Social enterprises offered missing link to access investment streams

12/05/2009

"Social enterprise is the UK’s most exciting up-and-coming business sector. But in the absence of tried and tested tools to guide social enterprises, there is a need to find new ways of bridging the gap between corporate and non-profit access to finance."

A new one year programme to help social enterprises access risk finance is being launched today by the National Endowment for Science, Technology and the Arts (NESTA) and the Office of the Third Sector (OTS).

The £90,000 programme aims to incentivise investment in social enterprises and ensure that a stronger social enterprise sector emerges from the recession. 

Social enterprises have been hailed as one of the most exciting emerging sectors in the UK, contributing at least £8.4 billion to the economy every year.  However social enterprises can find it difficult to access the finance needed to grow. Evidence suggests this is because some social entrepreneurs may have low levels of financial literacy and their businesses are not always 'investment ready'. Government's commitment to develop an investment readiness programme was reaffirmed in 'Real Help for Communities' action plan in February this year.

NESTA's Public Services Innovation Lab is now working with the OTS to develop a year long Social Enterprise Access to Investment facility designed to give social enterprises the best advice to help them access risk capital.  The facility will offer a success fee that will incentivise brokers of advice to help social enterprises access funds.

These fees will be performance based and only payable to investment readiness providers in the event of social enterprises successfully accessing risk capital. The aim is to spread the model of success fees in the developing capital market for businesses driven by more than just the financial bottom line.

Jonathan Kestenbaum, Chief Executive of NESTA said "Social enterprise is the UK's most exciting up-and-coming business sector. But in the absence of tried and tested tools to guide social enterprises, there is a need to find new ways of bridging the gap between corporate and non-profit access to finance. This new resource will provide the evidence that social enterprises can achieve sustainable growth with the right kind of support".

The project will also act as a one year programme to provide insight into how investment readiness may be sustainably financed in the future. In turn this will increase the quality of social enterprise investment propositions, their chances of success and the appeal of social enterprises as investment vehicles.

Campbell Robb, Director General of OTS said, "This new programme is extremely exciting and innovative. It will illustrate the real value of investment readiness support not only to social entrepreneurs but other crucial stakeholders in ways that we hope will stimulate further, long-term, investment in this area."

More details about the Social Enterprise Access to Investment programme will be available following a seminar on the 10 June with Investment Readiness Providers, social entrepreneurs, and other stakeholders.

Contact:

For further information, please contact Catherine Anderson on 020 7438 2609 or Catherine.Anderson@nesta.org.uk or Jan Singleton on 020 7438 2606 or at Jan.Singleton@nesta.org.uk

Notes to editors:

About NESTA
NESTA is the National Endowment for Science, Technology and the Arts, a unique and independent body with a mission to make the UK more innovative.

With the largest portfolio of early-stage businesses in the country, it is a leading authority on how to grow new ideas. It also stimulates imaginative solutions to pressing social issues and shapes policy to help the UK meet its national innovation challenges.

The Social Enterprise Access to Investment programme falls under the Risk Capital work being undertaken by NESTA's Public Services Innovation Lab. The Lab is a trailblazing response to the increasing and complex challenges that society is facing. Its Risk Capital work aims to show how risk finance and good advice can accelerate and scale radical social innovation. To find out more visit: www.nestalab.org.uk  

About the OTS
As part of the Cabinet Office, the Office of the Third Sector (OTS) leads work across government to support the environment for a thriving third sector (voluntary and community groups, social enterprises, charities, cooperatives and mutuals), enabling the sector to campaign for change, deliver public services, promote social enterprise and strengthen communities. The OTS was created at the centre of government in May 2006 in recognition of the increasingly important role the third sector plays in both society and the economy.

http://www.cabinetoffice.gov.uk/third_sector.aspx

About the Social Enterprise Access to Investment programme
This Social Enterprise Access to Investment programme will be run by NESTA and is jointly funded by the Office of the Third Sector and the National Endowment for Science, Technology and the Arts.

The programme will run one year to provide insight into how Investment Readiness Providers (IRPs) may be sustainably financed in the future. In turn this will increase the quality of social enterprise investment proposals; their chances of success; and the appeal of social enterprises as investment vehicles.