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Scrambling for funds for my social enterprise

Friday, 10 May 2013 | By Michelle Hammond

Starting a social enterprise is becoming increasingly common in Australia, particularly among young entrepreneurs looking to make their mark alongside the corporate giants of the world.


Daniel Flynn, founder and managing director of Thankyou Water, didn’t always dream of making the world a better place. But after realising the full extent of the world’s water crisis, Flynn decided to enter the social enterprise sector.


Thankyou Water, founded in August 2008, uses its profits from the sale of bottled water to fund safe water projects in developing nations.


To date, the business has funded 52 projects in Cambodia, Myanmar, Uganda, Sir Lanka, Kenya and Timor-Leste, assisting more than 33,000 people.


Earlier this year, Flynn was named Victorian Young Achiever of the Year. While Flynn has a very clear vision for Thankyou Water, he admits it was a struggle to secure funding for it.


“Back when I was 19 years old, which was about five years ago, I was going into first-year uni and discovered the world water crisis – 900 million people don’t have access to clean water,” Flynn told StartupSmart.


“Four-and-a-half thousand kids die every day from waterborne diseases… [Meanwhile,] we spend $600 million here in Australia on bottled water.


“I didn’t know what [the solution] looked like, but what if I could be part of that? That’s where the inspiration came from.”


Flynn knew he needed funds to get the idea off the ground. Unfortunately, investors weren’t keen to get on board.


“We wanted to set up a social enterprise, which basically is a business but doesn’t have shareholders, so it’s very hard to attract capital. The moment you take that away from it, you shut down many opportunities,” he says.


“We want to give the profit away and we’re not letting people make money off it. Everyone said, ‘You guys are crazy’.”


Thankyou Water needed $250,000 to get up and running – $100,000 for its first product run and $150,000 to attain a unique bottle mould.


While the business was unable to attain funding from investors, it managed to strike a deal with Visy, which offers packaging, paper, recycling and clean energy solutions.


“When we met with Visy, they gave us 30,000 bottles and also had the shape of a bottle mould no one else was using at the time, and they said, ‘You can have that’,” Flynn says.


“It didn’t solve all our problems. I remember we landed our first big break a month or two after and had to deal with a group called the Metro Beverage Company.


“They’re a big deal and when we met with them it was a 10-minute pitch and it turned into an hour-and-a-half meeting. They made their first order for 50,000 bottles.


“We had this sinking feeling of, Oh crap – we’ve overcommitted. We hadn’t registered the company, we hadn’t trademarked.


“The last thing we thought was someone would order straightaway. I remember adding up those costs and we needed 20 grand in real cash – money we can use to pay bills and get the company off the ground.”


Desperate to secure some working capital, Flynn met with an anonymous angel investor.


“The first time we met, we got nothing. The second time, he just couldn’t believe it. He said, ‘Where’s all this money coming from?’ I looked at him and said, ‘We don’t have any’,” he says.


“He and his business partner came back to us and said, ‘We’re so impressed’. They wrote us a cheque for 20 grand, which was a gift. It wasn’t a loan and it wasn’t an investment.


“When you have momentum, it changes everything. What that business guy saw in our business the second time was momentum.”


Thankyou Water has gained even more momentum since then, growing to a team of 12 and partnering with more than 3000 stockists nationwide.


“We’ve had some pretty significant growth in the last year and a half… It took us three years to help just over 5000 people get access to safe water. A year and a half on, we’ve helped 33,500 people,” Flynn says.


“From a bottle point of view, at the three-year mark one million bottles were sold and, a year and a half later, it’s about to hit six million.”