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Are You Ready for Some Funding?

OweestaOweestaOctober 17, 2013

Goals

Process of getting private investors

Assess where your org stands now

Set some goals and make an action plan

Tips and tools to help you get there

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THE PROCESSPrepare for successful investor conversations

Step 1:Gather 

Step 2:Know your condition

Step 3:Increase your 

valueStep 5:

Set asking price (How much do you 

d?)

Step 4:Decide if you need 

outside help

10 Steps to Getting Private Funding

Strengths/Successes: Benchmarks Accounting? Areas needing outside

information

Step 10:Bring them back ! Maintain  the relationship

Step 9:Close the deal!

Step 8:Negotiate the best 

Step 7:Promotion!  

(Investor Packet)

Step 6:Shop for buyers (who are your funders?)

need?)

Financial statements Audits Portfolio performance Impact data Stories Other ______________

Strengths/Successes:

______________________

______________________

______________________

Weaknesses/Challenges:

______________________

______________________

______________________

g Financial analysis? Strategic planning? Business planning? Photos? Proposal writing? Qualified Board members? Other? __________________

expertise:

______________________

______________________

______________________

Do you have? Financial

projections Capitalization plan

relationship Negotiate the bestprice (How much can you get?) Case statement

Audited financials Brochures Success stories Resumes

Plan for ongoing communication:

1)________________________

2)________________________

3)________________________

What’s the right amount to ask for based on your

condition and investor’s goals?

High Value Targets:

________________________________________________

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GATHER INFORMATIONHow to sell your CDFI: Step One

Information is Power! What information do you need to assess your

organization? What information do buyers need to understand your y y

organization?

√ Financial statements / audits√ Portfolio data√ Development service data√ Market data√ Impact data√ Stories/pictures√ Other???

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Wh t if h i f ti th tWhat if you have information that is not flattering?

KNOW YOUR CONDITIONHow to sell your CDFI: Step Two

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Are you……

or

or

Assess Your Organization

Are you meeting your mission?

Are you having impact in your targetAre you having impact in your target market?

What are your strengths and weaknesses?√ Programmatically√O ti ll ?√Operationally?√ Financially?

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What Are You up Against?

Investor expectations

Financial & performance benchmarks

Industry standards

Competition

National NCDFI Market Study

Large scale investments means in-depth underwriting- smaller loans not as cost effective- smaller loans not as cost effective

Investment parameters limit access to debt capital

Investment terms may deter some Native CDFIs

Satisfying underwriting requirements

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Financial & Performance Benchmarks and Industry Standards

C l Capitalization Financing Activities & Performance Efficiency & Operations Staff & BoardMarketMarket

Competition

Peer Groups Peer Groups

Market Area

Limited Resources

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INCREASE VALUEHow to sell your CDFI: Step Three

Increasing Value in the Short-Term

Tighten up delinquenciesGet more stories and photosFix accounting issues Increase expertise on your BoardOperational planningp p gOther?

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Increasing Value in the Long-Term

Better understand your market Strategic planningBusiness PlanningFinancial analysisOther?

Know Demand

Document, quantify and communicate demand for your org and specific products and servicesy g p p

Demand data helps shape responsive products and services

Demand data informs business plan, financial projections and community impact goals

Show investors you have sufficient demand to deploy the requested financing

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GOT TEAM? NEED HELP? How to sell your CDFI: Step Four

Reasons to Consider Outside Help

ExpertiseLack of time internallyyGet a fresh perspectiveGain credibility

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SET YOUR PRICEHow to sell your CDFI: Step Five

a.k.a. Don’t Let the Tail Wag the Dog!!!

First Step: Develop financial projections– Shows you how much you plan to spend in theShows you how much you plan to spend in the

future– Can be provided to funder to build credibility

Second Step: Create a capitalization plan– How much do you have to cover needs?

How much do you need?– How much do you need?– What areas are short?

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SHOP FOR BUYERSHow to sell your CDFI: Step Six

CapitalizationTotal Capital by Type

45% 44%48%

46%44%

6% 6%

Borrowed Capital Equity  EQ2

All CDFIs Loan Funds

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Source of Borrowed Funds

13%

5%

4%

14%

5%

4%

Foundations

Religious Institutions

Individuals

4%

31%

8%

21%

5%

13%

3%

31%

8%

20%

6%

Nondepository FI

Banks/CU

State/Local Govt

Federal Govt

Corporations

8%

2%

4%

7%

2%

Other

Ntl CDFI Intermediary

Loan Funds All CDFIs

Who do You Talk To?

Identify likely targets• Match mission• Geographic footprint• Who is supporting similar orgs?• Online resources

Who is out there

Market research Market research

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PROMOTE!How to sell your CDFI: Step Seven

Key Elements of an Investor’s Packet Case statement including

– Brief org overview and historyH d h t d– How you do what you do

– Community benefit– What are your goals for this year– Why you need investor’s support

Most recent audited financial statementsMost recent audited financial statements Organization/program brochures Success stories Resumes

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NEGOTIATE!How to sell your CDFI: Step Eight

Now That You’re Ready for The Ask

How much will you ask for?Who makes the pitchWho makes the pitch Customize the approach Anticipate questionsWhat if they’re just not that into you?

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CLOSE THE DEALHow to sell your CDFI: Step Nine

Process and preparation gets you here.

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Then this happens!

BRING THEM BACKHow to sell your CDFI: Step Ten

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Maintaining the Relationship

“It’s always easier to keep a customer than to get a new one.”

FINAL TIPS

Don’t put all your eggs into one basket…diversify funding, hit more than one target

Make sure your pitch fits with investor’s mission/goals/priorities

Tell your story to everyone!!!! Be persistent and patient If investor says no, ask whyy , y Ask for help