Investment Readiness

4. ClearlySo Investment Readiness Traffic Light Tool

Venture Traffic Light Summary Please complete this document for each venture and feed the results into the ‘My Venture Rankings’ table. After you have reviewed the CVA for each of your 10 Ventures and applied the Traffic Lighting system to each section within the CVA, you should be able to rank your cohort from most investment ready to least. Date: Venture Name: Entrepreneur: Amount of Investment Sought: Type of Investment Sought: Target Close Date:

Section	Points	Rationale	Actions
1. Individual	O O O
2. Proposition	O O O
3. People	O O O
4. Performance	O O O
5. Plan	O O O
6. Growth Capital	O O O
7. Documents	O O O
TOTAL	/14

5. ClearlySo Investment Readiness Traffic Light Guide

Investment Readiness Pipeline Building and Prioritising the Pipeline This tool and process will be used to help the Venture Managers (“VM”) and the Investment Managers (“IM”) assess, prioritise, and focus their efforts to effectively support and facilitate investment into the 30 Big Venture Challenge (“BVC”) ventures. It is designed to be used along with the Critical Venture Analysis (“CVA”), which you should have for each Venture and which we expect to be an evolving document as you come to better understand your ventures. Aims

Define a clear framework for venture assessment and prioritisation
Identify venture weak points to focus support and increase prospects
Establish expectations and process for both VM and IM

Outcomes

Prioritised ranking and score for ventures within each cohort
Identified key areas to focus for each venture
Clarified pathway to accelerate each venture towards investment readiness

Traffic Lighting – Red, Amber, and Green To simplify this analysis and process, and to create a prioritisation process that enables us to assess the ventures on flexible yet comparable terms, we will use a ‘Traffic Lighting’ system. Each of the 7 sections within the Critical Venture Analysis will be individually assessed, and rated either Red, Amber, or Green. These individual ratings will then be combined to create an overall ranking for each venture. A description of the meaning and point value of each stoplight is as follows: Examples: Oomph Energy Deck Active HealthCare Solutions Discussion Questions: Select 3 elements from any of the business, one red, one amber, and one green. Justify your choice. What are your top 3 questions you need to ask to find out more? What would you do with your time to help this venture secure investment? Traffic Lighting – Points As mentioned above, each light corresponds to a certain point value. The maximum point value a section can earn is 2 points and the minimum is 0 - therefore, the net maximum value a venture can achieve is 14 points. VM Plus Points Each VM will be allocated 3 VM Plus Points* today and another 3 VM Plus Points in 6-months time. You are encouraged to allocate these points to your ventures at your discretion in order to highlight value that is not well reflected within the CVA**. Use these** to fast-track, fo**cus, and reflect your intuition regarding investment readiness.* Traffic Lighting – Triggers Traffic Lighting – Investment Readiness Pipeline After you have reviewed the CVA for each of your 10 Ventures and applied the Traffic Lighting system to each section within the CVA, you should be able to rank you ventures from most investment ready to least investment ready based on the total number of points they have. Please use this page to complete the ‘My Venture Rankings’ table below. We will meet monthly to review progress with this pipeline. My Venture Rankings Venture Traffic Light Summary Please complete this document for each venture and feed the results into the ‘My Venture Rankings’ table. After you have reviewed the CVA for each of your 10 Ventures and applied the Traffic Lighting system to each section within the CVA, you should be able to rank your cohort from most investment ready to least. Date: Venture Name: Entrepreneur: Amount of Investment Sought: Type of Investment Sought: Target Close Date:

	Red	Amber	Green

Points	0	1	2
Rationale	Lots of work needed	Good, but still needs some improvement	Good to go
Investment Readiness	Ventures with any part of the organisation rated red are not likely to secure investment and need focused work to bring that particular part of the business up to scratch.	Ventures with an amber light or two may be investment ready, though it will depend on which section is being ranked amber.	Bring on the
investors!

Points	Triggers	Action	Outcome
0 - 7	None	Monthly Pipeline Review	Progress and investment readiness pipeline update.
8	Investment Readiness Analysis
(“IRA”)	Call between VM and IM within 5-days.
IRA completed within 3 days after the call.	Investment Readiness Analysis document.
List of questions for the VM to clarify with the Venture.
Virtual Deal Room Created.
10	Detailed Investment Analysis (“DIA”) & Investor Documents	Call between VM and IM within 3-days.
Meeting with VM, IM and Venture within 5-days after the meeting.
DIA completed within 5-days after the call.
Investor documents prepared & completed.	Detailed Investment Analysis document for VM, Venture, and investors.
Communicate investment opportunity to investors to gauge level of interest.
Pitch practice and investor-facing preparation.
Capital raising & sales plan.
12 +	Investor meetings and due diligence.	Meeting between VM, IM, and Venture within 5 days.
Prep venture for investors.
Introduce to Investors.	Venture speaking with investors.
Due diligence meetings.
Secured LOI for match panel

	Venture	Points	Comments
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Section	Points	Rationale	Actions
1. Individual	O O O
2. Proposition	O O O
3. People	O O O
4. Performance	O O O
5. Plan	O O O
6. Growth Capital	O O O
7. Documents	O O O
TOTAL	/14

