Case Study: Xceptional Capital Raise
Xceptional is a technology job platform linking autistic people to meaningful careers with tech companies, banks, government and start-ups and scale ups. The company was started by Mike Tozer in 2027, inspired by Mike’s sister who has struggled to find suitable work throughout her life, having been knocked back in the interview process and on the job. In observing his sister’s experiences, Mike noticed employers sometimes missed the opportunity to utilise the incredible skills of autistic people. Xceptional helps other companies embrace the unique strengths and diverse skill sets of autistic people, and channel these skills to tackle high-tech business challenges. This is achieved through disrupting traditional recruitments practices, job training and work place management.
In Australia there are approximately 350,000 people with autism. The company’s long term goal is to place more autistic people into meaningful jobs, and reduce trends of underemployment (with fewer than 20% of adults diagnosed employed full time).
According to the NDIS, “there are more people receiving job support under 18 years of age than over 18,” partly because helping people when they are younger can set them up for the future. Mike would like to see a similar focus on supporting autistic people and hopes that Xceptional can lead the way. Mike believes through Xceptional’s successes, people will look back and hopefully ask themselves, “why did we lock this whole group of people out of the workplace.” Mike would like to see the 1 in 7 neurodiverse individuals in our society placed in meaningful work.
Xceptional aims to break down barriers for autistic people in both Australia and the region.
The Business Challenge
Like other business owners Mike has experienced many challenges throughout the company’s journey to date. Surprisingly, Mike was initially advised to, “never have your first business as both for purpose and for profit.” However, Mike believes for-purpose businesses can achieve similar, if not better outcomes, if driven by more than just returning profits to shareholders.
As Xceptional grew, it was clear additional capital would be needed to enhance various functional areas within the company to meet market demand. Mike noted, “as our client relationships deepened, it was clear we needed to provide alternative levels of support, from recruitment to work place coaching and mentoring”. Additional capital was also needed to support the development of Xceptional’s technology platform.
Xceptional worked closely with the Social Impact Hub in applying for an Impact Investment Ready Growth Grant, and was successful in securing $70,000.
The grant was used to develop a strong financial model, theory of change framework and robust information memorandum (IM) that would appeal to potential investors.
Xceptional ultimately secured $600,000 in impact investment, which was a was a mix of both equity and debt investment.
The Impact Investing Journey
The Impact Investment Ready Growth Grant was pivotal to Xceptional becoming investment ready. Securing impact investment however, was a longer process than Xceptional had anticipated, and not without challenges.
At one point during the investment raising process, Xceptional was offered the unique opportunity to work with the Impact Investment Group (IIG) to develop a new impact investment instrument. This meant the company was innovating on both its own business model and financial instrument simultaneously, which at times stretched their internal resources. As a result of this collaboration, however the first impact loan for businesses in Australia was developed. Termed Benefits Outcomes Linked Debt (BOLD), the instrument incentivises Xceptional to achieve greater social impact by reducing the loan amount payable as the business delivers on agreed social outcomes.
Not every pitch to investors was successful. At any given time there are always a number of other businesses seeking investment. Creating a compelling story was important, as well as seeking out investors with vision alignment. The Social Impact Hub provided insights both prior and post each pitch and worked with Xceptional to develop recommendations on which investors would be the best fit. Four other impact-focussed investors participated in the investment alongside the IIG Catalyst Fund; Tripple, The Community Impact Fund, The Disability Impact Fund, and The Snow Foundation.
Mike advises other social enterprises about to embark on a similar journey to, “be very clear on why you are doing your business, for, adhering to your mission will drive you overcome any roadblocks.” Mike added, being an entrepreneur can be tough at times, but having a clear vision on the ‘why’ will help motivate not only yourself, but those around you, and this will ultimately help you to succeed down the track.
To learn more about the BOLD contract, download this explainer from Impact Investment Group.