A £25m fund launched by leading UK social investors backs early-stage social enterprises whose staff recruiting policies and management structures reflect the diversity of the sector they operate in
A new £25m (€29.3m) social investment fund is offering patient capital or equity investment for early-stage UK social businesses whose staff recruitment policy reflects the sectors in which they operate.
The Growth Impact Fund (GIF) has been established by Big Issue Invest, UnLtd and Shift in an effort to boost flagging financing for the social enterprise sector. Big Issue Invest Fund Management is the fund manager for the GIF, which is being funded by professional investors only. Bank of America and Access Foundation are among its supporters.
Big Issue Invest is the social investment arm of the Big Issue Group, whose first business was the Big Issue street newspaper, sold by homeless people to provide them with an income. UnLtd finds, funds and supports social entrepreneurs, while Shift works with social organisations to design programmes that maximise impact.
The partners say the fund aims to tackle structural barriers within social investment highlighted by the Adebowale Commission, whose report was published in early 2022. The commission found the UK social investment market “was fundamentally the same in 2019 as it was in 2011”, despite £600m of public investment during that period.
Organisations eligible for funding will receive between £50,000 and £1.5m either via patient capital, or through alternative mechanisms such as an investment of 70% of funding through equity and quasi-equity products.
“The Growth Impact Fund will address the bias which we know can close doors to diverse-led organisations and share its learnings to wedge those doors open for more funds and entrepreneurs to follow,” Sara Redford, chair of GIF’s Social Impact Investment Committee said on launching the fund.
GIF says it will provide grant-funded support throughout the investment process and that it commits to ensuring that the team, management, and governance of the fund itself are representative of the entrepreneurs the fund looks to support.
To qualify for support, social enterprises (SE) will need to meet specific diversity, equity and inclusion (DEI) criteria in their management structures.
A DEI toolkit is being developed by Big Issue Invest, UnLtd, and Social Value UK to aid in eligibility screening. The fund will use this to assess potential fund recipients’ existing structures and plans for improving DEI and to provide support as needed. It plans to share an open-source version of the toolkit within the next year.
The commitment to social inclusion is also being built into the oversight and management of the fund itself. Social entrepreneurs will be represented on the fund’s advisory board and investment committee with the objective of maintaining inclusivity and understanding the needs of the founders of the organisations in which it invests.
Social investment means not just investing in ‘good’ projects, but also investing in impactful people and social businesses that disrupt the status quo in leadership, governance, and delivery, according to Mathu Jeyaloganathan, head of investment at UnLtd.
“That includes how organisations resource and staff the funding, not just how the investees operate. With the Growth Impact Fund, we don’t just want to show it can be done, but influence others to change their practices, implement reform and learn from our efforts,” she said.