5. Glossary from Good Finance

Glossary** from Good Finance** Explore common investment terms and their descriptions below. A Angel investors: high net worth individual who make investments, typically in early-stage enterprises. See for more information. Asset: in relation to an organisation’s accounts. a financial benefit recorded on a balance sheet. Assets include tangible property (i.e. a property with a physical form such as buildings, equipment and vehicles) and intangible property, and any claims for money owed by others. Assets can include cash, inventories, and property rights. Asset transfer: where a charity or social enterprise takes ownership of a building previously owned by part of the public sector; the building is usually one that is particularly valued by the local community. B Balance sheet: a “snapshot” of the assets and liabilities of an organisation at a single point in time. **Bond: **a promise by a borrower (the issuer) to repay money to an investor (the bondholder) usually with interest (the coupon). The issuer borrows money by selling bonds to bondholders; the issuer receives the money and the bondholder receives a promise from the issuer to repay the debt at a later date, with interest (usually through a written contract). C **Capital: **capital usually refers to financial capital or money and in particular the amount of cash and other assets held by an organisation. Capstone investor: the final investor in a fund or a project whose investment secures the other investments and enables the fund or project go ahead **Cash flow: the actual cash held by an organisation over a given period. A cash flow forecast shows the total expected outflows (payments) and inflows (receipts) over the year, usually on a monthly or quarterly basis. It is an essential tool for understanding where there will be shortages and surpluses of funds during the year and planning for ways to resolve these. Co-investment: investment in a project or fund alongside and often on the same terms as other investors. Community development finance institution (CDFI): a private financial institution that provides affordable loans and support to businesses, social enterprises and individuals who struggle to get finance from high street banks and loan companies. Cornerstone investment: the principal investor in a fund or project whose commitment to invest may give confidence to others to invest. D Debt finance: investment with the expectation of repayment (usually with interest). Debt finance usually takes the form of loans, both secured and unsecured, as well as overdrafts and standby facilities or standby facilities (e.g. bonds or loan notes). Generally, debt financing requires a borrower to repay the amount borrowed along with some form of interest, and sometimes an arrangement or other fee. See for more information. Development capital: money (typically invested as equity) to **enable organisations to build capacity, for example by purchasing property or other assets, or developing new products and services. Dividends: a sum of money paid regularly (typically annually) by a company to its shareholders out of its profits (or reserves). E Equity investment: investment in exchange for a stake in an organisation, usually in the form of shares. Each share represents ownership of a proportion of the value of the company and typically provides the shareholder with voting and dividend rights. Equity finance is permanently invested in the organisation which has no legal obligation to repay the amount invested or to pay interest. Equity investors expect to receive dividends paid out of the organisation’s earnings available for distribution and/or capital gain on the sale of the organisation or on selling their shares to other investors. See for more information. F Facility: an arrangement whereby a lender provides monies to a borrower. “Facility” is often used interchangeably with the term “loan”. Financial returns: the monetary surplus generated by an organisation on an investment. It may be expressed as “not” (i.e. after deducting all expenses from the gross income generated by the investment) or “gross”. First loss: it is possible to have different tiers of investors so that one set of investors accepts that, in the event that the investee suffers financial dificulties, it will lose the money it invested before any of the other investors lose any money. This investor will bear the ‘first loss’. Fund: a collective investment scheme that provides a way of investing money alongside other investors with similar objectives on a pooled basis. This often provides individual investors with access to a wider range of investments than they would be able to access alone and may reduce the costs of investing due to economies of scale. Funds are managed by fund managers for a management fee on behalf of investors. G Grant: a conditional or unconditional gift of money with no expectation of repayment. See . H High net worth individual: a person who a) has an annual income of £100,000 or more; b) net assets of £250,000 or more. I **Institutional investors: **organisations making investments e.g. pension funds or insurance companies. Interest: fee paid by a borrower to a lender to pay for the use of borrowed money. When money is borrowed, interest is typically paid to the lender as a percentage of the amount owed. Interest usually accrues on a daily basis but is charged less frequently, e.g. monthly, quarterly or annually. Investment readiness: an organisation having the systems, processes and business model to be able to attract investment L **Liability: **in relation to an organisation’s accounts, a financial obligation or debt to another party entered on a balance sheet. **Loan: ** a sum of money which is borrowed and has to be paid back, usually with interest. See for more information. M Market: public place where buyers and sellers make transactions, directly or via intermediaries. Merger: combining two companies to create one larger company that is expected to be more valuable than the individual companies on their own. N Net Present Value (NPV): present value of expected future cash in ﬂows minus the present value of cash outflows e.g. the amount of investment and any initial and ongoing investment costs. Often used in capital budgeting to determine whether or not to make an investment (if negative, the investment should not be made). Nominal rate of return: rate of return expressed only in monetary terms - so not adjusted for inﬂation. O Overdraft: an amount agreed between a borrower and a lender (typically the bank of the borrower) up to which an organisation can borrow when it needs funds rather than in one lump sum. Overdrafts are repayable on demand by the lender. Interest is usually paid on the amount of money that is borrowed until it is repaid and rates are usually higher than for standard loans. See for more information. Operational risk: risk arising from failed processes in carrying out business functions. Ordinary share: share in the ownership of a company that gives the holder the right to receive distributed proﬁts and to vote at general meetings of the company. An ordinary shareholder ranks behind all other creditors/investors if the company is wound up. P Patient capital: loans or equity investments offered on a long-term basis (typically 5 years or longer). It is often used to describe long-term investment by investors looking for non-financial as well as financial gains and may be offered on soft terms (e.g. capital/interest repayment holidays and at zero or sub-market interest rates). Peer-to-peer lenders: investors investing directly into borrowers (rather than in a financial institution) typically using online platforms that match (usually individual) lenders with borrowers to create crowdfunded loans for both business and individuals. See for more information. Principal: a sum of money lent or invested, on which interest is paid or earned (or the balance of a loan, net of interest and amounts repaid). **Profit and loss account: **also known as an income and expenditure account, it shows income earned for the year and deducts from it all expenses incurred in earning that income. This will show a profit (surplus) or loss (deficit) for the year, depending on whether income is larger than expenses or expenses have exceeded income. Q Quasi-equity investment: a hybrid of equity and debt investment. Equity investment may not be possible if an organisation is not structured to issue shares. A quasi-equity investment allows an investor to benefit from the future revenues of an organisation through a royalty payment which is a fixed percentage of revenue. This is similar to a conventional equity investment but does not require an organisation to issue shares. See for more information. R Restricted funds: funds (often grants) that can only be used for a specific purpose or project and cannot be used for other purposes. These can also be referred to as ring-fenced or earmarked funds. S Secured debt/loan: a loan that is backed by property (in the case of a mortgage) or assets belonging to the borrower. This may be the property or asset that is being bought with the loan itself or other assets held by the organisation. If an organisation defaults on its debt, the lender can sell the asset to recoup, in full or in part, its loan. See for more information. Senior debt/loan: debt that takes priority over other unsecured or otherwise more junior (or subordinated) debt. In the event that the borrower organisation is wound up, senior debt theoretically must be repaid before other creditors receive any payment. Social enterprise: a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners. Social impact: There is no one definition of the term or concept, but the social impact can be defined as the effect on people that happens as a result of an action or inaction, activity, project, programme or policy. The ‘impact’ can be positive or negative and can be intended or unintended, or a combination of all of these. Social Impact Bond: a payment-by-results contract where social investors pay for an organisation to deliver a service - for example, helping homeless people to find a home - and the commissioner (typically government or local authority) repays the investors with interest if the service is successful unlike a conventional bond, they do not offer a fixed rate of return. See for more information. Social investment finance intermediary (SIFI): an organisation that provides, facilitates or structures financial investments for social sector organisations and/or provides investment-focussed business support to social sector organisations. Social investment wholesaler: an investor which makes larger investments in funds or financial organisations (social investment finance intermediaries) that will themselves invest smaller amounts in a number of charities and social enterprises. is the UK social investment wholesaler. Social sector organisations: charities and social enterprises that exist primarily to deliver social impact; that reinvests the majority of surpluses to further their social mission; and that are independent of government. The social sector includes, but is not limited to voluntary and community organisations, charities, social enterprises, community interest companies and community benefit societies. The social sector is also referred to as the “Third Sector”. Standby or revolving credit facility: usually provided in the form of a loan where money can be drawn down over a certain period of time when an organisation needs it (if budgeted income does not materialise), rather than as one lump sum. Interest is charged only on the funds drawn down. This is similar to an overdraft but is typically repayable on a fixed date (rather than on-demand). Subordinated or junior debt/loan: debt which is ranked after other more senior debt. In the event that the borrower organisation is wound up, subordinated debt will be paid only after other senior creditors have received payment. This is a riskier investment for a lender and is therefore typically lent at a higher interest rate than senior debt. T Term loan: a loan drawn as a lump sum or in several portions, for a set period of time with an agreed schedule of repayment. Once any part of the loan is repaid, it cannot be re-borrowed. **Third Sector: **see social sector organisations. Triple bottom line: approach to measuring a company’s performance on environmental, social and economic issues. The triple bottom line focuses companies not just on the economic value they add but also on the environmental and social value they add or destroy. U Underwriting: a commitment, for a fee, by a lender or investor to provide financing if other sources fail. Unrestricted funds: funds that can be used however and wherever an organisation needs to further its objectives. Unsecured loan: a loan that does not take security over an organisation’s assets. Because the risk for the lender is greater, interest rates are usually higher than for secured loans. V Valuation: process of determining the value of an asset or a portfolio of assets, including any accrued income. Venture capitalists: A Professional Investor who provides capital to early stage businesses. W Working capital: finance used to manage the timing differences between spending money and receiving it (income and expenditure). **Write-off: **when all or part of the value of an asset (e.g. an investment) as shown in an organisation’s accounts is reduced. In respect of an investment, this may occur when the investor considers there is no likelihood of any recovery of the amount invested. The glossary is listed in alphabetical order. This glossary has used the following guides and websites to contribute to these definitions:

