Securing funding
Unless you have sufficient money in the bank, it is likely that your enterprise will need some funding from family and friends, angel investors, grants or seed funds.
In order to attract investment, you will need to know:
- What is the startup capital required to cover initial expenses for equipment, facility setup, licences, and operational costs?
- What investment needs will arise as the business expands (will you need to purchase equipment, or expand collection routes)?
What is the expected return on investment (ROI) for potential investors, considering both financial gains and the social/environmental impact of the enterprise?
To attract investment, it’s essential to have clear and well-prepared financials, such as cash flow projections, profit and loss statements, and detailed cost forecasting, as discussed in the previous section.
Financial tools
Social enterprises have access to a variety of financial tools designed to support their unique combination of business goals and social impact.
| Funding option | Advantages | Disadvantages |
|---|---|---|
| Grants |
No repayment required; Fosters alignment with social/environmental goals. |
Highly competitive; Specific usage restrictions (e.g. not allowing for the purchase of equipment). |
| Loans |
Provides predictable capital; Enables faster scaling. |
Many lenders e.g. banks are not warm to the idea of investing in plastic recovery and recycling enterprises because of the perceived low return on investment; Requires repayment with interest; May require collateral in case the money is not repaid; Increases financial risk. |
| Impact investment | Access to investors committed to social and environmental returns. |
Expectation of both financial return on investment and measurable impact; Can involve complex agreements. |
| Plastic credits |
Pays higher than EPR schemes (see row below); Clear process and fast payments processing; Have funds available to support governance / verification systems. |
Stringent documentation requirements; Credits do not cover the full costs of recovery and recycling.
|
| Extended Producer Responsibility (EPR) payments | Less documentation required to receive payments. |
Different polymers may be priced differently making calculating revenue more complex; Payments are often less than for plastic credits and not enough to cover the full costs of recovery and recycling. |
Advantages and disadvantages of different funding options
How the Flipflopi did it...
EPR or Plastic Credits? The Flipflopi experience
Through our work in plastic waste management, we found that selling PP and PET via a Plastic Credits scheme provided significantly higher prices—three to four times more than Kenya’s Extended Producer Responsibility (EPR) subsidies.
Comparing Plastic Credits and EPR
- Plastic Credits offer a fixed rate per kg (typically 16–17 Kenyan Shillings), regardless of polymer type.
- EPR payments vary by polymer type and are generally lower than Plastic Credits.
Advantages of Plastic Credits
- Higher prices per kg compared to EPR.
- Upfront payments (50% at signing, 50% after verification).
- Opportunities for additional funding (e.g., governance initiatives).
- Improved data management due to strong verification systems.
Challenges of Plastic Credits
- Extensive documentation required (audits, PPE records, revenue tracking).
- Increased labour costs for managing verification.
- Long collection periods (at least three months before transport).
- No market timing flexibility: plastic must be sold on the set collection date, regardless of market price changes.
Why we chose Plastic Credits over EPR
Despite its challenges, Plastic Credits provide more financial certainty and structured funding. In contrast:
- EPR payments are lower, less transparent, and controlled by Producer Responsibility Organisations (PROs).
- EPR lacks structured operational support and does not shield recyclers from market price fluctuations.
Financial reality: plastic collection alone is not viable
Even with Plastic Credits, high transport costs and fixed flake prices make a standalone collection business unsustainable. A successful model requires subsidies from other revenue streams.
While we are committed to ethically collecting all types of plastic, managing the labour-intensive administration of Plastic Credits raises opportunity cost concerns. This time could be better spent securing grants and donations, which may offer greater financial sustainability.
Expert Insights
Follow these tips from investors on what they look for in social enterprises:
- Highlight the social and environmental impact of your enterprise with measurable outcomes. For example, include data on the amount of plastic you will be removing from the environment, or the number of people whose livelihoods will benefit. Align your activities with the Sustainable Development Goals, particularly Goal 12 Sustainable Consumption and Production and Goal 13 Climate Action.
- Demonstrate financial viability and scalability with a clear revenue model, examples of how you will reduce costs, and by outlining how their funding will enable your enterprise to grow.
- Tailor your pitch to the funder’s priorities. Do your research and look at what they have funded in the past and explain how your activities are aligned with their goals.
- Collaborate with other organisations, municipal government or research institutions to amplify your impact and lend credibility.
- Tell human stories. For example, are there people or communities that have already been positively impacted by your activities?
- Be transparent about the risks. Show your understanding of local policies and strategies, discuss how you will secure stable demand for your products, and share your solutions for logistics, quality control and workforce training.
- Make sure your proposal looks professional. Provide a clear vision and mission, a detailed budget for how the funds will be used, and visuals like graphs or infographics to illustrate your expected outcomes.
