New £10m Risk Capital Investment fund for social enterprises announced
27 February 2008
Phil Hope, Minister for the Third Sector, today announced that a radical
proposal to set up a £10million Risk Capital fund for social enterprises
will go ahead. The fund will be the first of its kind and will particularly
benefit them at the critical start up and early growth stages of developing
their business.
Through extensive consultation, social enterprises have told the Government
that equity or equity-like investment is a crucial finance option for the
long-term sustainability of the sector. Therefore, the fund will be run as
a ‘pathfinder investment scheme’ where the Government’s £10million
investment will be matched by private and independent investors. This will
ensure a legacy by building relationships and understanding between social
enterprises and commercial investors.
Phil Hope, Minister for the Third Sector, said:
“I’m extremely excited about this fund and what it means for the long-term
development of social enterprise as a mainstream business option. Investors
are increasingly looking to maximise their profits whilst also being able
to benefit the wider world. I hope that the legacy of this fund will
be to show investors the potential of ethically driven investment. Although
this method of investment will not suit all social enterprises I am
encouraged that this initiative will open up social enterprises to a
greater choice of investment opportunities."
Jonathan Bland, Chief Executive of the Social Enterprise Coalition, said:
"We welcome the fund as a step in the right direction for helping
social enterprises scale up. We feel it is a useful pilot for increasing
vital risk capital investment into social enterprise."
The Government will appoint one or more independent fund manager(s)
following a tender process. Under the rules of the investment fund the
Government will make the same return on investments as independent
investors. It is expected that the fund will open to applications in
the autumn.
The Risk Capital investment fund was first recommended in the
Government’s
Social Enterprise Action Plan published in November 2006.