“The Acquiring Business for Good Guide” (for some legal terms). This guide is from Social Firms Scotland.
ClearlySo and “The ClearlySo Guide for The Ambitious Entrepreneur” (for the definitions of types of finance)
The DIY Social Investment: A social entrepreneur’s guide to creating your own social investment through social investment tax relief (SITR) (for some financial and legal terms)
UK British Angel Association’s website and reports
Wikipedia (primarily for BCorp, BLab, BenCom)

Accounting systems		These are computer systems which automate bookkeeping and financial reporting. Popular ones include Sage, Quickbooks and Xero. Highly recommended for managing finances if you are seeking investment.
Advance Assurance		Once entrepreneurs are satisfied that their social enterprise structure and proposed investment offer qualifies for Social Investment Tax Relief (SITR), (or Enterprise Investment Scheme (EIS) or Seed Enterprise Investment Scheme (SEIS) they should seek to gain ‘Advance Assurance’ from HMRC. Although it is not compulsory, it gives investors certainty of tax relief, and smooths the process when the tax relief is actually claimed. To obtain an Advance Assurance, organisations need to send all the required information for SITR accreditation to HMRC to assess whether your investors are eligible for SITR tax relief. It is relatively straightforward.
Advisors		People who support organisations and entrepreneurs to build their business. They can be paid or unpaid, with formal engagement plans or relatively informal.
Sometimes advisors work together as Advisory Boards to an organisation – this is quite cumbersome for organisations if they have a Board of Directors too as Advisory Boards should meet regularly. However, having a group of Advisors with whom the CEO or Directors meet as individuals is useful.
Professional advisors are advisors who work with organisations in the area at which they are skilled and trained often lawyers, accountants and surveyors etc.
Advisory Board		These are boards of advisors who meet regularly to give advice and guidance to social enterprises. This can be quite cumbersome for organisations if they have a Board of Directors too as Advisory Boards should meet regularly. When reviewing governance it is useful to understand what roles the Advisory Board plays versus the Board of Directors (and which group should hold that role) as well as whether it would be more effective for the CEO or Directors to meet with the individual advisors separately rather than run and support an Advisory Board.
Annual General Meeting		Company and charity law used to require that organisations hold an Annual General Meeting. The requirement to do so could be in a Company’s Articles (and this can be changed by resolution).
Annual General Meetings were specific formal meetings with a requirement for company business to be transacted. Whilst organisations are not legally required to do this, it is useful to hold an annual meeting of members or shareholders and invite stakeholders to celebrate the year and mark any changes.
General meetings of shareholders or members can be called according to Company Articles.
Articles		The Company Articles define the company structure. Various clauses provide a framework and clarity for running the organisation lawfully. The Articles for Companies limited by Shares (CLS) and Companies limited by Guarantee (CLG) will include definitions of shareholders, members, directors, classes of shares etc.
Company Articles for CLSs with social clauses and asset locks provide the definition for social enterprises.
Company Articles for Community Interest Companies (CIC) and charities include specific information defined by the CIC Regulator or the relevant Charity Commission.
Assets		Something that an organisation owns - often a building or equipment. They can be tangible or intangible. They should be valued and the value reflected in the company financial statements.
Asset lock		This is when an organisation uses clauses in their Articles to protect and dedicate certain or all assets to the promotion of the organisation’s social mission. Asset locks prevent asset stripping.
Asset strip		Sell assets at less than their market value.
Balance Sheet		Balance Sheet is a financial statement that shows the value of a venture at a given point in time by detailing what a venture owns, and what they owe. It includes of the value of all of a venture’s assets (property, cash, etc) and all of a venture’s liabilities (debt, outstanding invoices, etc).
BenCom		Registered under the Co-operative and Community Benefit Societies Act 2014, Community benefit societies (also known as ‘societies for the benefit of the community’ or ‘bencoms’ – these trade to benefit the broader community, and the Financial Conduct Authority (FCA) will refer to consider whether they satisfy that requirement by prohibiting any distribution of assets or profits to members and generally whether their aims are charitable or more widely philanthropic so as to offer “community benefit”.
These can be social enterprises which are community owned and managed, sometimes issuing community shares.
The 2014 law clarified the differences between organisations previously called Industrial and Provident Societies (IPS). Organisations registered under previous Acts are called “registered societies” and some of these could be considered social enterprises.
B Corp		Benefit corporations or B Corps are registered not for profit legal entities in the United States and some other countries are following suit.
The “B” stands for beneficial and indicates that the certified organizations voluntarily meets certain standards of transparency, accountability, sustainability, and performance, with an aim to create value for society, not just for traditional stakeholders such as the shareholders.
These organisation’s social benefit is not locked in and can changed by shareholder majorities – the various states have differing majorities and requirements for the incorporation of a B Corp – thus making the organisation no longer a B Corp. The closest legal structure in the UK is the CIC and in contrast to B Corps, CICs commitment to social benefit cannot be removed and CICs are permanent legal entities.
However, in the UK there is the possible of being a certified B Corp and meeting the requirements of the BLab that provides a social badge. The certification has wide ranging impact measurements but it includes the requirement for a social clause and asset lock in the company articles. In addition to passing the certification process there is an annual membership fee.
Like other social badges, the B Corp certification is useful to social enterprises targeted certain markets for investments or customers. In the case of the B Corp certification it is useful for international recognition as the B Lab has been effective at raising the profile of B Corps across the world.
Beneficiary		These are people who benefit from an organisation’s activity. Traditionally these are the people for whom a Benefit corporations or social enterprise or charity is created.
Benefit corporations		See B Corp
B Lab		B Lab is a not for profit organisation headquartered in Wayne, Pennsylvania, which created, and awards, the B Corporation certification companies.
Board / Board of Directors		Boards are required under Company Law to lead companies and charities. Boards are made of directors whose roles receive further definition in the Company Articles. Charity directors are often called Trustees. Directors (including those called Trustees) of incorporated companies (CLG, CLS, CICs) are registered at Companies House.
The owners of the company or charity (shareholders or members) elect the directors often at general meetings.
In the UK the Institute of Directors offer training, CPD and resources (including a Director’s Service Agreement).
Bonds		This is a form of long term debt (a loan) which is converted into a securitised debt. The holder of a bond is the creditor, the issuer of a bond is the borrower and the interest is called the coupon. A bond is a formal contract to repay borrowed money with interest (the coupon) fixed at certain intervals over time.
There are a variety of bonds being developed in the third sector in the UK including the Allia Retail Charity Bonds and Social Impact Bonds.
Borrower		The organisation or person who is receiving a loan or debt investment, from a creditor (lender) who can be a person or organisation too.
Bridging Loan		This is a short-term loan that acts as a brief stopgap whilst new finance is secured.
Business Angel		These are private individuals who to invest in startups and early-stage ventures. They are classified differently from friends and family and founders who invest in a business. They self-certify themselves as High Net Worth Individuals or Sophisticated Investors, which means they take the risk for investing onto themselves. They invest as individuals or are part of groups who entrepreneurs pitch to or they operate as syndicates for investing or they invest in certain types of funds developed for angel investing.
Social Business Angels want to invest in start-ups and early -stage ventures that have a positive social or environmental impact can join the growing numbers of angels making impact investments. Social Business Angels are sometimes called Impact Investors. This is a growing trend with angel groups in London (Clearly Social Angels), cross-UK (Resonance) and Birmingham (run by Institute of Social Entrepreneurs). Social Investment funds developed for Impact Angels have recently been developed using Social Investment Tax Relief (SITR).
Business Plan		This is a written document that explains how a business is going to reach its goals, typically covering financials, sales & marketing, operations, the market, and competition. Investors often want to see it, and it’s a very useful exercise to ensure an entrepreneur has thought everything through. For social enterprises it should include the Theory of Change, social impact and how it will be measured.
Cap Table		A table describing the capitalization (i.e. how the company has been funded to date) of a company including the names and number of shares owned by each founder and the investors.
Capital Gains Tax		Capital Gains Tax is a tax on the gain or profit you make when you sell, give away or otherwise dispose of something. It applies to assets that you own, such as shares or property. Business angels utilize tax reliefs to minimise Capital Gains Tax.
Capital Holiday		A period of time where the principal (the original amount borrowed not including any interest) of a loan does not need to be paid. With SITR, this period is a minimum of 3 years and 1 day.
Capped Dividend		The dividends in a Community Interest Company CLS are capped at 35% of profits. This means 35% or less of profits may be paid to shareholders of a CIC.
