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Profile: Nesta’s Barclay on investing in innovation for social good

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Published: 14 June 2022

A fairer start for every child, a healthy life for all, and a sustainable future. Those are the key impact themes behind the UK’s national endowment Nesta’s new investment strategy, as Lisa Barclay explains

Lisa Barclay, Nesta: “We are looking for businesses that combine commercial potential with a thematic impact.”


  • Executive director, investments, Nesta, 2019 – present
  • COO, Social Finance, 2010 – 19
  • Assistant director, Bridges Ventures (now Bridges Fund Management) 2004 – 08
  • Co-founder, E-Government Solutions, 2000 – 02
  • Strategy consulting and public policy roles 1993 – 2000
  • MA, Cambridge, Social and Political Sciences/Economics 1990-93
  • MBA, London Business School 2002-04

Created in 1998 with an initial £250m (€292m) of National Lottery funding, Nesta is the UK’s first-ever publicly supported national endowment.

It was the idea of Oscar-winning film producer David Puttnam, who felt the country was failing to capitalise on its talent for innovation and invention. The initial funding was later supplement, in 2006, with a further £75m of lottery money, drawn down over five years.

As the executive director for investments, Lisa Barclay is responsible for finding early-stage technology ventures with social or environmental impact. Barclay has worked in the impact investment industry for twenty years, before “it was even called impact, starting with my time at Bridges Fund Management“, she says.

Barclay followed this up at Social Finance where she developed outcomes-based investment models that levered private finance to government programmes, with investors being paid on the basis of successful results. “But I was itching to get back to direct investing. The work I do now is very similar to the work I did at Bridges.”

Nesta has £120m of assets under management. “Since the early 2000s, we have made 137 investments across our portfolio. 34 companies are in our three arts investment funds. 61 companies and six funds are in our legacy venture portfolios investing in deep-tech commercialisation. And finally, 36 companies are in our current impact ventures portfolio. Of all these, 37 are still active.”

Nesta manages four funds which have third party participation. Three of them are in the area of the arts, and the fourth is their impact investing fund, Nesta Impact Ventures. These are only open to institutional investors, which currently include a number of foundations and Big Society Capital.

Investment process

The criteria Barclay’s team employs to choose businesses to invest are “very much what you would expect from most venture capital teams. The key selection criteria are based on an assessment of the size of market, the quality of the management team, commercial potential of a particular proposition, and asking the question “is there a moat?” (i.e. barriers to entry).

She adds: “The main difference is that we are looking for businesses that combine commercial potential with a thematic impact. We tend to look at recent startups that align with our themes, particularly those which have raised less than £3m and are looking to have a raise soon.”

Barclay’s investment team is fairly small, consisting of just ten people. But she notes “it sits alongside some 250 other colleagues who are working on the same themes as we are. We are able to harness the specialist knowledge that they have developed and their extraordinary networks. They are essentially looking through a public policy lens, whereas we are more focused on private sector innovation”.

Thanks to this broader organisation, the Nesta investment team has developed deep expertise in certain areas. “We are able to bring to bear our team’s knowledge of data and behavioural science and the use of technology to help our companies accelerate their impact and commercial success.”

She says: “Our normal investment size is between £500,000 and £1m. We are providing seeding or early stage capital, but we do often follow on to support investments up to £4m.”

An example of the latter is Third Space Learning. This provides one-to-one tutoring for primary school pupils using graduates in South Asia and linking them virtually with UK pupils. Barclays says: “This has been hugely successful during the period of COVID and afterwards.”

Key themes

Nesta’s broad mandate, to commercialise innovation generally, ended when Ravi Gurumurthy was appointed chief executive, in December 2019.

Barclay explains: “When Ravi joined Nesta, he felt that the organisation was doing a lot of good things but was in need of more focus.”

After carrying out a strategic review, Gurumurthy selected three main areas of focus: a fairer start for every child by bridging the education attainment gap, a healthy life for all by tackling obesity, and a sustainable future. “Everything we do at Nesta is now focused on these three goals,” Barclay notes.

There are some exceptions in areas where historic activity continues, such as working with organisations seeking impact in the arts world. Nesta recently partnered with London’s National Gallery to deliver HOME-Zero, a creative R&D project to help raise awareness of household emissions and climate change. “But in future, we’ll try to orientate this towards the three goals that Ravi has indicated.”

Barclay’s team have been delivering on the new strategy since the middle of 2021 and so far, they have made “two mission-aligned investments”.

In the core focus area of obesity, Nesta’s aim is to halve the prevalence of obesity by 2030. “This would increase healthy life expectancy by an average of nearly two years for around ten million people in the UK, while narrowing health inequalities between the richest and poorest in society,” according to the organisation.

Nesta has invested in a very early-stage life sciences company which is developing capsules that suppress appetite but can be easily flushed out of the body naturally. These have the advantage of offering weight loss to obese people without the necessity for surgery.

The second investment is in the area of education. Here, Nesta’s “mission is to narrow the outcome gap between children growing up in disadvantage and the national average”.

Barclays says: “We have invested in a business that has been set up to improve the accessibility and affordability of quality childcare. The business matches families with carers and has created a suite of tools to essentially reinvent childminding with technology at its core.”

Challenges and the future

COVID was a challenge for Nesta as for all organisations “but given that a lot of our businesses are digital businesses in health and education, many of them actually thrived. Others needed some support, but we saw good resilience and creativity”.

“We don’t know what the economic headwinds will be going forwards and how this will affect the availability of new investments.” There may also be new areas of focus added, Nesta describes tackling loneliness as “an area of exploration”.

Barclay concludes: “It is still early days in our investment strategy, but we are excited about this new focus and are very much ‘full speed ahead’ looking for new investments in all three core areas. There is a huge amount that venture capital can bring to impact there.”

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