does your company account for? Investor’s perspective

30. 3. How to fundraise? -29- © KIBOW All rights reserved. 4．Business Model □ Customer segmentation Who are the customers? □ Distribution channels How do you get your product to customers? □ Profit formula How to make profit? Investor’s perspective

31. 3. How to fundraise? -30- © KIBOW All rights reserved. Examples of Business Model １．Manufacturing 2．Retail 3．Ad 4．Subscription 5．Freemium 6．Matching buy sell manufacturer sell buy service Premium provide ad fee ad Free service match e.g. recruitment e.g. TV e.g. supermarket e.g. mobile phone e.g. music provider e.g. car company

32. 3. How to fundraise? -31- © KIBOW All rights reserved. 5．Management Team □ What motivates you? □ What are your strengths and weaknesses? □ Is there someone to complement your weaknesses? □ Are you open to get feedback to learn and improve yourself? Investor’s perspective

33. 3. How to fundraise? -32- © KIBOW All rights reserved. 6．Growth Strategy □ How do you increase customers? □ How do you expand regions? □ Is your speed of business growth fast enough? □ What is your 5-7 year roadmap? □ What are the bottlenecks and how do you remove them? Investor’s perspective

34. 3. How to fundraise? -33- © KIBOW All rights reserved. *see next slide 7．Impact Strategy □ What is your impact model*? □ Do you identify key impact indicators? □ How do you collect impact data? Investor’s perspective

35. 3. How to fundraise? Impact model is a graphical representation of what value is provided to whom and what kind of change is created in society No poverty Sustainable cities and communities Business Model Social Impact SDGs Target ・poor ・disabled ・elderly etc. Safe Healthy Independent Eliminate discrimination Community Government Sustainable economy Vacant Reform Investors Fundraise Reform Provide House Tenant Support Reconnect e.g. Affordable housing -34- © KIBOW All rights reserved.

36. 3. How to fundraise? -35- © KIBOW All rights reserved. 8．Competitive Advantage □ Who are your competitors? □ What are the differentiators from your competitors? □ Are the differentiators difficult to imitate? Investor’s perspective

37. 3. How to fundraise? -36- © KIBOW All rights reserved. 9．Financial Performance □ Are sales growing? □ Are there any excessive expenses such as advertising costs? □ What is the gross margin ratio? □ Doesn’t your company have debt too much? Investor’s perspective

38. 3. How to fundraise? -37- © KIBOW All rights reserved. 10．Financial Plan Profit Plan □ What are your KPIs? □ Is your sales forecast realistic? □ Is your cost estimate reasonable? □ Can you ensure profit even in the worst case? Capital Policy □ Is it clear when, how much, from whom, and for what the funding will be raised in the future? Investor’s perspective

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