Cash Flow Statement		This is a financial statement that shows the actual cash that flows in and out of your business to pay for expenses or received as revenue. It doesn’t show profitability, but it does show how much cash the business has at any point, and can help determine how much investment a venture needs. This is critical for most investors to see prior to making an investment.
Charitable Bonds		The Charitable Bond is an ethical savings bond that allows investors to share the interest with their chosen charity. The Charitable Bond allows them to use this capital in a low-risk ethical investment that brings forward future interest in an upfront donation to their chosen charity. These have been pioneered by Allia.
Charitable Incorporated Organisation (CIO)		A charitable incorporated organisation (CIO) is a new form of legal structure designed for non-profit organisations in England and Wales.
The main intended benefits of the new entity are that it has limited liability so that its members and trustees will not have to contribute in the event of financial loss. CIOs only need to register with the Charity Commission.
Charity		Charities are organisations whose primary function is to deliver a charitable aim.
Registered charities in the UK receive various tax breaks, can access funding specifically targeted at social impact and can receive Gift Aid on donations. Charities need to be registered with the Charity Commission for either Scotland (OSCR), Northern Ireland or England and Wales.
Charity status is not a legal structure but unincorporated groups or companies limited by guarantee or BenComs can have charitable status.
Charity Regulator		This organisation monitors and registers charities and Charitable Incorporated Organisations (CIO) in England and Wales. The corresponding body in Scotland is called OSCR.
Chatham House Rule		When a meeting, or part thereof, is held under the Chatham House Rule, participants are free to use the information received, but neither the identity nor the affiliation of the speaker(s), nor that of any other participant, may be revealed
CIC Regulator		This person regulates CICs across the UK and works for Companies House.
Clauses		All legal contracts are created by a series of numbered paragraphs called clauses. Company Articles are legal contracts and therefore are made up of a series of clauses.
Community Benefit Society (BenCom)		Registered under the Co-operative and Community Benefit Societies Act 2014, Community benefit societies (also known as ‘societies for the benefit of the community’ or ‘bencoms’ – these trade to benefit the broader community, and the Financial Conduct Authority (FCA) will refer to consider whether they satisfy that requirement by prohibiting any distribution of assets or profits to members and generally whether their aims are charitable or more widely philanthropic so as to offer “community benefit”.
These can be social enterprises which are community owned and managed, sometimes issuing community shares.
The 2014 law clarified the differences between organisations previously called Industrial and Provident Societies (IPS). Organisations registered under previous Acts are called “registered societies” and some of these could be considered social enterprises.
Community of Benefit		The group of people who are designated as the beneficiaries or community of benefit of CICs. This group is not always geographical but it must be able to be defined.
Community Interest Company (CIC)		A community interest company (CIC) is a type of company introduced by the United Kingdom government in 2005 designed for social enterprises that want to use their profits and assets for the public good. CICs are created by establishing a permanent asset and social lock for a community of benefit with a Company limited by shares (CLS) or Company limited by guarantee (CLG). It is regulated by the CIC Regulator.
Companies House		Companies House is the United Kingdom’s registrar of companies and is an executive agency and trading fund of Her Majesty’s Government. It falls under the remit of the Department for Business, Innovation and Skills (BIS) and is also a member of the Public Data Group.
Company		This is an incorporated organisation and can be limited by shares or guarantee.
Company Limited by Guarantee (CLG)		This is a company that has been incorporated where ownership is held by members.
Company limited by shares (CLS)		This is a company that has been incorporated where ownership is held by shareholders.
Community Shares		These are shares in enterprises that serve a community purpose, usually bought by the community themselves in a form of crowd-funding. This type of funding can only be raised by co-operatives or community benefit societies.
Coupon		Interest charged on a bond.
Creditor		Person or organisation investing through debt finance or loan.
Crowdfunding		Crowdfunding allows for contributions from lots and lots of investors to be collected (often via an online platform). It can be grant funding (Kickstarter, Indiegogo), debt funding (Buzzbnk, Zopa) or equity (Seedrs, Crowdcube).
Deal Lead		The Deal Lead (Lead Investor) is the investor who helps the entrepreneur get all other investors involved. The lead investor might be the first, largest, most influential, or just most proactive investor. They’ll often take the lead on doing the due diligence and negotiating the valuation.
Debt finance		Any finance provided through a loan of some sort, this could be an overdraft or a lease. The amount of money loaned is required to be returned and usually with an agreed interest payment calculated over time. It can be secured or unsecured.
The basic loan (also called term loan or bullet loan) is where the debtor/borrower agrees to pay the creditor/investor the full sum of the debt borrowed (principal) after a fixed period of time, along with the interest calculated as a percentage of the total debt per year. The interest may be paid in full on the date the principal is due or staggered over the period before.
Debtor		See Borrower.
Dilution		This is the reduction in percentage of ownership of a venture that investors suffer when a venture raises more funds as equity. This occurs because to raise equity a company will issue shares to new investors and therefore the shares they hold will form a smaller percentage of all the shares issued.
Director		This is a person who is appointed by the owners of an organisation to provide direction. Their role is defined in law.
See also Boards.
Director’s Service Agreement		Recommended as a way to engage effectively with directors.
Dividend		Proceeds paid by the company to an investor as a return on an original investment. Dividends can be paid either in cash or in kind, i.e. additional shares of stock, they can also be capped.
Due Diligence		The process when a potential investor investigates a venture in much more detail to ensure that they want to invest in it. This process can take anywhere from 1-week to 1-year and often depends on the preparedness of the founder but also the experience of the investor.
Employees		These are individuals who have a legal relationship of employment with a company. This relationship is controlled by law through an employment contract.
Enterprise Investment Scheme (EIS)		A tax relief for investors offsetting 30% of the value of their investment again their income tax liability, designed to encourage investment into young businesses.
Equity		Shares in a limited company. Community shares in a BenCom are less likely to be called equity but strictly speaking, they are equity.
Financial Conduct Authority (FCA)		With reference to social enterprises it is worth knowing that the FCA regulates BenCom’s specifically their issuing of community shares and whether their purposes are charitable or not. The regulations for issuing community shares are lighter than those for general CLSs or CIC CLSs.
Financial Model		A method of communicating the business plan through the finances of the business. Investors want to see these and to understand the assumptions that went into them.
Financial statements		This includes Balance Sheet, Cash flow statement and P&L. They are an indicator of the health of the business when historic figures are reviewed and are included in forecasts within the Financial Model.
Friends & Family Investing		This refers to the early finance that an entrepreneur might raise from people they know well. Often these people are investing primarily because they know and like the entrepreneur and so they’re happy to take on higher risk.
General Meeting (Special & Annual)		General meetings are held by shareholders and governed by Company Law through the Company Articles and Shareholders’ Agreement. They are used to decide matters that require shareholders’ approval and there are clear processes for managing, calling, running and recording resolutions from such meetings.
Company and charity law used to require that organisations hold an Annual General Meeting. The requirement to do so could be in a Company’s Articles (and this can be changed by resolution).
Annual General Meetings were specific formal meetings with a requirement for company business to be transacted. Whilst organisations are not legally required to do this, it is useful to hold an annual meeting of members or shareholders and invite stakeholders to celebrate the year and mark any changes.
General meetings of shareholders or members can be called according to Company Articles.
Special General Meetings are called for the shareholders to discuss specific items of company business. These are defined in Company law and in the Company Articles.
Governance		Governance is a term used to describe the directors’ role in: the long term direction of a social enterprise or charity, including its objectives or purposes, implementing policies and activities to achieve objectives, complying with legal requirements, accountability to stakeholders.
Grant		This is money given to a venture, often for a specific purpose at a specific time, which will not be returned to the funder.
High Net Worth Individual		A classification that denotes the wealth of a person. Although there is no precise definition of how rich somebody must be to fit into this category, Nesta and others define it as ‘those with greater than £1,000,000 of investable wealth’. And in order to invest in start-ups as a business angel such a person must self-certify themselves as a “High Net Worth Individual”.
Income & Expenditure Account		See P&L.
Incorporated		This is when a legal entity is created – an organisation that has a separate legal identity from the people involved in it. This creates limited liability.
Impact Investors		These can be individual angel investors or institutional investors.
