We’ve all heard stories about entrepreneurs raising $1 million in seed funding based on an idea sketched out on a napkin. Sounds amazing, but how do you get that funder meeting in the first place? And what happens when your product still needs some fine-tuning and validation? Or what if you’re more focused on social impact than runaway profits? Or if the market itself is still being defined? More often than not, this is the case for early-stage entrepreneurs, especially in the impact space, and it can make securing early stage capital challenging and unpredictable.
The “Pioneer Gap” — a term coined by Monitor-Deloitte and the Acumen Fund in 2012 — describes the lack of funders ready and willing to invest in “pioneering” business models for social change.“Although excited by their novelty, investors are often rattled by these firms’ risk profiles and are unimpressed by their financial returns.” In other words,