Nesta's Impact Investment fund went live this week, backed by Nesta's own capital as well as Big Society Capital and Omidyar.
We have a strong in-house investment team which have shown their ability to make shrewd early stage investments in technology, and achieve successful exits. It seemed logical to combine their strengths with our many strengths in the social field, and to link investment with a strong emphasis on evidence.
That makes us part of a much larger field. The UK is now leading the world in social investment, with more funds going into the field, more backing from government, and a strong body of intermediaries, many of which have been supported by Nesta.
I see the field as an answer to two types of challenge. One is to grow an economy, and financial institutions, that aren't blind to people, blind to the long-term, or blind to the systems on which the economy depends - environment, family, community.
That will entail a growing share of the economy for social enterprises, mutuals, charities and socially oriented businesses.
Government as Investors
The social investment that's fuelling with economy aims to combine commercial and social returns and to reverse the excesses of a financial system that has so often been myopic, by focusing rigorously on social impact rather than ignoring it.
The other challenge is that we need governments that can behave more like investors - preventing future harms, and seeing people and communities in terms of capital (human, social, organisational, natural).
Too often governments act short-term and lack even the most basic tools for organising their roles as investors (something we looked at in Plan I).
Another role for social investment is to provide some of the capital, and the tools, to help public services think in this way, rewarding longer term outcomes (like lower reoffending, or lower youth unemployment) rather than only funding inputs.
Both are huge tasks that will take many decades. The UK's initiatives with social investment are still an experiment, and there are bound to be some failures as well as successes, and many surprises, as the field matures.
But I've no doubt that the field will mature - and that as it does it will transform how many sectors both think and act - from banks and charities to government departments.