Interest		A fee paid by a borrower (i.e. an organisation) to a lender (i.e. an investor) on top of repaying the money that has been lent.
Investment readiness		Investment readiness work helps businesses to get ready to take on debt, equity or other kinds of investment, and also offers charities the chance to prepare business plans and financial models for repayable finance and innovative business models.
This can involve incubators and advice from organisations like UnLtd, ClearlySo, Resonance, SE Acumen CIC etc on preparing a company for investment, structuring a deal and pitching to investors.
The Big Lottery’s Big Potential Fund and some government funding provide opportunities for investment readiness funding.
Investor		Someone who invests through equity or debt into an organisation.
Lead Investors		See Deal Lead.
Lender		Also called a creditor or investor, providing investment as a loan.
Letter of Intent (LOI)		A document from investors saying they intend to invest in a particular venture subject to any particular points (such as satisfactory completion of due diligence). It can sometimes be included in the term sheet.
Loan		See debt, term loan, bridging loan, convertible loan, secured loan, unsecured loan.
Mortgage		These are also called Amortising loans. This is a debt which is paid down incrementally over a fixed period of time. A mortgage is the most common form of this type of loan but others are government securities and corporate
LLP		A limited liability partnership (LLP) is a partnership in which some or all partners (depending on the jurisdiction) have limited liabilities. It therefore exhibits elements of partnerships and incorporated organisations. In an LLP, one partner is not responsible or liable for another partner’s misconduct or negligence. This is an important difference from the traditional unlimited partnership in which each partner has joint and several liability. In an LLP, some partners have a form of limited liability similar to that of the shareholders of a corporation.
Whilst an LLP is a useful structure for joint ventures and some industries, it is not easily eligible for social investment.
Member		The owner of a company limited by guarantee (CLG) or CIO or SCIO. Shareholders and owners of BenComs are often called members too.
Memorandum		The list of initial shareholders or members from when a company limited by guarantee (CLG) or shares (CLS) is formed.
Mission drift		This is when an organisation stops delivering the mission that they were established for. This occurs in social enterprises, charities, private companies or any other group of people working towards an aim.
Non-Executive Director (NED)		This is not a legal term. All directors of companies which are registered with Companies House according to the Company Articles, have the same roles and responsibilities as directors.
This term is usually used to describe a director who is not involved in the business in another capacity (other than as a director).
Not for profit / not for private profit / non profit		This is not a UK legal term. It generally encompasses charities and social enterprises, almost all legal structures other than a CLS.
OSCR – Scottish Charity Regulator		This is the body that registers and manages Scottish Charitable Incorporated Organisations (SCIO) and registered charities in Scotland.
Overdraft facility		A business overdraft facility is a loan of a pre-determined amount that you can take out if, as and when you need. It can be a useful way to manage your working capital, for example if you are waiting for invoices to be paid. (Also called Standby Fund or Revolving Credit).
Patient Capital		Money lent by an investor who is prepared to wait a relatively long time to get their money back. Also known as long term capital.
Pitch Deck		A set of slides used to accompany an entrepreneur’s ‘pitch’ to investors explaining why they should invest in their venture. Companies often have a more detailed version of the deck they use to send to potential investors they don’t have the opportunity to pitch to.
Principal		The money originally invested or loaned, on which base interest and returns are calculated.
Pro Bono		Literally it is Latin for “for free” and is usually used when a professional advisor works in their area of professional expertise but doesn’t charge.
Professional Advisor		Professional advisors are advisors who work with organisations in the area at which they are skilled and trained often lawyers, accountants, surveyors etc. They can sometimes work pro bono (for free) but need to be clear about whether you are a client for work to be covered by their professional indemnity.
Professional indemnity insurance		This is insurance which covers professional advisors’ work.
Profit & Loss Account (P&L)		A financial statement that shows a venture’s revenue and costs over a given period of time, and therefore shows the venture’s net profit or loss over that time.
Retail Investor		Typically, an investor who invests small amounts of their own money rather than investing on behalf of others.
Revolving Credit		See Overdraft Facility.
Quasi-Equity		This is a category of debt taken on by a venture that has some traits of equity, such as having flexible repayment options, being unsecured, or repayments linked to company performance.
Secured Loan		This is a loan or debt investment where the borrower pledges an asset (usually property) as collateral (security) against the value of the loan. If the borrower fails to repay the loan (known as a default) the creditor takes possession of the asset and may sell it to recoup some or all of the value of the loan.
Seed Enterprise Investment Scheme (SEIS)		Similar to EIS, but allows investors to offset 50% of the value of their investment, eligible only in investments into very young startups companies.
SEED Finance		This is often a small or initial amount of financing to an entrepreneur to prove a concept that includes investors outside of the friends and family. Rounds following the seed round are typically identified by an alphabetical sequence reflecting their order: Series A, B, and C.
Self-Certified Sophisticated Investor		This is a business angel which has self-certified as a sophisticated investor.
Shares		Dissolving / vesting / classes / redeemable/ golden
Shareholder		Owners of shares and through the shares, owners of a company limited by shares (CLS) or (CIC CLS). They can be people or organisations.
Shareholder Agreement (SHA)		A legal document agreed to by all shareholders of a venture specifying what the shareholders are and are not allowed to do with regards to operating and transferring (selling) shares.
Slide Deck		See Pitch Deck.
Social Business		A business that aims to deliver social change and whilst their Company Articles may include a social clause however they do not have an asset lock.
Social Clause		A clause in the Articles of a company which reflects their social mission and objectives. These clauses may be locked to prevent mission drift.
Social Enterprise		A business developed to deliver social change or impact with matching social objectives in their Company Articles (called a social clause). Social Enterprises also include in their Company Articles the commitment that profits/assets are primarily reinvested for the social mission the organisation was developed for (this is achieved through an asset lock).
Social Enterprise Mark		A UK badge for social enterprises earned through a certification process which includes having social clauses and asset locks in your articles.
Social Enterprise UK		The body which lobbies government and business for social enterprises. Becoming a member requires a minimum of a social clause and asset lock in an organisation’s articles.
Social Investment		Generally considered repayable investment into organisations committed to social change.
Social Investment Tax Relief (SITR)		Modelled on EIS, this is a tax relief providing investors with an offset against their tax-bill of 30% of the value of their investment, but it is different from EIS and SEIS because a) the ventures must be charities, CICs or sometimes community benefit societies and b) debt finance is eligible.
Stakeholder		These are people or organisations who are involved in the social enterprise or any other organisation in any way. Anyone who has an interest, involvement or relationship (formal or informal) with an organisation can be considered a stakeholder.
Standby Fund		See Overdraft Facility.
State Aid / “De Minimis” State Aid		In this context, we mean where an organisation has received funding directly or indirectly from the government. This is limited to about £290,000 per year per venture. All tax reliefs including EIS, SEIS and SITR are state aid.
Subordinated Debt		Debt that, if a venture defaults, gets paid back to investors last after other debt has been paid. This type of debt is often viewed similar to equity and can provide an added layer of security to entice more risk averse-investors to put debt into the business on top of the subordinated piece.
Tax Relief		In this context it is a tax rebate allowed to individuals.
Term Loan		See Basic Loan or Debt.
Term Sheet		A summary of the proposed major terms and conditions of an investment that is agreed upon by all parties before the investment is made. It is not legally binding. It usually covers things like the type of investment being made, any board representation or other governance requests, and the timeline and process for completing the investment. The SHA is drafted based on this document.
Trustee		Often directors of charities are called trustees.
Unincorporated		This is when the people running an organisation are responsible for all activities of the business (severally liable).
Unitary Board		When a charity has been allowed by the Charity Commission to have a Unitary Board it has some directors who are paid employees of the charity too.
Unsecured loan		The opposite of a secured loan. The creditor has no recourse if the borrower defaults.
Valuation		A ‘valuation’ states how much a venture is worth and usually takes place when an investment is about to happen. There are many ways of calculating a valuation, it is very important that an entrepreneur knows how their valuation was reached and can explain it.
A pre-money valuation is how much the business is theoretically worth just before the money is invested. A post-money valuation includes the money that has just been invested.
Volunteer		Volunteers are unpaid participants in an organisation. They can be individuals who volunteer to learn new skills or those who volunteer to share their skills and time. Some people can be volunteers and directors and employees and beneficiaries making it important to define and manage each relationship clearly with appropriate frameworks of engagement.
Working Capital		Money an organisation needs to finance its day-to-day operations

