As impact investing space is moving towards mainstream, it is becoming essential for the industry to embrace the best practices of the traditional business. One such practice is to understand how to become attractive to the venture capital firms. Of course for Social Enterprises this means how to show the promise of growth coupled with impact.
Mr. Frank Levinson, a successful entrepreneur and Founder of Small World Group, an incubator/venture capital firm based in Silicon Valley and Singapore shares some of his wisdom below on how he runs an effective Incubator. Small World Group is a partner of IIX for Impact Incubator.
“Small World Group Incubator focuses on having the companies we start drive to achieve the following 3 milestones –
- Finish the MVP (minimum viable product)
- Sell the product to a few customers
- Sell the product at a viable gross profit
Achieving this means we have a “battle hardened team” of people who work together well, who can plan and execute, that the product is technically complete and functioning to the design specifications and that customers like the product sufficiently to pay enough for the company to eventually be profitable.
This combination of milestones defines a viable business model that has been tested and proven worthy of future investments.
Of the more than 20 companies we have started over the past 5-6 years, some have failed. One failed because the team could not work together, 3 more failed because the early customer revenue did not grow along the lines needed to make the business long term profitable.
No companies failed to make the MVP or to have initial sales!
The goal of an incubator has to be to test the viability of the business described in the business plan. “
As Mr. Levinson emphasizes, viability of the business model is as always the core of the success of the venture. For a Social Enterprise, this holds true and in addition to safeguarding its mission and achieving the desired impact.
Founder and Managing Director,
Small World Group.