Seven Steps to Raise Investment Capital with Sustainability Data: The Shamba Pride Case

Data: The Differentiator for Next-Generation Businesses

In the modern funding landscape, data holds the key to unlocking opportunities and securing investment. Shamba Pride, a forward-thinking agricultural enterprise, successfully closed its seed round in 2021, backed by visionary investors such as Seedstars Africa Ventures and Gray Matters Capital. In 2023, Shamba Pride is embarking on a Series A round to secure primarily equity funding, supplemented by debt instruments.

Challenge:

To secure Series A funding, Shamba Pride needs to showcase not only its financial potential but also its commitment to Environmental, Social, and Governance (ESG) factors and its positive impact on the community and the environment.

Solution:

Following these seven proven steps, Shamba Pride leverages ESG+Impact data to secure investment capital.

Lesson #1: Craft your “Big Story”

Before digging into the data, craft a compelling narrative. Ranjay Gulati’s book, “Deep Purpose” describes the “Big Story,” which connects your business’s core focus to a high-level social and environmental purpose, making it deeply personal and data-backed. When crafting the narrative, there are 3 complementary levels to consider:

• The CEO’s personal story
• The organization’s group identity
• The urgency of the issue that needs to be addressed now, backed by data

Patrick Sampao, Shamba Pride’s Chief Product Officer, describes Shamba Pride’s “Big Story” in terms of the urgency of the issue of food security:

“Fifty percent of micro-entrepreneurs who try to open [agriculture supply] shops close within a year. Our mission is to provide micro-enterprises and SMEs with affordable solutions. Farmers will not be able to produce sufficient food without affordable, easy access to quality inputs, particularly expensive climate resilient inputs. We’re shielding farmers from unpredictable price fluctuation, and we’re providing the training and services that help companies stay in the game. If an agrodealer’s business is sustainable, then the system is sustainable.”

Lesson #2: Connect Metrics to Financial Success

Beyond impact, investors need to know that the company is financially viable. To accomplish this, organizations should explicitly connect their metrics to a financial materiality hypothesis, supported by research and evidence. This connection will highlight how sustainability efforts lead to resiliency and longevity, better serving customers, fostering a satisfied workforce, and promoting a culture of innovation driven by the organization’s guiding purpose.

Shamba Pride’s focus on climate-smart agriculture in ASAL (Arid and Semi-Arid Land) regions is an investment in future soil quality and meeting nutritional needs in a resource-constrained world. By supporting the financial empowerment of agro dealers and end users, Shamba Pride is contributing to wide-scale growth in a $1 trillion industry in Sub-Saharan Africa, alongside increased demand for its products and services.

Lesson #3: Share Individual Customer Narratives

To make its impact real, Shamba Pride shares individual customer narratives and case studies. These stories personalize Shamba Pride's work, helping investors understand the impact both at a high level and on a personal level. This approach ensures transparency and authenticity, expanding the understanding of impact beyond statistics.

Lesson #4: Tailor Pitches Based on Investor Motivation

Investors have unique priorities based on their focus areas, resulting in different weighting of the priority of ESG, impact, and financial performance. It's essential to customize your pitches accordingly, emphasizing specific aspects that resonate with their interests:

• Traditional Investors: Focus on financial metrics, with ESG + Impact data as supplementary evidence.
• ESG Investors: Speak to financial materiality and risk-focused metrics.
• Impact Investors: Focus on opportunities for the product or service to impact your stakeholders. Shamba Pride primarily raised equity funding from impact investors.

According to Patrick Sampao, “It is critical that we are aligned on values. Our investors are committed to climate change impact and changing the lives of smallholder farmers. They are keen to support SMEs, and they care about climate change and gender.” By collecting gender and climate data, and assessing the impact on stakeholders through surveys (for example, quality of life improvement and nutritional quality), Shamba Pride ensures continuous alignment with investor values.

Lesson #5: Proactively Align with Investor ESG Regulations

Investors increasingly face pressure from emerging regulations (e.g. SFDR) to disclose data to back their sustainable claims and avoid greenwashing accusations. Working with a company that already has strong ESG+Impact data management systems instills confidence in investors that that their prospective investment will support their sustainable mission, rather than leaving them scrambling to disclose at the last minute.

Shamba Pride proactively discloses its environmental performance to investors. According to Patrick, “We want to ensure that we are achieving our mission in a sustainable way. Farmers need to be able to produce their crops in a way that is not destructive to the environment.”

Lesson #6: Use the “Anti-Greenwashing” Template

Proof’s anti-greenwashing template is designed to contextualize your data and transparently showcase your ESG and impact maturity. For each metric, define:

• Performance Target - What is a specific, measurable, attainable, realistic, time-bound (SMART) goal for the metric?
• Planned Actions - What actions did your organization plan to take to achieve the target?
• Result - What was your result (may be quantitative or qualitative) for the metric?
• Benchmark - How does your performance compare to industry benchmarks, or to past performance?
• Actions Taken - Which of the planned actions did your organization take? Be sure to take note of what worked and what didn’t.
• Explanation - Why did you outperform, or why did you fall short on your target? What other context is helpful for a stakeholder to understand?

Download the Anti Greenwashing Template

Shamba Pride demonstrates a genuine commitment to performance improvement. According to Patrick:

“It is important to show a trajectory of continuous improvement. In 2020, only 10% of our portfolio was climate smart. In 2023, 30% is climate smart. By 2025, if we continue that trajectory we will be 50% climate smart. Our biggest near-term goal as a business is to expand our ASAL land coverage. The Proof dashboard allows us to track our impact by product and region. We can take a look at how much ASAL coverage we have now, and track it against the impact we are planning to have in the future.“

Lesson #7: Partner with a Credible ESG+Impact Measurement Platform

Partnering with an ESG+Impact data intelligence platform bolsters your organization’s credibility among investors. A technology platform digitizes your ESG+Impact infrastructure in a cost effective way, so that your team can focus on mission-critical activities and performance improvement initiatives.

Leveraging Proof’s access to proprietary data, expertise, and best practices, Shamba Pride ensures that current and prospective investors alike receive accurate information about the impact of their investments.

“I like the way that the Proof dashboard captures the data and gives you quick insights on the things we’ve been doing … It’s great to have a tool that automatically analyzes data on the impact of our products,” Patrick says about the Proof platform’s automated data intelligence offering.

Advice to Other Founders

Reflecting on many years of capital raise experience, Shamba Pride’s founders offer sage advice to fellow entrepreneurs:

Begin Action Promptly and Avoid Overanalyzing

“Get the ball rolling. Don’t over-test and over-analyze before rolling out products.”

Know Your Customers’ Needs

“Focus on understanding the needs of the end user. Kenyans are peculiar consumers - there is a need to pick up unspoken nuances to make sure you aren’t missing out on valuable insights that go beyond the face value of data.”

Expanding Horizons: Replicating Success

Shamba Pride's journey doesn't end here. They aspire to replicate their successes in other countries beyond Kenya, such as Tanzania and Zambia, seeking partners and collaborators to ease their entry into new markets.

Shamba Pride's story exemplifies the power of sustainability data in attracting investment and fostering positive change. By crafting a compelling narrative, connecting metrics to financial success, sharing individual stories, and aligning with investor values and regulations, they've set a benchmark for sustainable businesses. Partnering with Proof enhances their credibility and paves the way for a more sustainable and prosperous future.