Utfallsfonden has reached final close with commitments of SEK50m from Norwegian family-owned investment company Ferd and the European Investment Fund.
Swedish social impact fund Utfallsfonden has reached final close of SEK400m (€36.6m) after raising SEK50m from its latest fundraising round to invest into social outcomes contracts and companies that contribute to solving societal challenges in the social and health-related sectors.
This latest commitment is comprised of an SEK25m investment from Norwegian family-owned investment company Ferd, made through its social impact investment arm Ferd Sosiale Entreprenører (FSE), which was matched by a further SEK25m from the European Investment Fund (EIF), an anchor investor in the fund. The EIF’s latest commitment brings its total investments in the fund to SEK200m.
Other investors in the fund include Swedish state-owned fund of funds Saminvest and family offices Danir and Leksell Social Ventures. The latter is the first private investor to have invested into social outcomes contracts in Sweden and according to the fund’s managers, was pivotal in helping to launch the fund two years ago.
Espen Daae, investment chief, social impact at Ferd, told Impact Investor that the firm had also invested directly into social outcomes contacts in Norway but was attracted by the benefits of investing through a fund.
“There’s a long lead time in getting these contracts off the ground. So, for us, putting these into a fund where you can reduce the transactional costs of outcomes contracts is very attractive. There’s also a knowledge you acquire by entering into these contracts and learning from your mistakes, which adds real value,” he said, adding that the strength of the link between investing through social outcomes contracts and the direct change effected was also very attractive.
“You don’t get paid unless you deliver real change. It’s a very good way of tying your intention to things that can be measured but also to outcomes that create an impact where it matters the most,” he added.
Social outcomes contracts
Jenny Carenco, co-founder and general partner of the fund, which launched in April 2023 with a term of ten years, said it is the first of its kind in Sweden to invest into social outcomes contracts.
The fund will invest a minimum of 80% of its portfolio into social outcomes contracts but can invest more if the opportunity arises. It can also invest up to a maximum of 20% directly into the equity of companies addressing issues in the social and health-related sectors, such as mental health, unemployment, and elderly care.
Carenco explained that the investments into social outcomes contracts through the fund could be made in two ways. Either through a financial outcomes contract directly with an outcomes commissioner representing a local government body such as a municipality or region, or through an operational outcomes contract with a company or a service provider who in turn enters into a outcomes contract with a municipality or region.
In the first scenario, the money invested is repaid directly by the commissioner upon achieving agreed outcomes. In the second, the municipality or region pays the company or service provider for the outcomes achieved who then repay the fund once the money has been received.
In both scenarios, the money is earmarked for specific social interventions, such as improving the health of an elderly population, and repaid only if there is a positive change in the target group measured against predetermined KPIs.
“We don’t strive for perfect counter factual measurements as you would in a research project but we do try to find a good enough and objective enough measurement with the outcomes payer to demonstrate that there has been a significant positive change in the target group with sufficient scale, depth and duration.
“If the intervention fails, they don’t pay us anything but if the outcomes meet the agreed results than we will get back more than we initially invested. This represents the premium for taking on the risk of uncertain outcomes,” explained Carenco.
The fund plans to make around 20 investments across the portfolio, with a minimum of 80% of the portfolio invested into Sweden, and the remaining portion in the wider Nordic region.
Investments to date
To date the fund has invested into several outcomes contracts, including SEK50m with the Härnösand municipality to deliver what Carenco described as “preventive interventions for the elderly, with the objective of providing dignified ageing and reduced costs for elderly care” and SEK2.1m with the Gävle municipality, aimed at supporting 2600 students to improve their reading skills.
It has also made one equity investment of SEK3m into a company which provides multisystemic therapy (MST), a type of intervention designed for families with children at risk of being put into foster or institutional care, and plans to make a second equity investment of SEK5m into a firm that provides digital mental health support for children in schools by the summer.
