Office of the Third Sector Homepage
Last updated: 23 November 2008
Many social enterprises find it difficult to access risk capital, leaving a gap in their finances, particularly when they are at the critical stage of their development between starting up and growing their business. The Office of the Third Sector's risk capital investment fund will aim to fill this gap and improve social enterprises’ access to private and independent investment in the future.
The Government's £10 million investment will be matched by a further £10 million investment from the private and independent sectors. The objectives are to:
The next step will be to appoint a fund manager or managers through an open competition. The Office of the Third Sector has appointed Capital for Enterprise Limited (CfEL) to assist it in establishing one or more funds that will offer risk capital investment to Social Enterprises based in England.
This document below sets out the objectives that OTS wishes to achieve and the restrictions that will be imposed on any fund in order that it meets its public policy objectives. Detail is provided setting out the information that will be required from those wishing to submit a proposal, the assessment criteria that CfEL and OTS will apply, and an outline timetable for the award of funding. The assessment criteria will be based on evidence of how bidders demonstrate they will be able to meet the objectives of the fund.
Stakeholders have indicated that the 12 week period proposed in the consultation response is excessive. Consequently, unless CfEL receive representations from potential partners to revert to the original 12 week period by 10 October 2008, the closing date for proposals will be Wednesday 12 November 2008.
The Office of the Third Sector held a consultation on the risk capital investment fund, to gather evidence that social enterprises face an equity gap when looking to expand their businesses, and to give stakeholders a chance to comment on the proposed structure of the fund.
Overall there were 29 responses to the consultation from a wide range of industry experts, Regional Development Agencies and bodies representing investors and thousands of social entrepreneurs. Respondents agreed with the Government that the proposed fund would help bridge a gap in finance that some social enterprises experience particularly when moving from a start-up to a growth phase.
The consultation also raised a number of issues that the Government has considered and addressed in its response (which can be downloaded below). As a result, improvments have been made to the proposals for appointing and reimbursing the fund manager or managers.