Selling social: Seed funding the Cambridge Science Centre
This piece was first published in the launch edition of Cambridge Tech Quarter. Chris Lennard, CEO of the Cambridge Science Centre, gives some pointers on starting up a social enterprise.
To successfully create a vibrant socially oriented business is a life goal of mine. However, a passion for building an organisation that 'does good' is not enough by itself: as with any start-up you need a solid business plan, to build your team, to develop and market your prototype, to manage your cash flow, and to sell your idea.
In March, the Cambridge Science Centre, an initiative to get a hands-on exhibition space for the sciences in central Cambridge [See 'What is a science discovery centre?'], announced its charitable status and the raising of seed capital with pledges totaling £300,000.
Here's a few pointers on what I discovered in these fledgling stages of development:
Don't be shy
The social enterprise industry is, as the name suggests, social: talk about what you're doing.
You need to flush-out similar initiatives and position your company with them in mind. Head-to-head local competition doesn't score points in the social enterprise sector: deliver a complementary value proposition. Get an active website and blog, Facebook, Twitter. You'll be amazed how much the incumbents are willing to lend a hand to a collaborator.
Back you claims
If you believe in it, put some cash on the nail. If you're hoping another person or company is going to seed-fund you and your team, they will want to know you believe in it enough to risk your own money first. Explain to those who might back you what your motivations are and the personal returns you expect: being social does not equal being driven by just goodwill. Be clear on what you want in both financial and reputation development terms.
Know your limits
As you may personally back some early developments in your new company, establish a maximum cash outlay up-front, know your progress metrics and lay out a schedule. Agree your commitment with your family: their support is paramount.
Talk with an accountant: this is really critical. Know how much of and when you are going to claim back your investment if the business takes off. And be ready with a personal bridging loan! The gap between a pledge and cash in the door can be longer than you expect, especially when setting up as a charity.
Understand the exit
Social enterprises may not always create financial returns for their backers. However, any seed funding individuals are supporting you with their reputations and they are betting that your business will be a success. Success means that they don't have to keep drip-feeding the organisation: the exit is when the business is sustainably standing on its own feet, delivering a major social good.
Show the stages to get you to a sustainable business, justify the success criteria, quantify the backing needed for each stage, and provide a time-line. Thoroughly research the market and outline the unmet need, show how you plan to innovate in services and how you will develop cost structures which are competitive for the industry.
Assemble the team
I come from a very different industry to science centres (my background is mobile technology),but I bring general commercial expertise to a business that I am passionate about. I brought together a team with the expertise and networks that we needed: a complement to me in research and life sciences, exhibit building and science communications, science centre operations and events, and volunteer management.
The team we have is fantastic, and they allow our organisation to carry an expert conversation in any related field. Identify what you need most in each stage of your development, and get people with those skill-sets on-board. Unlike the private sector you may not be able to offer profit share or equity so it is critical that you know what motivates your team. Support them to let each person bring the greatest value to the organisation in those early days. In a small company, the personality of individuals reflects what you deliver.
Show me don't tell me
Hermann Hauser told us that many people ask him "What is the secret of early business success?" to which he replies "Just do something!". Our Science Xchange event in October 2011 and then our modular exhibit tables for the Cambridge Science Festival in March 2012 demonstrate to the public what we care about: we did something, and we showed it off.
These events demonstrate to potential backers that we have a dedicated innovative team, strong volunteer support, an active partner network, professional marketing, some heavy-hitting sponsors, and good business operations. As a founder, your personal funding commitment should be enough to produce your first demonstrator, and make sure you invite the VIPs!
Develop your partners
Partners are one of the most critical parts of a social enterprise. The social sector is much more open than the private sector: talk to partners and learn from them. Make sure you have identified your stakeholder groups and that you develop major advocates in each of these areas. As part of “showing” what you are about do some tactical projects with these partners, something they can talk about with pleasure. A good reference is worth a lot more than any compliment you can pay to yourself.
Build an expert Board
We are, at the moment, a small organisation interfacing with highly established research and technology groups in Cambridge to improve public access to science. We formed as a charity in part to receive grants, but also to prove our business transparency and assemble a significant board of directors.
By definition, in the short term our exhibits and exhibitions can only represent a tiny fraction of what is going on in Cambridge, even if our final vision is quite broad. The board is critical in these early stages to help focus and nurture our initiative while opening doors at the highest levels within the stakeholder community. The board will also be a key factor in capital fundraising.
With a seed-funding round now under our belt, the tough but fascinating work of fundraising to cover 2013 operations and building towards an intermediate location for a science centre in Cambridge by summer 2014 begins.
In a year's time, I hope we can author a follow-up article on the dos and don'ts of major capital fundraising!
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What is a science discovery centre? A science discovery centre is an institute of informal learning where the public get to experience hands-on science in a non-critical environment. Their main purpose is to build public confidence in science and maths by showcasing science as intriguing, approachable, and providing tools for the every day not just for specialists. There is about one science centre for every 1 million people in the UK giving a national industry size of £250 million p.a.. They serve 20 million people per year through a mix of on-site and outreach engagements, with about 25% of on-site visits being through school groups. Most centres provide an exhibition space, a workshop, a lab, and a schools outreach programme. Incomes generally show a balance of admissions revenue, trading income and grants. Trading subsidiaries provide exhibit services, corporate rentals, a café and gift-shop retail. To enable the significant multi-year research or regional grants which support wider public access, almost all UK science centres are registered charities. Our research suggests that to support the grant income and capital outlay needed for a vibrant public space we need in our 10 year plan to target around 100,000 direct customer engagements and in excess of £1 million in annual revenues to become long-term sustainable. At a basic level, the numbers suggest a science centre for Cambridge is viable: Cambridge hosts world-renowned local science and technology, 4 million tourists a year, over 35,000 people to the University of Cambridge Science Festival in March, and there are 600 schools and 1.6 million people within a 1 hour catchment area. Today, no major science centre serves East Anglia with multidisciplinary hands-on science year round. |
| Chris Lennard, CEO Cambridge Science Centre |
| www.cambridgesciencecentre.org |
| development@cambridgesciencecentre.org |
| @camsciencecntr |
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