A lack of investment-ready enterprises is slowing the development of an impact investment market in Australia.
At NAB, we have set our sights on becoming the bank of choice for the sector but are finding that there are not enough viable investment opportunities to meet demand from investors and our customers.
In some ways, it’s a nice problem to have in that the investment community, like us, sees the opportunity to have a positive impact on our communities, while making the most of the business opportunities that arise from a shift in how society addresses social and environmental issues.
However, we need to strike while the iron is hot. The interest is there but if we cannot provide tangible examples and opportunities for investors to act on then we risk losing the momentum and losing potential investors.
This is why we have recently launched the NAB Impact Investment Readiness Fund to help enterprises get to a point where they can seek funding from the investment community to scale-up their social and environmental impact.
The Fund offers grants of up to $100,000 for not-for-profit organisations and social enterprises to purchase specialised capacity building support from providers such as advisory, financial, intermediary or legal services.
So how do you make your purpose-led enterprise look attractive to an investor?
1. Think like an investor
Investors first and foremost want to see strong financial results. Make sure you demonstrate how you will create financial value alongside delivering the social and environmental outcomes you say you will. Without a strong financial case you will struggle to ensure long term sustainability of your impact let alone attract investors.
2. Perfect the business of a business plan
Creating a strong business plan (organisations like TDi can help with this) and demonstrating the management team’s ability to deliver on the plan are essential. If investors don’t have confidence in either your plan or your management team then they are unlikely to invest in your enterprise.
3. Eat, sleep and breathe measurement
Measurement is at the heart of this issue. It must be built into your operating model. Investors are going to want to see your financial results alongside tangible social and/or environmental outcomes. We recently partnered with TDi to release a paper on this subject, Impact Measurement: Exploring its role in Impact Investing, which is a great resource for understanding why it is important and for getting ideas about how to do it.
Do you have any tips for getting your enterprise investment-ready? Leave any suggestions in the comments below.
Corinne Proske is Head of Community Finance & Development at NAB. She will be speaking on ‘Building investment ready enterprises’ at the upcoming Impact Investing Conference taking place in Sydney in July. Book before May 29th and save $200 on ticket prices.