9. Pitching Checklist

**FEB 11, 2015 @ 10:50 AM 19,963 ** Don’t Pitch A Venture Capitalist Without This Checklist , CONTRIBUTOR I cover entrepreneurship and investing. Opinions expressed by Forbes Contributors are their own. I’m surprised at how many funding pitches I get which lack some of the basic information which investors require before funding. I think this stems from two causes: 1. **Lack of basic knowledge of the information investors require. **I would hope that a competent founder could easily educate herself about what information an investor wants with some basic research. 2. A desire to hide important information which you think might be perceived badly, e.g, you raised

6m but are pivoting and would appropriately be valued at a seed level.  I think this is bad logic.  If you’re talking with an investor competent enough that you’d want her to invest in you, that investor will also be competent enough to surface the negative information you’re trying to hide.  By surfacing the negatives early, you help establish a relationship of mutual trust and respect.  This is why formal investment prospectuses always have a " Factors" section, and also why I told my former girlfriend (now wife) about some of my idiosyncrasies before she had made any life commitments to me. I've listed below the points I recommend you cover when pitching your  to early-stage investors. First, I suggest you send a 7-10 page presentation deck (or link to a deck) with a one-page introductory email.  The cover note should include: name, website, location, revenues (if any), detailed financing history (if any), and precise terms on which you are seeking to raise capital.  If you are testing the market to see what terms you can get, just say, "We are targeting to raise

X at pre-money valuation of $Y.” Investors value getting a sense of your expectations. Raising capital is about quality of outreach, not quantity. Before approaching any investor, review their website to understand their areas of interest. Most VCs (including ffVC) only accept business pitches via referral. Here’s our checklist: Overview. One or two sentences about what you do, for who, so they can do what. Location. ** **. We want to know what qualifies you to execute your idea successfully and better than the five other companies in your space: work history, network, and skills are all key. Your history is important: did you work together in a prior company or did you meet last week at a hackathon? At an early stage, the key driver of our investment is the people, particularly how hungry and coachable you are. Demo. We almost always require a demo, or at least a mockup. Market. What is the problem, why does it exist, and how big is the opportunity? Solution. Your value proposition: how you solve this problem faster, cheaper, smarter. Business Model. How do you make money? Who pays, how much, from where? Customer/user. Who they are and how many? How will you reach/acquire them? Competition. Know every competitor and what are the current solutions to this problem, and why they aren’t addressing your market adequately. List the major competitors, understand their processes and what your competitive advantage is. Financial Overview. What are the expected revenues, expenses, and EBITDA three years out? How long will this round’s cash last you? We typically fund companies sufficiently so that they can run 18 months until the next funding, if needed. Funding. How much are you raising and how are you going to use the money? To grow a team, to support overhead, to expand? How much have you raised thus far and from whom? Milestones. What is your vision for the future, measured in milestones for the next 3 years? Note that in our board meetings, we will evaluate your progress against these milestones. Legal status. Where are you incorporated? Are you planning to relocate some or all of your team? We only know one thing for sure about your business presentation: most of it will be proven wrong. However, we want to know that you are expert in your market and that you have thought about the key issues inherent to your business. As much as possible, emphasize the traction you have already achieved and the metrics you are using to measure that traction. We suggest you title your deck in this format: [Company Name] [yyyymmdd], e.g., “Klout 20150524”. This allows investors to differentiate your file from all of the other files they receive, and also easily track the evolution of your pitch as it changes. Naming your file “Pitch.ppt” does not make you look thoughtful, considerate, or organized. In parallel or before approaching VCs, I suggest you consider crowdfunding your business. https://www.forbes.com/sites/davidteten/2015/02/11/dont-pitch-a-venture-capitalist-without-this-checklist/#5b7751a75d53

