Cabinet Office Third Sector

The Cabinet Office today opened a consultation on the working of a new £10million risk capital investment fund for social enterprises. 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 development between starting up and growing their business. The risk capital investment fund will fill this gap and help develop better access to private and independent investment in the future.

The Government has published proposals for operating the fund and wants views of stakeholders before making the final decisions. The proposals are to establish a ‘pathfinder investment scheme’ where the Government's £10million investment will be matched by a further £10million investment from the private and independent sectors. The Government would appoint an independent fund manager and expect to make the same return on investments as independent investors.

Campbell Robb, Director General, Office of the Third Sector (OTS), said:

“This new fund will help many social enterprises grow their businesses and flourish. Our proposals will also make it a catalyst for market change by bringing social enterprises together with private and independent investors. This is vital if we are to build a sustainable future for risk capital financing for social enterprises that is not reliant on government subsidy.”

Responses to the consultation are requested before Friday 2 November 2007. The consultation document detailing the Government proposals can be accessed online at: Risk capital investment fund for social enterprise.

The Government committed to £10million investment to improve access to finance for social enterprises as part of its Social Enterprise Action Plan published in November 2006.

Notes to Editors

1. The Government defines social enterprises as; businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners.
2. The social enterprise action plan: ‘Scaling new heights’ was published in November 2006 by the then Chancellor of the Exchequer, Gordon Brown. It aims to open the door to thousands of new social enterprises, raise awareness of what they can achieve and encouraging more people to make a difference, either by involvement or investment. It is available online at: 2006 social enterprise action plan .
3. The Office of the Third Sector (OTS) in May 2006 to drive forward the Government's role in supporting a thriving third sector, and join up sector related work across government.

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