How to attract ethical investors

The concept of ethical investment has been around for quite a few years now.  It has definitely made the transition from a niche interest to a mainstream concern.  Unfortunately, it remains something of a hazy one, because everyone has their own personal views on what constitutes ethics and while there are some companies which are regular fixtures on “naughty lists” (e.g. arms companies), many companies are perceived as “naughty” by some investors and “nice” (or at least OK) by others.

Forget about trying to please everyone

Even if you personally think that you’re running the most ethical of ethical companies, you’re almost certainly going to find that there is at least one person disagrees with you.  That’s just life.  In the real world, the chances are that you’re going to be running the most ethical operation you possibly can, but there’s probably going to be some fault someone could find with you if they really wanted.  For example, you might run your own company to a high standard, but use a supplier of which someone disapproved.

The key point to note is that if you try to please everyone, there’s a strong chance that your message will become so diluted and bland that it will appeal to nobody.  Decide which particular niche of ethical investors you want to target and hone in on them.

Pitch a positive message

If you run a campaign on why ethical investors should avoid your competition, then, at best, all you’ll be doing is discouraging them from investing in your competition.  At worst, you’ll come across as just trying to spike your competitors.  Instead, take the moral high ground.  Lay off criticizing other companies, even if you don’t reference them by name, and layout what you do and why that makes you a worthy investment.

Remember that to attract astute ethical investors, you’re going to have to cover both bases.  In other words, you’re going to have to show how you’re both ethical and a good investment.  If you’re ethical but unable to demonstrate how you can provide a good return on investment in financial terms, then maybe you should think about turning your business into a non-profit. 

Be ready to back up everything you say

Modern ethical investors have long since grasped the concept of “greenwashing”.  In other words, they are (mostly only too) well aware that many companies are now really trying to present themselves as ethical (and sustainable) because they know that it’s what investors (and consumers) want, but that their commitment to ethics (and sustainability) can be limited, to put it mildly.  The way to counter this suspicion is to provide plenty of real-world examples of what you do to support your ethical credentials and why you think it matters.

Get out and communicate

Small businesses may not have the funds to run huge advertising campaigns, but they can certainly get out onto the internet and start building links with the sort of people they think they might like to have as investors (or consumers or brand ambassadors).  Remember the long-established social-media etiquette of listening before talking, but be ready to talk.  In particular, be ready to answer questions openly and honestly and if there’s something you need to improve just admit it and make a commitment to doing it. 

This is how you build trust with people and can encourage them to look “beyond the financials” (which may not be that impressive if you’re a young business) into other factors like the quality of the management or to consider the long-term prospects of the idea in the context of an in-depth knowledge of the sector.

Alternatives to finding investors

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