Some of you may have already heard or read about it: Fundraising for our SHS VI fund has started. With a planned target volume of 200 million euros, we will make around 15 investments in the European healthcare and medtech industry with this sixth fund. As a specialised healthcare investor, we are specifically looking for growth companies and medium-sized enterprises that we want to develop further with sector expertise and capital.
Fundraising: a clarification of terms
Where does the term fundraising actually come from, and what types of fundraising are distinguished? High time for a few clarifying lines. If you google the word fundraising, you will get 126,000,000 hits within a second. Don’t worry, we won’t go through them all now. But we can already say that many of these hits are associated with fundraising for charitable organisations.
Most of us have probably been approached or written to by a non-profit organisation as part of a fundraising campaign. Caritas, Misereor, the Red Cross, Sea Rescue, Doctors Without Borders, WWF, and many others. : all these organisations depend on donations (sometimes also donations in kind) to be able to fulfil their central, charitable task.
Professor Dr Michael Urselmann of the Cologne University of Technology1 has defined fundraising briefly and succinctly like this:
“Fundraising is the systematic analysis, planning, implementation and control of all activities of a public welfare organisation, which aim to procure all required resources (monetary, material and services) at the lowest possible cost through a consistent orientation towards the needs of the resource providers (private individuals, companies, foundations, public institutions).”2
So if we clean out our wardrobe as part of an old clothes collection campaign by the German Red Cross and hand in two or three bags of clothes at the collection point, then this campaign can also be understood as successful fundraising. Because the German Red Cross, which has called for donations, uses our clothing donation (resource) to help homeless people, for example, and thus fulfils a public welfare-oriented purpose.
In addition to soliciting donations in kind and money, charitable organisations sometimes use targeted fundraising campaigns to recruit the resource of time from their target groups. Volunteers are then sought, for example, to provide a service. In the course of the recent flood disaster in North Rhine-Westphalia and Rhineland-Palatinate, thousands of helpers responded to the call of various non-profit organisations and “donated” their free time to personally help the victims of the flood disaster on site.
Fathers of fundraising
Before we delve further into the topic of fundraising, also in the context of private equity, a few words on etymology. Fund comes from English and means, among other things, means; to raise is translated as to procure. It is therefore about raising funds (donations, in-kind resources, time, etc.). Systematic fundraising for non-profit organisations, as we know it today, was invented in the USA at the beginning of the 20th century. Charles Sumner Ward and Frank L. Pierce are regarded in literature as the “Fathers of Fundraising”. Ward and Pierce were to systematically and professionally raise funds that were still missing for the construction of the YMCA building in Washington D.C.. The two were more than successful with their professional campaign. The building can still be visited in D.C. today.
Fundraising professionally
Today, it can be said that fundraising in the non-profit sector is practically inconceivable without professional fundraising specialists. The competition between organisations for donors is too great. Those who want to fundraise successfully here rely on targeted offline and/or online fundraising. The German Fundraising Association estimates that there are about 3,000 professional fundraisers working in Germany. Then there are the countless volunteer fundraisers who raise funds for their organisations on our doorsteps or in the marketplaces of our cities.
Online, offline, digital
According to the German Fundraising Association3, the classic, personalised letter is still one of the most successful means. However, according to the professional association on its homepage, classic face-to-face measures such as advertising stands in city centres or door-to-door visits are also very successful. Also, image-based appeals for donations on television usually generate large sums of money.
In the area of online fundraising via the internet, measures include: Email newsletters, promotions on social media channels, search engine advertising, etc. In addition, there are large donation portals where various organisations present their projects and solicit donations. The best-known platform in Germany is probably Betterplace.org. More than 30,000 verified projects are waiting for supporters there. Betterplace.org itself is non-profit and charitable.
Digital fundraising goes beyond online fundraising via the internet. Measures in digital fundraising can be: QR codes, face-to-face with tablets, SMS appeals, messenger marketing, use of AI for data analysis, apps, augmented and/or virtual reality, etc.
And what about sponsorship?
Like fundraising, sponsorship is a vehicle for raising funds for a specific purpose. However, while sponsorship is part of fundraising in the USA, this is not the case in German-speaking countries. Put simply: a donation is a gift for which the donor does not expect anything in return. Sponsorship, on the other hand, is clearly a business. The shirt sponsor of a football club, for example, pays the club a certain sum and in return is allowed to print his logo on the players’ shirts. The sponsor hopes that his commitment will lead to greater awareness and a positive image transfer. And in the end, the expectation is that this will pay off in more sales.
Serious and successful
The be-all and end-all of a successful fundraising campaign is seriousness and professionalism. Potential donors should be comprehensively and transparently informed in suitable media about the tasks and goals of the organisation for which they are to donate resources (money, donations in kind, time). Furthermore, it is helpful if the organisation is audited and certified. This is because donors need to have confidence that their financial contribution or donation in kind will arrive exactly where it is needed.
Private Equity and Fundraising
In addition to fundraising for non-profit organisations, there is also fundraising in the private equity sector, as mentioned at the very beginning. The German Private Equity and Venture Capital Association (BVK) understands this to mean the raising of investment money in a fund, which then reinvests this money in companies. The fact that fundraising plays a central role in the private equity sector is shown by the development of the capital raised from 2016 to the first half of 2021. In 2016, 1.459 billion euros of capital were raised. In 2020, it was 3.532 billion euros and in the first half of 2021 alone, private equity firms were able to raise 3.341 million euros from their investors.4
SHS, based in Tübingen, is currently fundraising for the SHS VI fund. As an experienced, specialised sector investor in the healthcare sector, SHS focuses its fundraising activities on institutional investors, pension funds, family offices, banks, insurance companies and investors from industry. The aim is to raise around 200 million euros for the fund and thus invest in around 15 growth companies in the European healthcare market. After the success of the SHS I to SHS V funds, the experts at SHS are convinced that they will also justify the confidence of investors with their SHS VI fund. The healthcare sector will continue to grow in view of the social developments and challenges in the healthcare sector.
Source:
1 https://wirtschaftslexikon.gabler.de/autoren/prof-dr-michael-urselmann-400
2 https://wirtschaftslexikon.gabler.de/definition/fundraising-36017
3 https://www.dfrv.de/
4 BVK https://www.bvkap.de/