Integrating Purpose in investment pitch is becoming a must for entrepreneurs
When entrepreneurs pitch their company idea to investors, it’s often said that a defining 60-second moment will separate success from failure.
While those behind startups place a lot of thought into their pitches, making sure they cover keywords that investors like to hear, such as product-market fit and scalability, a rising number of investors want to hear more about the purpose at the core of a young firm’s vision.
There are several definitions of purpose in business, but simply said, it is what the organization stands for, its raison d’être, where all its decisions, long and short term, spring from to create economic and social goals.
A purpose is fundamentally an integrated set of values in which the entrepreneur believes, that leads to sustainable performance and positive outcomes in the wider world.
Faced with environmental challenges and social inequalities, entrepreneurs are encouraged to look at these problems as opportunities to design scalable, financially-rewarding solutions that meet shareholders’ interests, while creating value for the environment and local communities.
Globally, investors are increasingly interested in supporting innovative organizations that strive for better financial returns through these kinds of business models.
Michel Cezon, technology and startup coach at the EU’s European Innovation Council Accelerator and professor of entrepreneurship and strategy at Grenoble Ecole de Management, sees a growing trend of investors concerned about social and environmental issues.
He said: “Beyond the tech, my starting point is always the team, and how aligned they are with their value proposition and purpose. Otherwise, you might end up with a vegan opening a butchery”.
Cezon believes that entrepreneurs should be armed with a set of compatible values and a shared vision, which he sees as the best way to attract investors.
Investment in companies striving to do well by doing good also operate in the Middle East and North Africa region. A total of $444 million was invested in impact-driven startups in the area through venture capital firms, which grew by 15 percent between 2016 and 2021.
Experts such as Medea Nocentini, founder of UAE-based body Companies Creating Change, sees impact-driven demand coming from a diverse range of investors, including venture capitalists, corporates and family offices, who have a rising appetite for envirotech, edtech, healthtech, agritech and foodtech.
However, this purpose should not be used as a marketing tool, or as an add-on generic used to mask different motives within young companies. The goal is to move away from what Harvard Business School Professor Ranjay Gulati refers to as a “convenient purpose” to a “deep purpose”, a proactive commitment to positive commercial and social outcomes.
The demand for purpose-driven startups also comes from large corporations actively seeking to create efficient value chains and adopt scalable solutions that respond to environmental concerns.
In February, US food and drinks giant PepsiCo. announced the finalists to its greenhouse accelerator program, a grant and mentorship scheme, which invites consciously-driven startups from the MENA region to showcase ideas that provide sustainable packaging and encourage recycling. The winner will receive $100,000 and access to the group’s network to help grow the young firm’s operations.
A firm’s clear purpose, beyond financial performance, is becoming more significant to investors today. Profit is evidently essential to thrive, but more than ever, the purpose of an entrepreneur today is to create value among all of their stakeholders.
• May Barber is a LEED Green Associate Architect and brand management adviser focused on building brands with purpose.
• Mourad Ben Ayed is a seasoned adviser in finance and strategy focused on purpose-driven businesses and an educator at the American University in Sharjah.