It’s not always easy for social entrepreneurs to find the best solution for financing and scaling. How can you make sure to avoid pitfalls and prejudices? Robert Greve, founder of SWiM Bildung and Studio2B, talks about entrepreneurial detours, reducing reservations and valuable tips to his younger self.
Robert, you have had a thrilling journey with your mission to modernize schools. How did your theory of change evolve since inception?
At the beginning, when we fared under the name “SchulePLUS”, we understood our role to be that of a facilitator building a social network for schools, teachers and external partners. But despite a very promising start, the scaling didn’t really work out. We were quick to realize that we hade to make a fundamental change: to focus on a specific area, rather than trying to cover the entire range of education from theatre pedagogy to sports to cultural offerings to technology and mathematics. When the German ministry for education introduced “vocational orientation” in all secondary schools and the demand increased dramatically on our platform, this focus evolved quite naturally. First, we experimented a lot with different formats. Then we had our breakthrough with „Dein Erster Tag“ (“Your first day”): Suddenly, VR technology made the old, laborious factory tours much more scalable. Our idea to bet on digital tools to create a modern, innovative and creative vocational orientation proved to be spot on.
Which goal was more important to you, scaling or systems change?
Both. In terms of impact, “Dein Erster Tag“ provides true support in a very underdeveloped topic. Pupils can experience vocational orientation in a modern, cool and fun way. This has inspired us to start building an entire curriculum 2.0 for vocational orientation. But we are still several steps behind achieving this level of systems change. Our impact assessment is not yet sophisticated enough. Although we have a lot of data points, they refer mostly to outputs, not outcomes.
Meanwhile, you are at home in both roles, as developers of educational concepts as well as facilitators between schools and the corporate world.
Yes, we were able to combine both approaches really well and will reach our 2019 milestone to cover 20% of all German secondary schools within short. It is pretty incredible for me that one fifth of all secondary schools will soon use our vocational orientation offers. In terms of quantity and quality, this is a big achievement for us.
„It is pretty incredible for me that one fifth of all secondary schools will soon use our vocational orientation offers. In terms of quantity and quality, this is a big achievement for us.”
Schools have a lot of innovation to shoulder while teaching resources are dwindling. Which experiences did you make when it comes to teachers’ openness for change? Are there clear success factors that help you to sell your solutions?
I believe that teachers are generally very open to change. Our biggest success factor is that our offerings can be implemented directly. “Dein Erster Tag“ provides a box with VR glasses that allow pupils to start right away. It’s simply “plug and play” – you neither need WLAN nor teaching instructions. I’m sure there are great top-down concepts that are very successful at some schools. But on a broader scale, you have to convince teachers with these small, simple but effective approaches. I like to compare it with the readymade cooking boxes that you see everywhere right now: It’s much easier to get familar with all the ingredients and enjoy cooking when you have simple recipes. At some point, you won’t need the boxes anymore. In the same way, we strive to ease the daily work of teachers. Sure, they could master it all by themselves, but they simply have no time for that. And once the reservations vis-a-vis digital technologies such as VR glasses are overcome, you can also use them in other subjects.
As compared to many of your social entrepreneur peers, you have been traveling the impact route for a very long time. Are you satisfied with what you have achieved to date?
Absolutely. We had to make many more detours than I had hoped for, but have now reached a point, where we can finally cover a big number of schools and generate systemic impact. It’s incredibly difficult to reconcile positive impact and commercial viability with a B2B concept in the educational sector. With „Dein erster Tag“, we managed to find a model, in which both aspects cross-fertilize. If we can also be successful in expanding in terms of quality, with many different formats, then we’re on the right track.
Which milestones were particularly important to you?
The financing rounds were real highlights to me. It was a big encouragement to win two experienced private investors last year, who know the game in our sector and believe in our business model. In 2018, we merged two social enterprises to combine our resources. The next milestone is to achieve financial breakeven, ideally still in 2019.
“The financing rounds were real highlights to me. It was a big encouragement to win two experienced private investors last year, who know the game in our sector and believe in our business model.”
You have already mastered several financing rounds with support from FASE. What are your personal tips when it comes to financing?
First, you have to be fully conscious about how much financing you really need for your product development, especially when IT and digitization play a major role. A second driver is sales. For years, we have underestimated how expensive it would be to build professional sales and distribution from A to Z. Thirdly, you should consider the qualification of your employees and the salary structures that come with it. As a social entrepreneur, if you a very honest to yourself, you will come to the conclusion that you’ll need substantial amounts of external capital. At the beginning of the lifecycle, I really like the mezzanine models that FASE often recommends. Once your enterprise grows, it may make sense to look into equity.
In the eyes of many social entrepreneurs, equity is a two-edged sword. What’s your take on this?
I admit that at the beginning, I was very sceptical to get equity investors aboard. The usual nightmare is that you are bound to someone for years then, with whom it absolutely doesn’t work out. I have never regretted this step, though. In the meantime, FASE helped us to get eleven impact investors aboard and we are very happy with them. With most of our investors, it is very easy to get along, since they made it very clear from the onset that they will be passive investors. With others, who are very active, it’s a lot of fun for me and the team to benefit from their wealth of experience and expertise. What I also learned is that equity doesn’t necessarily translate into less freedom. Sometimes, it’s just the opposite: It can be very limiting to feel the pressure to repay mezzanine capital at a fixed point in time and to put a strain on your liquidity.
How do you find out in advance who will be the right impact investor for you?
One aspect is clearly sympathy and empathy. To put it casually: Would you like to have a few beers with this person? How would he or she react if things don’t go smoothly? What I experienced is that social entrepreneurs initially tend to shy away from those investors who very experienced, but then turn out to be very relaxed, fact-driven and professional when things get difficult. They have been there thousands of times before. My advice to my younger self would be: choose your investors based on their experience. I would also target fewer and bigger capital providers since good communication requires a lot of time. And a last piece of advice: Establish a balance between those investors who primarily seek impact and those, whose mindset is stamped by business and financial aspects. This mitigates the risk that the scales will tilt in one direction or the other.
Provided, of course, that you as the social entrepreneur have the choice.
Right. The truth is that social entrepreneurs in Germany don’t have a huge choice of impact investors. This is what we experienced in our first financing rounds and that hasn’t changed a lot since. In most rounds, you’ll have two to four investors, with whom you would like to work.
How important is the support of a „trusted advisor“ such as FASE and how did you perceive this collaboration?
Collaborating with FASE was simply fantastic. It was the first time I learned how to properly prepare business and financial plans. Our common pitch events were always fun. There is 100 percent trust between us and I can recommend this path wholeheartedly to any of my social entrepreneur peers. Without FASE, it wouldn’t have been possible for us to access these types of investors and the impact capital we raised.
“Collaborating with FASE was simply fantastic – without FASE, it wouldn’t have been possible for us to access these types of investors and the impact capital we raised.”
Here’s more to study about vocational orientation, SWiM Bildung & Studio2B:
Case Study about the first financing round of SchulePLUS: Case Study 2014
Website Studio2B: Studio2B GmbH
Website “Dein Erster Tag”: Dein Erster Tag