£2 million in social investments from Nesta Impact Investments to tackle major challenges facing the UK including; elderly care, education and financial exclusion.

Social investment is set to grow in 2014, boosted by a new tax relief, and entrepreneurs who want to have a social impact as well as making a profit. That’s according to Nesta’s impact investment director, Joe Ludlow, who is today announcing the first social investments, totalling over £2 million, from Nesta Impact Investments.

The £25 million fund, which is backed by Big Society Capital and Omidyar Network, is investing in organisations tackling issues, such as elderly care, poor educational standards and financial exclusion, that have social impact as well as providing a potential return for investors. They include:

• Oomph! – an award winning social enterprise improving the health and quality of life of older adults in care homes through innovative group exercise classes, such as  ‘chair cheerleading’

• Ffrees Family Finance – a unique type of current account that helps families to save as they spend

• Movellas - a new online story sharing community aimed at improving literacy skills amongst teenagers

• Sherston Software – a company developing innovative educational software designed to motivate children and boost their educational performance

The UK social investment market is currently worth over £200m, and is set to grow to £1bn in the next two years[*]. Nesta’s Joe Ludlow says that although they are seeing hundreds of investment applications, more needs to be done to show the real potential that this market offers to social enterprises, entrepreneurs and investors.

“Social investment can help tackle the major social needs in the UK, and point a way to a better financial services industry that acts in the interest of society. The deals we’re announcing today epitomise this. The impact investing field is well researched and well supported by policy but we need more examples of deals done to make impact investment come alive for investors and entrepreneurs.” Joe Ludlow, impact investment director, Nesta.

Social investment will receive a boost in April when a new tax relief for social enterprises comes into force and later this month, the government will publish a road map for social investment setting out key steps to encourage investors. The new tax relief could potentially unlock nearly half a billion pounds in finance for charities and social enterprises over the next five years, according to Big Society Capital.

Big Society Capital’s Chief Executive, Nick O’Donohoe said:

“To tackle some of the biggest challenges in the UK today, we need to ensure that financial support is available to organisations and entrepreneurs developing innovative solutions and harnessing new technology. By investing £8 million in Nesta Impact Investments, we are able to support the very best in new ideas to scale up and reach more people. This is an exciting time for social investment, as we see more opportunities for individuals to invest in these sorts of projects – using their money for both a financial and social return.”

Omidyar Network's Investment Director, Vineet Bewtra said:

"Early stage impact investing is a powerful tool but it is underutilized.  Nesta Impact Investments has thoughtfully sourced several smart, innovative investments that will positively impact thousands of people's lives in the U.K. and potentially further afield. Omidyar Network is excited to be part of the team that is supporting them, and we are especially pleased to see that Nesta has identified so many creative mission-driven entrepreneurs, and is working with them from the early stages of development.  We are optimistic that these projects will yield both social and financial returns in both the short and long terms.”  

-ENDS-

For more information, or to arrange interviews, please contact:

Gemma Davidson at Nesta on 07986 396571 or 020 7438 2606 [email protected]

Notes to editors:

Nesta Impact Investments is a £25 million social investment fund, backed by Big Society Capital, Omidyar Network and Nesta. It was launched in October 2012 and helps tackle the major challenges faced by older people, children and communities in the UK by investing in life-changing innovations.

The fund is run by Nesta Investment Management (NIM), which is a wholly-owned subsidiary of Nesta, the UK’s innovation foundation. NIM is authorised by the Financial Services Authority to manage and invest funds on behalf of Nesta and external investors.

Big Society Capital is the world's first social investment bank. Big Society Capital formally launched in April 2012, with an estimated £600 million of equity to be paid-in over 5 years, of which £400 million will be from unclaimed assets left dormant in bank accounts for over 15  years and £200 million from the UK’s largest high street banks.

Big Society Capital seeks to support the growth of a social investment market in the UK by revolutionising the way in which the social sector is funded. Through supporting the growth of social investment finance providers, Big Society Capital will improve access to innovative forms of financing, and connect the sector to capital markets.