Case for support worksheet

T****rusts & Foundations Fundraising Case for support worksh****eet

Who you help and why - key info about your beneficiaries and the need	What you propose to do about it
What you will achieve as a result	Why your organisation is best placed to achieve this change

Funding needs worksheet

T****rusts & Foundations Fundraising Funding needs worksheet

Funding need & description	Priority level	Annual funding needed	Annual funding needed	Scope for development if we can secure the ideal amount	Funding context: current position, competition, social trends
Funding need & description	Priority level	Minimum	Ideal	Scope for development if we can secure the ideal amount	Funding context: current position, competition, social trends

INVESTMENT READINESS What does it mean to be investment “ready”: Well, that’s a hard question to answer, as it differs on a case-by-case basis. Typically, being investment ready means the social entrepreneur has a proposition that is worth investing in and said social entrepreneur knows what they are asking for and has the documentation/evidence to back up their plan/proposition. Aka, they know what they are asking for and can prove to someone else that they are worth it. It’s also a mixture of knowing what you are asking for and can reasonably expect from the market right now based on your size, past performance and proposition for the way ahead ….then how all of this is packaged up and “sold” to investors to meet your fundraising needs.
Key Documentation: Key Resources:

Types of investment explained:

https://goodfinance.org.uk/understanding-social-investment
https://www.goodfinance.org.uk/understanding-social-investment/types-social-investment There are two main types of social investment 1. Borrowing (debt) Taking out a loan which you agree to repay over a set period of time. Most debt investments are paid back with interest - a fee you pay to the investor for the use of their money. E.g., an investor loans your organisation £10,000 and you repay a total of £11,000 at £229 per month over 4 years. 2. Shares (equity) Selling shares in your organisation to an investor. Equity investors receive a share of any profits paid out by the organisation and get to have a say in how the organisation is run. E.g., an investor pays £10,000 to own 10% of your organisation. These will most likely be provided via the following people or groups:
CORE QUESTIONS Establishing the investment ask**:** In nearly all investment conversations you have you’ll be asked the following questions.

Establishing the proposition and opportunity**:** It’s likely that in most investment conversations you have, especially with new contacts, you’ll be asked follow-up questions on your proposition and USP that will broadly look at the following. Having convincing, emotive, and robust answers to these questions is crucial. **IN-DEPTH QUESTIONS ** This section reviews the more probing questions and detailed questions investors will expect answers to. Not all of them will be asked but having answers to all of them is important.
These questions have been broken down into the following sections:

Plans for Growth
Need for Support
Business Model
Social Impact
Person and People
General Answering each one of these questions in full will be a large time commitment. If you are able to commit to this, or can share it out amongst a small team of you, please do. It will provide a handy resource and review of your practices and hopefully identify areas of strengths and weaknesses. A more practical and less time-consuming way of answering these questions is to use key words, links to key documentation or parts of your website, and bullet points to answer any questions that you think are important or require more thought. e.g.

You don’t need answers to all of these questions to be “investment ready” but you should probably have answers for at least 75% of them. Social enterprises and their practices take time to get right. You’ll be able to find quick wins to answer some of these questions (e.g. free to download generic policy templates) but some practices or evidence bases will take longer to develop. The best thing you can do is to show how you plan to develop these areas of work when speaking to an investor. If you don’t have it, show you have a plan for it, this will reassure investors you are thinking about all elements of your work. Plans for Growth: Typically, investment in early-stage social enterprises is used for growth. This might be explicit (e.g., funding marketing campaigns and sales) or implicit (e.g., building capacity in the technology team to future proof the business from technical issues associated with bigger user numbers). As such, this is regularly a core part of what an investor is looking at when they are considering investing. Growth and sales performance are, in large part, what will drive up the value of the business and ensure a return on their investment. Having well thought-out, logical and, were possible, evidenced plans of why your growth plans are reasonable and ambitious will be key to convincing people that you have an investable proposition. Need for Support: Many social investment programmes will come with a non-financial support offer. This may be consultancy, mentoring, coaching or some sort of technical input to the business. Your need for support may well form a part of the decision-making process for that institution or individual. Typically, though investors will be reassured to hear that you have external supporters; be in partners, accelerator programmes or advisors.
It’s not unlikely that an investor will ask to become a part of your board. They’ll want to do this to ensure that their money is being put to good use. You should consider these proposals on a case-by-case basis but one thing to ensure is that your board is made up of a diverse set of people and opinions. Investors views should be balanced out amongst other board members. Business Model: This section helps you review how well you’ve thought through your business model. Your pitch deck should contain a lot of this information and will really build on the answers to the “core questions” at the start of this document. Your business model really underpins your growth predictions so the two sections should relate to each other. Social Impact: Social investors will review your social impact model. Understanding how impact and business activities relate are core to an investable proposition for any social investor. If you are established in the market investors will expect to see comprehensive answers to the below questions. If you aren’t in the market yet, or have only just entered it, you may get away with how your delivery model will “theoretically” generate impact as you haven’t had the chance to evidence it yet. Person and People: People run businesses. Unfortunately there’s no getting away from it an investor is investing in you as much as the business proposition itself. Moreover, they are investing in your team, their skills, experiences and motivations. Demonstrating that you have built a great team, you are establishing your place in the market and networking well is crucial to future success. This section focuses on the founder, the team and your governance structures whilst also considering how you manage other stakeholders. General: This section focuses on some additional questions, mostly financial, that you will probably be asked during an investors due diligence process.

External Documents (designed to be shared with potential investors)	Delete as applicable
Business Model/Plan	YES/NO
Pitch deck	YES/NO
Financial Forecast/Model	YES/NO
Management Accounts (audited balance sheet and P&L for previous financial year)	YES/NO
Internal Documents (key documents to back up your arguments and support the final stages of investment)	Delete as applicable
Policies, procedures and working practices	YES/NO
FAQs	YES/NO
Agreements and contracts	YES/NO
Sales pipelines	YES/NO

How much you need?

What form of capital do you need it in? (debt/equity/revenue share/mix)

Why do you need it?

What round is this? And of how many anticipated rounds? What do the future rounds look like?

Who are you looking to raise from (type of investor) and what’s the size/interest from your network right now?

Why are you addressing this problem? - Size the opportunity (not just TAM, SAM, and SOM) and include a £ cost to those experiencing the pain.

Why have you proposed this solution? - What have you built to tackle this problem and why is this your approach

Why now? - What has changed in the market, technology, or human behaviour to make now the right time to launch this startup

Why you? - What is so special about you and your team that will allow you to win

Do you have a profitable revenue model? If not, do you already have a committed sales pipeline?

Is the social impact model (Theory of Change or ToC) documented, realistic and impactful?
LINK to Theory of Change
Theory of Change developed in combination with researchers at XX university and outcomes against this have been shown in our last two impact reports HERE and HERE
Are the operational and measurement process plans clear and realistic for the achievement of social impact?
Impact collection done via this FORM.
Is there a social mission lock in place? Is this appropriate for the business?
Yes: link to ARTICLES
Golden share articles in association with local provider.

