Investment readiness continues to be debated in the social investment sphere – who is and who isn’t, and whether it actually “readies” social ventures for “investment”. This comprehensive report looks into the success, or otherwise, of the Investment & Contract Readiness Fund – a £13m pot of Cabinet Office money, managed by the Social Investment Business, intended to ready social ventures for investment and contracts (the clue’s in the name).
The main thing to note is that it was successful – 78 ventures secured £154m contracts and £79m investment. This means that dozens of social ventures successfully won contracts to continue or expand their work with beneficiaries, or raised investment to pursue new activities. For every £1 spent by the ICRF, £18 was unlocked – which looks like good value for money.
However there are some more interesting lessons which the report draws out:
- Investment readiness “should be seen as a ‘spectrum’ rather than a binary state”. I strongly agree, and would go further and argue that investment readiness is often in the eye of the investor. A social enterprise may look fresh, ambitious and confident to one investor, but ill-prepared, risky and stubborn to another. At CAF Venturesome, we’ve undoubtedly filled both investor roles in the past! Investment readiness support should continue to be tailored where possible to each venture’s current need.
- Good providers come in all shapes and sizes – there were 40 providers of investment & contract readiness support. Whilst the smallest providers (<£100k turnover) appear to have the highest success rates (80% of the ventures they worked with won contracts and/or investment); the more established names proved their ability to successfully support a large number of social ventures.
- Not just the usual suspects – there were a huge range of investors involved. Whilst social investment finance intermediaries supported 42% of successful ventures, BSC (7%), commercial banks (11%) and charitable foundations (15%) all played a part – a useful reminder of the breadth of the “social investment” sector.
What’s missing from the report is more examination of the 77 social ventures which received a grant for investment readiness support, but did not win contracts or investment. To help everyone’s understanding, more insight on what they did (or didn’t) do would be hugely valuable. Were their business models too risky? Were their markets too competitive? Or was their support simply not good enough?
Beyond the sector navel-gazing, the most valuable lesson here is the reminder that capacity building has positive long-term impact. Even if this was not the focus of the ICRF, around half of social ventures successfully supported have already gone on to raise additional contracts or investment. That looks like success to me.
By Holly Piper, Head of CAF Venturesome
Holly leads the CAF Venturesome team, including overall responsibility for CAF Venturesome’s funds and social investments. Since joining in 2012, Holly has led significant fundraising as well as managing a portfolio of innovative social investments. Holly previously worked at the management consultancy firm Oliver Wyman.
CAF Venturesome is a leading social investment fund, providing affordable unsecured loans to impactful social organisations. Since 2002, they have made over 490 social investments to a huge range of charities, social enterprises and community groups. For more information about their work, visit www.venturesome.org
This post was previously published by CAF Venturesome