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Impact investing has gained significant traction in recent years, with more investors looking to align their financial goals with positive social and environmental outcomes. However, for founders seeking impact investment, it can be challenging to navigate this space and find the right investors. To drive more trackable impact investments, founders should consider asking impact investors five key questions.
Top things to Know
– What is your impact thesis? Understanding an impact investor’s thesis is crucial to ensure alignment with your company’s mission and goals. By asking this question, founders can assess whether the investor’s focus areas and impact metrics align with their own.
– How do you measure impact? Impact measurement is essential for tracking progress and ensuring accountability. Founders should inquire about the investor’s approach to measuring impact and the specific metrics they use. This will help determine if their measurement methods align with the company’s own impact goals.
– Can you provide examples of successful impact investments? Asking for examples of previous impact investments allows founders to assess the investor’s track record and the types of companies they have supported. This information can provide insights into the investor’s expertise and the potential value they can bring to the table.
– What is your approach to risk management? Understanding how an impact investor manages risk is crucial for founders. By asking this question, founders can gain insights into the investor’s risk tolerance, risk mitigation strategies, and their ability to support companies through challenging times.
– How do you support portfolio companies beyond capital? Impact investors can provide more than just financial support. Founders should inquire about the additional resources and support the investor can offer, such as mentorship, networks, and expertise. This will help determine if the investor can provide value beyond capital and contribute to the company’s growth and impact.
By asking these five key questions, founders can gain a better understanding of potential impact investors and assess their compatibility with their company’s mission and goals. This will help drive more trackable impact investments and ensure a strong partnership between founders and investors.
Overall, founders seeking impact investment should consider asking the following questions to potential impact investors:
– What is your impact thesis?
– How do you measure impact?
– Can you provide examples of successful impact investments?
– What is your approach to risk management?
– How do you support portfolio companies beyond capital?
As impact investing continues to grow, founders must be diligent in selecting the right investors who align with their company’s mission and can provide the necessary support for both financial and impact goals.
Original article: https://techcrunch.com/2023/07/24/5-key-questions-climate-tech-founders-should-ask-impact-investors/