Pitching socially beneficial ideas to for profit investors

Today I turned in my application for alphalab. I applied using the CrowdSpotter idea. However, I had to tweak it substantially in the application process. Originally my idea started out having the ultraistic belief that if people were able to invest in their community they would take better care of the community and also encourage their friends to frequent the location of their real estate investment. This ultra-local, faith in the goodness of humanity, viewpoint for my idea would simply not attract an investor, which is what many accelerators are.

Throughout the application process I ran my app by various entrepreneurial mentors of mine, and people involved in the alphalab program. When I told them about the company they all thought it was a really awesome idea but they all also thought I would scare off investors because of the inherent social good aspect that is incorporated into unaccredited investors being allowed to influence their neighborhoods investment by voting with their dollars. So the point I wanted to write about today is what to do when your company can be a profitable investment and also provide a social good.

For those of us in the class looking to create a for-profit venture I think it is important to consider where your funding sources will come from and what their primary motivation might be. For most of the funding sources their motivation is a return on their investment. So your pitch to them has to focus predominantly on the potential profitability of your idea. If the social benefit aspect enhances your products profitability then you need to explain why. If the social benefit aspect means taking less profit then you need to think about how to get an investor to buy into that.

For me I had to change the core concept of CrowdSpotter was. It went from being an engine from which to allow people to directly partake and profit from their communities growth and success to an engine that provided access to quality deal flow that was previously unavailable to unaccredited investors. The original idea was about giving people a voice in their community’s development. The new idea was about providing people with access the quality real estate investments that would provide an asset that is the closest one can come to fixed income. However, the old idea is still there. Despite a change in language and focus the old idea is inherent in the platforms operability; if people choose to do so they can still use CrowdSpotter to invest in local real estate that positively affects their neighborhood.

I guess what I am trying to say with all of this is that those of us considering for-profit ventures with a social good aspect must be flexible in our wording of our idea and flexible in our conception of the idea.

P.S.

I also found this boutique consulting firm that focuses on helping companies develop their intrapenurship capabilities. Their blog has some good educational info. I thought I would share. 

http://blog.liffft.com/