Launching and Financing Your Social Enterprise Empowering People to - - PowerPoint PPT Presentation

Empowering People to Change the World

Funding and Mentoring Entrepreneurs DRAFT October 7, 2009

Launching and Financing Your Social Enterprise

February 2013

Agenda

• Background on Draper Richards Kaplan
• The Funding Landscape
• The Funding Process
• Things to Consider
• Q&A

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Background on Draper Richards Kaplan

• DRK is a Venture Philanthropy firm founded in 2002 by Jenny Shilling-

Stein along with Venture Capital veterans Bill Draper and Robin Richards.

• DRK is an early-stage, high-touch funder of social innovation:

“We invest in social entrepreneurs who change the world.”

• DRK operates like a venture capital firm:

– Raises funds from limited partners (and spends down over 5-7 yrs) – Provides capital to early stage organizations ($100K/yr x 3years) – Provides strategic and operational support beyond the capital

• DRK has funded 49 organizations to date:

– Issue-area agnostic – Geographically agnostic – Focused on early stage – Highly-selective (<2% acceptance)

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Background on Draper Richards Kaplan: Business Models in DRK Portfolio

4 Tightest management /least speed Loosest management /greatest speed

Full management Franchise Partnership Curriculum distribution Network

• Organization fully

manages

• perations at all

sites

• Organization

licenses management of

• perations as part
• f a single network
• Organization

licenses other

• rganizations to

employ model as part of their own network

• Organization

authorizes use of its model through distribution of curriculum to

• ther
• rganizations
• Organization

grows through spread of ideas through loose network of individuals/

• rganizations
• Room to Read
• Design that Matters
• Education Pioneers
• Kiva
• The Mission Continues
• VisionSpring
• One Acre Fund
• Grassroot Soccer
• Living Goods
• Little Kids Rock
• Spark
• Genocide Intervention

Network

Agenda

• Background on Draper Richards Kaplan
• The Funding Landscape
• The Funding Process
• Things to Consider
• Q&A

5

The Funding Landscape: Sources, Dynamics and Considerations

• Funding Sources

– Individuals – Foundations – Corporations – Government Entities – Other Non-Profit Organizations – Earned Revenue – Note: Highly successful non-profits have a concentrated funding mix

• Funder Dynamics

– Focus on issue area – Focus on target demographic – Focus on geography – Focus on stage of growth – Focus on earned revenue/sustainability

• Funder type considerations

– Restricted vs. Unrestricted – Reporting requirements – High-touch / Low-touch / No-touch – Potential funding source(s) will influence legal structure

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Note: Bubble size indicates relative average total grant size to social venture Source: Foundation Center Directory; Organization websites

Engagement level Funding stage

“Draper Richards Kaplan provides high level of support to very early stage social ventures”

The Funding Landscape: Sampling Of Venture Philanthropy Firms

Agenda

• Background on Draper Richards Kaplan
• The Funding Landscape
• The Funding Process
• Things to Consider
• Q&A

8

The Funding Process: Practically Speaking…

• DRK timeline is 4-6 months
• DRK required documents:

– Grant application – Resume – Theory of Change – Development Pipeline – Operating/Business Plan

• DRK steps along the way…

– Reviewing the application – Interviewing: the social entrepreneur, management team, the board, extended network, “Outside the tent” sector experts – Developing metrics and milestones for the grant

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The Funding Process: What DRK Looks For

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• Does the entrepreneur exhibit

characteristics of exceptional leadership?

• Can the entrepreneur handle

challenges?

• Manage people?
• Communicate effectively?
• Strategically assess
• pportunities?
• Recruit board members?
• Is the model scalable?
• Is the model replicable?
• Is there service demand and

dollars available for this model in additional areas such as

• ther fields, geographies,

methods of service delivery (e.g. advocacy, media, etc)?

• Is there an ongoing revenue

source to support this work?

• Is the entrepreneur’s idea

important?

• Does the idea meet a pressing

need?

• Does it fill a gap that is not

already met?

• Is it uniquely suited to fill that

gap?

• Will the impact reach beyond

the direct program beneficiaries (e.g. family members, communities, future generations)?

Entrepreneurial leadership 1 Scalable model 2 Sustainable impact 3

• Improved staff and board

strength

• Catalytic budget growth
• Sustainable revenue
• Increased social impact

Facet of strong

• rganization

Key questions Measure of success

The Funding Process: Leadership

• Identify/articulate a definite need
• Visionary managers who can build an organization
• Focused on clear impact
• Pursue long-range growth/evolution possibilities
• Proven entrepreneurial qualities (i.e. magnet for resources)
• Have relevant issue expertise

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We evaluate leadership by assessing an individuals capability to solve a pressing social need.

The Funding Process: Scale

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• Ideas that can be implemented with reasonable money, feasible plans and team,
• Models that produce tangible results – Where’s the leverage (e.g. technology,

volunteers)? What is it enhancing/replacing?

• Scaling strategy

– Impact: Where are you going next? – Organization How are you building your organization? – Revenue Model: How will you increase revenues to match organization expenses?

If a leader can build a strong organization from the beginning, the organization has a much better chance at scaled and sustainable impact.

The Funding Process: Impact

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• Does it directly address the need of the target population the
• rganization seeks to serve?
• Will the program create systemic change?
• What are your specific impact results intended for the three year term of

the grant and generally beyond?

• How are you measuring, monitoring, and evaluating your impact?
• How do your impact metrics link back to your theory of change?

We look for leveraged solutions that create lasting positive

• change. We look for game-changing ideas that create better
• pportunities and outcomes for the future.

Agenda

• Background on Draper Richards Kaplan
• The Funding Landscape
• The Funding Process
• Things to Consider
• Q&A

14

Things to Consider

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• Identify real problems
• Talk to the people with those problems (as well as veterans in your field)
• Analyze the competitive landscape (i.e. don’t assume that your solution will

work or is unique.

• Consider joining an existing org or being an intrapreneur – many paths to

having an impact

• Develop a theory of change to layout inputs, short term and long term
• utcomes, and ultimate impact BEFORE you pilot... will make selling your

program’s vision much easier!

• Develop a business model… not just a program model

– Identify who would be willing to pay – Test your assumptions

• Do not feel constrained by current systems

Things to Consider

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• Know your funder before you walk in the door – do the research
• Balance refining the program model with developing organizational

capacity

• Spend time building, informing, and leveraging your board (i.e. TTT /

WWW)

• Maintain a learning orientation (don’t think that you have all the

answers)

• Keep your own counsel
• Go do it – get away from the white board and do it

– Don’t over analyze – Fail Faster: You’ll learn more/faster by doing, than thinking

Q&A

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Thank you!

Tom Fry, Draper Richards Kaplan Foundation