Raphael Nouwen (Triodos Bank): This is Why Investors Say 'No'!

Finding investors is one of the most challenging tasks for every startup. Social enterprises may even have to look harder for a match that fits. Raphael Nouwen, Manager of Business Lending at Triodos Bank, gives some great insight on the best ways to approach potential investors.

At RevelX, we support a more just and sustainable future of the planet. That’s why we support organizations that focus on social issues, the so-called “social enterprises.” Specifically, we are a partner of Social Enterprise NL’s Next Level program, helping entrepreneurs fine-tune their business plan and pitch.

Social enterprises in the startup phase want to grow just like any other organization. Through scaling, social enterprises will be able to accomplish their goals better. What is the secret to finding investors if you are a new social enterprise?

During Next Level, Raphael Nouwen (Triodos Bank) and Jan Hein van der Hoeven (Pymwymic) gave a workshop about why investors often say “no.” After this inspiring session, we talked to Raphael.

“First, think carefully about what you want and come up with a concrete question. It’s only then that an investor can give a concrete answer. Consider also what kind of money you want. Mandates of investors and finance providers differ widely depending on the sort of investment, so think carefully about whether you are going for a subsidy, loan, investment, or donation. Realize as well what the consequence is for your organization when you choose to accept a particular form of money. For example, is there a return requirement? Is there a repayment requirement or an impact statement requirement? You should really make sure you can fulfil the requirements and avoid accepting money that puts you under too much pressure.

 “Also, ensure that there is a match with the investor. Each investor has his own profile and is looking for a different sort of initiative. Do research to find out what they are looking for. For example, a bank is much more conservative than other fund sources in that they don’t want to take on much risk and might want a predictable upside.”

“I recommend to startups that they prepare a tailor-made introduction. Make sure you can demonstrate on one sheet of paper why your initiative is in line with the investor. Your application should stand out!

“Moreover, you don’t want your documents to be one of many in a gigantic pile. So, look at your network to see if you can get a personal introduction before you make a written offer.”

“Remember, ‘no’ is not necessarily a value judgment of your initiative. It only means that there is no match with the investor at the moment. Don’t get discouraged!

“A ‘no’ today does not mean a ‘no’ at a later stage. Therefore, try to keep in contact and remain in touch to keep potential investors updated on your progress.

 “I encourage an entrepreneur to ask an investor that says ‘no’ to provide a suggestion for another funder. They have solid networks and know other funders. A warm introduction can be of great value.”

The Next Level program continues through May and June.