Omidyar Network is a philanthropic investment firm dedicated to harnessing the power of markets to create opportunity for people to improve their lives. Established in 2004 by eBay founder Pierre Omidyar and his wife Pam, the organization invests in and helps scale innovative organizations to catalyze economic and social change. As of September 30, 2013, Omidyar Network has committed more than $637 million to for-profit companies and non-profit organizations that foster economic advancement and encourage individual participation across multiple initiatives, including entrepreneurship, financial inclusion, property rights, government transparency, consumer Internet and mobile. To learn more, visit www.omidyar.com.

Background on the investments:

Oomph! (‘Our Organisation Makes People Happy’!) design and run fun, interactive, group exercise classes within care homes and in the community. Its specialist exercises are based on expert methodology, and use reminiscent music and simple routines to deliver physical and mental health benefits to older people. So far, Oomph! has carried out 7,000 sessions in over 600 care homes and is now rapidly expanding and working with some of the biggest names in the care sector: including Bupa, Hallmark and Ideal Care Homes.

An award-winning social enterprise Oomph! was set up in 2011 by the twenty-six year-old Ben Allen. After studying health fitness, Ben started to apply what he had learnt to engage with older people in care homes:

"I founded Oomph! because we desperately need to improve the quality of life of our older adults and care home residents up and down the country today - not tomorrow. I have visited more than a thousand care homes and met so many older adults in our communities and the reality is we are letting our older generation down. They deserve so much better from us all. We are passionate about putting the social back into social care.”

Ben is a 2013 award winner under the Big Venture Challenge, an intensive 12-month programme that supports ambitious social entrepreneurs run by UnLtd, the Foundation for Social Entrepreneurs.

Ffrees Family Finance is a digital current account that helps families to save as they spend. Customers receive Ffrees points when they purchase through their account from Ffrees’ network of providers. These points are placed into a separate savings account, which customers can then redeem as cash.

Services such as Ffrees Money Manager also help people manage their budget and put money aside that is ring-fenced to pay bills. The basic account is free to join and has no monthly fees, and anyone with a confirmed UK address can get an account regardless of financial or social status.

Alex Letts, chief executive and founder of Ffrees, says it’s attracting people that want a new type of account:

“Millions of families today are not good business for the banks unless they can be charged fees and penalties. Not surprisingly, families are unhappy. Our unique current account is accessible for all families, regardless of their financial status.”

Movellas is a creative story sharing community for teenagers with over 85,000 free stories available to read online, all written by teens for teens. It encourages young people to create their own short stories, and engage with others to give feedback on their ideas. By creating a community of exclusively teenage writers Movellas aims to improve literacy skills, and increase enjoyment of both reading and writing.

Since it launched in 2012 Movellas has rapidly become popular with teenagers in the UK; it currently has over 200,000 active users per month and plans to double this over the next six months. Several of its young writers have now secured publishing deals. Its ambition is to be the leading, global, platform for social story telling for teenagers, who can access it at any time via their phone, tablet or computer.

Yvonne Biggins, co-founder of Movellas says: "We’ve been able to get young people interested in reading and writing through their passions for a wide range of subjects. Over five million stories were opened last month by more than 200,000 teenagers across our site and apps. Research shows that reading for pleasure has a positive impact on attainment and we’re excited about the role that Movellas is playing in getting more and more young people engaged in reading and writing, leading to a more literate society.”

Sherston Software is a leading provider of innovative educational software designed to nurture and motivate children as well as boost their educational performance.

Over the past decade, the standard of online gaming offered to the consumer market has far outclassed the digital equivalent in schools. Sherston aims to bring these standards into the classroom and the home by bringing together adaptive learning with quality gaming to engage and inspire children.

Sherston is also developing new assessment technologies under the brand TAG Assessment, that support the formative learning process, which are now being used by education agencies and exam bodies worldwide.

Sherston’s chief executive, Karim Derrick, points out that although educational technology is attracting entrepreneurs and investment, Britain still lags behind the US:

“In the UK, educational technology companies have not enjoyed the same levels of investment despite the excellent pedigree of educational software development and innovation here. We believe that Nesta's partnership with Sherston is a significant step to address this imbalance. Their investment will help us to build on our strong pedigree to provide the best in online adaptive learning, and underpins our shared ambition to leverage technology to improve student attainment."

[*] The first billion: A forecast of social investment demand. Boston Consulting Group and Big Society Capital (2012)