Financing tends to be on the top of the list of hurdles for sustainable companies looking to scale. A business does not survive on a mission alone, and in order to generate profits and revenue, it needs capital to operate. But for sustainable enterprises setting out to meet the triple bottle line (“Planet, People, Profit”) while minimizing impacts, attracting and raising funding can be a particularly challenging task.
As it is, genuinely committing to environmental stewardship by incorporating sustainability into business decisions largely goes against the grain in a market that still prioritizes short-term profits. Despite increasing public concern with issues such as climate change, plastic pollution and the changing priorities of the Environmental Protection Agency, sustainable ventures measured along this profitability metric may outwardly pose to investors a degree of risk. Striving to mitigate costs and reduce uncertainty, investors, like businesses, are presented with their prohibitive obstacles that boil down to a matter of economics.
When investors do show interest, there is the risk that their capital is conditional and contingent upon their ability to steer the ship. “Basically, when you take other people’s money you owe them something. You either owe them money back or a business decision that is kind of no longer yours,” said Jason Fried, CEO of Basecamp. As they say, money is money, but some funding options can be limiting and may come with strings attached.
Up until recently, private companies (green or not) would raise capital by taking out a loan (also known as “debt financing,” which needs to be paid off with interest), “going public” through an IPO (Initial Public Offering) or accepting investments from wealthy (“accredited” and thus exempt from certain securities protections) investors. For sustainable, viable growth, I’d advise entrepreneurs and young businesses to consider the pros and cons of each when weighing options for equity with their companies.
But the rise of social media and internet literacy sees us living in an increasingly connected world. With it, a new funding option has developed for small, sustainable businesses looking to raise capital: crowdfunding. Defined as the practice of funding a project or venture by raising many small amounts of money from a large number of people (aka a crowd), popular and well-known platforms for this model include IndieGoGo, Kickstarter and GoFundMe. (…)
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