#9 GKC | 💰 How Startups Raised Different Impact Funding

💡 GOOD Insights

Two weeks ago, we discussed about various types of funding options for SEA impact startups (read here).

I’ve received amazing support & feedback on that article from the community! Hence, let’s delve deeper into this topic :)

Today, I’ll share FIVE CASE STUDIES of how impact startups successfully raised capital from various sources.

Disclaimer: Case studies below are real-life deals; detailed information are excluded for privacy purposes.

Case Study 1: Venture Capital (Equity)

💼 Company: A nano-technology company that produces chemical-free membranes for industry applications.

📈 Financials: Revenue growing 100% year-on-year, EBITDA positive.

😩 Bottleneck: Received huge market demand due to regulatory-push globally. However, the current production facility is fully occupied.

💡 Solution: Raised an equity round to build a new production facility.

😎 Verdict: VC route makes sense. Why?

1) Large market size to capture VC returns (50-100x in 10 yrs)
2) Strong unit economics creates a feasible financial return projection
3) Free the company’s cash flow with equity money as cash flow is king for a manufacturing business (and most of business!)

Case Study 2: Loan

💼 Company: An Ed-Tech company that creates digital upskilling platform for career professionals.

📈 Financials: Revenue growing 20% year-on-year, EBITDA positive

😩 Bottleneck: Received a government contract to create upskilling platform for 600 remote villages, but only be paid by the end of project.

💡 Solution: Raised a working capital loan from angel impact investors.

😎 Verdict: Working capital loan makes sense. Why?

1) Secured government contract demonstrates lower risk for investors
2) Strong unit economics creates a feasible financial return projection
3) Fixed interest rates & tenure is favourable for investors who prefer clear financial returns (exits)

Case Study 3: Philanthropic Grant

💼 Company: An agriculture company that empowers rural farmers with the promotion of their heirloom, organic agricultural produce.

📈 Financials: Revenue flat year-on-year, EBITDA negative (slightly)

😩 Bottleneck: High transportation cost of raw materials (the agriculture produce) eats up the margins for the company.

💡 Solution: Raised a philanthropic grant from government to build a rice mill within the rural community, and transport the finished goods.

😎 Verdict: Philanthropic grant makes sense. Why?

1) Clear financial sustainable pathway which can be resolved with feasible operational solution
2) Not-as-strong unit economics requires a boost from grants to become financially sustainable

Case Study 4: Venture Capital + Loan

💼 Company: An aquaculture company that empowers rural farmers with end-to-end solutions.

📈 Financials: Revenue 50% year-on-year, EBITDA negative

😩 Bottleneck: Requires additional working capital to scale the business + traditional aqua-farming practice is bad for environment.

💡 Solution: Raised an equity round from VCs for working capital + a project-financing loan for sustainable farming projects.

😎 Verdict: A combo makes sense. Why?

1) Strong revenue growth and large market size attract VC investors who aim for 50-100x returns in 10 years
2) Free the company’s cash flow with a project-financing loan for new projects which can be higher risk

Case Study 5: Grant + Loan

💼 Company: A food catering social enterprise which empowers refugee mothers through employment and training.

📈 Financials: Revenue 10% year-on-year, EBITDA negative

😩 Bottleneck: Newly established with few corporate contracts; requires capital to purchase CAPEX (kitchen set up, trainings, etc); negative payment cycle for corporate contracts.

💡 Solution: Received a small grant from government to purchase necessary kitchenwares + raised a small working capital loan to mitigate negative payment cycle problem.

😎 Verdict: A combo makes sense. Why?

1) Secured corporate contract with clear and predictable income; favourable for investors to provide a small loan
2) Strong and clear impact which enables the company to raise a small grant from the government

Capital, like any other resources, is a means to an end. Clearly, the end should be strong impact outcome and financial sustainability.

If you’ve successfully raised capital from other methods, please let me know (by replying to this email). I’d love to learn more :)

Hope this is helpful! :)

Feel free to reach out via LinkedIn or email if you have more questions.

🎉 GOOD News

 💡Growth | SG Oatside sows 3x revenue growth as expansion bears fruit

 💡Exit | SG Inside a SG vegan beauty brand’s $100m glow up

 💡Research | SG What is biochar? Here’s the bicohar 101 class

🏆 GOOD Opportunities

 🚀 Accelerator | BIND Startup Acceleration Program | Due Sep 2

 🚀 Competition | Future of Capitalism ($1M funding) | Due Sep 30

 🚀 Grant | Climate Change Innovation ($150k grant) | Due Sep 15

💁‍♀️💁‍♂️ GOOD People

🙋‍♀️ Rafael Alzate | Specialist, Entrepreneurship @ Singapore University of Social Sciences (SUSS)

🙋‍♂️Ross Brooks | General Partner @ Katapult Ocean

🙋‍♀️ Jennifer Yuen | Co-founder @ Scale Climate Action

❤️ Amazing Content You’ll Like …

The $82.5M Mistake for Tani Hub - When shooting for the stars, naivety and mismanagement will ensure you crashing hard (link)

Indonesia’s Talent Shortage - Huge gap in tech talent demand (900k) vs. supply (50k) in Indonesia (link)

The story of JALA - A university project turned ID shrimp farming leader empowering 18,500 farmers (link)

👍 How I Can Help

Whenever you’re ready, here’s how I can be helpful:

1. Fellowships Database - a curated list of fellowship opportunities for SEA impact founders (read here)

2. Let’s Talk Impact - office hours for impact founders to talk about startups or personal if needed (book a timeslot)

3. Fractional Chief of Staff - Chief of Staff for fundraising / strategy / project management work (reach out via LinkedIn)

4. Sponsor Our Newsletter - work exclusively with impact brands / tools for impact founders (reach out via LinkedIn)

For daily insights, follow me on LinkedIn.