What are your plans for growth? What is the vision of scale? Is this appropriate for the market?

What pace of scaling will you adopt and why is this appropriate? E.g. are you planning to scale by region, block contracting or a growth rate % across

Are there crucial ‘pieces of the jigsaw’ missing that need to be in place to achieve this vision? How do your plans or investment solve these challenges?

Are the presented sales and cashflow forecasts sensible and sustainable? Are you overly reliant on just one or two large clients?

Is there a clear and sensible runway for launch of new products/services/markets in place and is the funding of the development of these budgeted in your projections?

What do you feel are the main risks in the growth plan? What are you doing to mitigate or overcome these risks?

Have clear and achievable milestones for operational/organisational growth been presented?

To what extent is the financial growth of the organisation clearly tied to the scaling of the social impact? Note: social investors are very keen to see how profit and purpose are linked. Less “social” investors may be less focused on this and prefer to see how your USP is providing you with market share and growth.

What are the long-term plans for growth? Do you want to position this to be bought out by a bigger player in the market or are you in it for the long term? Note: there’s no right answers here, just speak honestly about what your plan is now.

If partner organisations are required for routes to market or delivery, are the partnerships in place and are the organisations sufficiently strong, credible, and scalable?

Does the organisation have additional external supporters, e.g. accelerator programs, advisors or networks?

Who are the existing investors and/or board members and what experience do they bring to the business?

Is the business model documented and proven?

What are the major risks with the business model? How are they being mitigated?
Are you entering new markets, launching new products? Are there external influences – e.g. governmental policy changes?

Are there barriers to entry and/or a clear competitive advantage? How well do you understand your competition and sector?

Are the presented sales and cashflow forecasts sensible and sustainable? Are you overly reliant on just one or two large clients?

Does all relevant IP reside cleanly with the venture? If not, why not? How are the interests of the investor protected?

What’s to stop a bigger player entering the market?

Is the model truly scalable? Do the margins increase as the turnover grows? Is the market sufficiently large? Will the impact scale in line with the organisation?

How is performance monitored, reported, and reviewed? Note: You should learn some of the key numbers ahead of any pitches or discussions with investors e.g., growth rates, how the market has responded to launches/media campaigns etc

Is there a clear evidence or track record of the venture selling and selling sustainably (i.e. are profit/sales rising)? Is the income diverse, but not too diverse?

What history do the individuals involved in the business have of successfully hitting sales targets in previous roles?

Is the social impact model (Theory of Change or ToC) documented, realistic and impactful?

Are the operational and measurement process plans clear and realistic for the achievement of social impact?

Is there a social mission lock in place? Is this appropriate for the business?

How do you currently collect impact data? Is this appropriate?

Is there a positive trend on impact metrics? Are they achieving their social impact targets?

Is the ToC being executed as intended? Is social impact being delivered as anticipated by the Theory of Change – is it having the desired effect and thus creating the social change required?

Is the chosen plan for growth realistic given the team’s skills and track record?

What are the founders’ strengths and what do they bring to the organisation?
What are the key areas where you feel the entrepreneur has challenges? Where are the key skill gaps and/or where do you lack experience?

How can you demonstrate that you are focused on and committed to the delivery of the plan, whilst flexible to changing circumstances and responsive to feedback?

Are you, or your team, sufficiently financially literate to engage with investors and manage the business?

How much are the key management getting paid? If low what are the implications of realistic salaries and if high will stakeholders (current and future) react positively? Are all the costs of the business truly reflected in the financial projections?

Are there skill gaps? Do the management recognise these gaps, and have they shown willingness to fill these gaps? (Including financial commitments)

What is the quality of their board or advisers? How active are the board? Is there evidence of them selecting board members with diverse experience and with experience of growing organisations?

How has the organised managed to develop their brand and reputation? How are they engaging with key stakeholders? Is this appropriate for the current level of development?

Self-reflection exercise: comment on any significant information featured in the balance sheet below

Creditors - does the venture have the liquid assets to pay for the amounts outstanding. If it’s a short term liability – e.g. trade creditors - does it have the cash to pay those creditors within the next 30 days? If it’s long term – Bank Loan, Hire Purchase – are they able to make monthly payments as and when they fall due? How much of their cash is tied up in stock.

Debtors – If the amount of debtors represents more than, say 60 days of sales, question their ability to get people to pay for their products or services. Are their disputes with the customer, is the customer in financial trouble? Is the customer dissatisfied with the service or product?

Why are you asking for this much? What is the company’s valuation? Who are the current investors?

What are your future investment needs and why?

Template - Business Model and Investment Ask Scoping Document (2 pages)

BUSINESS OVERVIEW AND INVESTMENT CASE 1. VENTURE OVERVIEW Legal Structure: |* ***Founded*:* | FTE: Mission Statement*:* Business model: **2. SOCIAL IMPACT & DELIVERY ** Key Impact Metrics:

ABC number of beneficiaries
Case Study or Testimonial: [e.g.?] 3. FINANCIAL PERFORMANCE Financial Performance: ** Explanation: xxxx. Trading income- 60% / Donations, unrestricted grants and other non-grant income- 20% / Grant income- 20% 4. INVESTMENT NEED

**Funding Requirement: Use of Funds: 5. LOOKING AHEAD & CALL TO ACTION Deliverables Year 1:

Operations: (location, staff)
Delivery: (number of sessions, describe each income stream)
Impact: (numbers reached) **Deliverables Year 2: **
Operations:
Delivery:
Impact: Vision for the Next 3-5 Years:

Future Impact Goals: [Targets for the next 3-5 years]

Financial Year:	2022	2023	2024	2025	2026	2027	2028
Turnover	£	£	£	£ (projected)	£ (projected)	£ (projected)	£ (projected)
Traded income
Expenditure
Net Profit

ToC template (for filing in ) _ Simple version

**Theory of Change Model ** **Beneficiaries **** **** **** **** **** **** **** **** **** **** **** **Beneficiary needs

		Outcomes	Outcomes	Outcomes
Activities/ Intervention	Outputs	Short-term	Medium-term	Long-term
XXX
XXX
XXX
XXX	The direct results of a project’s activities, and are usually expressed as nouns that can be counted	What are the necessary short-term changes that need to happen to support achieving longer-term outcomes?		The intended and unintended changes that stakeholders experience or might experience as a result of an intervention/ activity

Key Assumptions	Impact Risks
-What needs to happen or be in place before you can achieve your goals and enable positive change?	-Financial, Networks, Data, People Power etc.

What to include in a pitch deck

Pitch Deck Outline Introduction (Why you) Tell people who you are and why you’re here and your motivation Impact Who are your beneficiaries, what are the unique needs, challenges or barriers faced by those beneficiaries How will your programme, service or product address the needs Market Size and Opportunity Identify two or three problems your programme, product or services will tackle Identify market size and opportunity in measurable numbers Solution Present a clear and concise solution that investors can easily follow Programme, Service or Product Show off the actual product or service your business is selling Traction (History of trading) Focus on the growth you’ve already experienced, major goals and next steps for your business Team Introduce your core team members and your board/ advisors Competition/ Peers Define your competition and explain why you’re different Financials (Headline) Show how your business makes and spends money in service of social impact and business growth Show how investment and your pipeline of customers will grow your income Investment and Use of Funds Tell investors what you need from them and why