Big Issue Invest, part of The Big Issue group of companies, is launching a social investment fund in the UK in September to help scale up social enterprises. It will raise both charitable and direct private investment and deliver both social and financial returns.
The Big Issue Invest Social Enterprise Venture Fund will build on Big Issue Invest’s successful track record of financing social enterprises. Since May 2005, Big Issue Invest has provided 27 loans worth over £5 million to 20 social enterprises with no payment defaults to date. Investments include Jamie Oliver’s Fifteen Foundation, which helps disadvantaged young people pursue careers in the restaurant industry, and Belu Water, the UK’s first carbon-neutral bottled water company, which puts its profits in worldwide water projects.
The new fund will enable Big Issue Invest to offer more equity-like investment to social enterprises, helping to fill the gap in capital available to businesses which are driven by social goals. It is already attracting interest from those in the mainstream private equity world. Ron Sheldon, Managing Partner at Advent International, will chair the Investment Committee.
‘Our interest is in market transformation,’ says Nigel Kershaw, CEO of Big Issue Invest. ‘Venture philanthropy has emerged as an important source of funding for many charities. However, like philanthropy in the past, it has been fuelled by the excesses of the market. We want to see a shift away from “efficient giving” out of excess to investing mainstream capital in businesses that create both social and financial returns. Only with such a change in how markets work will we dismantle poverty and inequality.’
Big Issue Invest hopes to persuade venture philanthropists as well as foundations looking to align their investing and grantmaking goals to become investors in the new fund. It hopes that over time social enterprise investing will develop into a new asset class. To this end, Big Issue Invest is also actively involved in developing new ways of managing and reporting social performance and advocating new tax and legal forms to provide more incentives for investing in socially driven businesses.