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Financing Social Enterprise

Financing social enterprise

Partnership between London South Bank University (Centre for Government and Charity Management Business Faculty) and CAN

Note: This short KTP  provided useful direction in the business context at CAN. While it was not possible  to identify  major innovations for the sector as a whole,  or new knowledge  for the R&D  community, important foundations have been laid for further development. 

Objectives: To develop a new fund with different investors targeting social enterprises in the £200-500k region.  The aim was to run the new fund on a self-sustaining basis by offering forms of loan and equity funding. The partnership was to develop understanding of different investment options, social impact and outcome measurement and KPI development, to aid funding decisions, and lead to improved investment strategies, leading to investment readiness consultancy opportunities.'

Results for the Company Partner

  • As suggested by lead academic, the following aspects were expected to be useful: a) working with a university which specialises in the social sector; b) working to rigorous project discipline; c) obtaining early, radical results which challenged initial assumptions and reduced potential losses.

Results for the Associate (none provided)

Results for the Knowledge Base Partner

  • An important learning  experience, providing valuable insights into the role of investment intermediaries, and the numerous and complex variables  they must  balance in order to prosper in an immature but rapidly developing market.  The  main academic lessons  from  this were:
    o   Expect the unexpected (risk analysis and contingency management)
    o   Beware unquestioned assumptions about  markets  (positioning strategy  over time)
    o   Consider the variables  affecting  the research  (prioritise  for targeting effort)
    o   Adopt a wide scanning process  of investors and investees  (excellent at CAN)
    o   Draw  on  the mass of empirical  data to narrow  the business case quickly
    o   Applied  research  often  needs only those  resources that are readily to hand
    o   Cost-benefit for commercial viability is fundamental to all investment decisions 
  • Benefits:
    o   the focus on SROI from an investment intermediary's  perspective;
    o   beginning to understand  and map a dynamic multi-stakeholder environment;
    o   planning to help develop a range of funding and related services for maximising measurable social impact;
    o   R&D in a rapidly changing social and political context in the UK; e) working with committed  professionals in a large, reputable organisation. 
  • Publications: an Academic Review report has been agreed with the key stakeholders.  Potential for strategic growth planning and investment-readiness  guidance  in the social enterprise sector  is significant. The  KTP highlighted the need to develop  models  and measures which could  be proposed for social investment funds  to be 'traded' on an open,  regulated  exchange

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