Investors around the world are finding ways to unleash the power of their capital by trying different industries and business models.
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The opinions of entrepreneurs' contributors are their own.
Most investment entrepreneurs believe that projecting massive profits is the best way to impress investors. Many entrepreneurs also think that investors will immediately sign a check when they come up with a groundbreaking idea that is far from mainstream offerings. All of this may be true, but it hardly represents the majority. I spend 50% of my workdays with startup investors of all kinds and have seen various reasons that motivate investors to invest in startups. A less known fact among entrepreneurs is that impact startups are attracting the attention of investors these days.
Many investors are looking for impact investing in order to exploit the potential of their capital on a sustainable basis. Impact investments are made in order to achieve positive, sustainable social or ecological effects in addition to returns. The 2020 annual investor survey conducted by GIIN estimates the market size of impact investments at $ 715 billion.
Similarly, these 20 startups are impacting farmers livelihoods and the future of food in Latin America
Are you an impact preneur?
Startup entrepreneurs who are committed to solving a major social or environmental problem are impact preneurs. You build sustainable business models that serve a social or ecological purpose and are profitable at the same time. The critical insight here is to cater to a large and disadvantaged audience. The underprivileged part of society may seem like a lack of money, but it is a pool of opportunities for long-term gamblers.
Related: 3 reasons why socially impact companies are on the rise
Identify an impact-generating industry
The easiest way to identify an industry that can have a major impact is to look at the United Nations 17 Sustainable Development Goals. Popular sectors that have had a significant impact around the world include microfinance, education, healthcare, and renewable energy. However, it would not be entirely appropriate to attribute the impact to a specific industry or industry. If your product can solve a social problem on a large scale, you have an impact-driven startup.
Scalability is every investor's favorite term. However, scalability with a social cause is the icing on the cake. So, unless you belong to an industry that is known to have a significant social impact, use your product's capabilities to address a mass problem.
Connected: 5 Ways To Integrate Social Goods Into Your Business
We can't eat money
These challenging times have forced many entrepreneurs to rethink their startup's vision. Some have realized that entering a market that can pay for the product is not enough. Instead, you need to be relevant in a market even when money becomes irrelevant. Measuring the performance of impact-driven startups is the hallmark of impact investing. Unsurprisingly, performance is measured by the impact in the target region versus the profit made. This measurement approach opens up new avenues for holistic innovation and the elimination of social or ecological problems.
There has never been a better time to delve into the impact of startup businesses. The world needs entrepreneurship more than ever. Anyone who is committed to a social cause will unintentionally be the superheroes of tomorrow. Social entrepreneurs are becoming the pillars on which the emerging stability of economies rests. And investors rely on it.