Will Funders Recognise the Model?
Some do and some dont. Newco is still a rare type of social enterprise and many large, mainstream funders simply lack the administrative procedures or experience to recognise something different from the norm. Smaller bodies are often more flexible and happy to engage more and take the time to recognise the exceptional strengths of the model. You may well have more success by talking specifics to a funder – is there a clause (e.g. a dividend cap) that you could introduce that helps them believe in you? In general however, its only startup funding you should be worried about. Newco’s can and do make a profit. They believe in trading, not grants and funding. If your business plan involves extensive public funding, Newco is probably not for you.
