Funding to support Investment Readiness

Jeff Scales

Development Manager

• Effective leadership & management• Clear business proposition• Good financial management• Clear purpose and community /

customer engagement

Investment Readiness - The Essentials

II SSKK

• Risk of the organisation / project / venture/contract succeeding and within the risk and return levels that funders, finance providers and commissioners are prepared to accept.

• “Beauty is in the eye of the beholder” so different funders will take very different views on whether an organisation is investment ready for them, although there are some core essentials.

Risk

Characteristics of a successful Social Enterprise

Clear and viable organisational strategy

Effective accounting systems and financial

management

Strong and effective

(entrepreneurial) management and leadership team

Track record of performance and

sector expertise

Clear businessobjectives and viable financial

plan

Strong

governance

framework

Confidence and support

from Stakeholders

& well networked

Good cashflow and cashflow

management

Maintain focus on organisational

objectives

Understanding of costs and pricing

Strong and effective board

Innovative and

solution orientated

Investogram – Typical Community Organisation

INVESTOGRAM - A PICTURE OF INVESTMENT READINESS

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%1. Board

2. Management

3. Culture

4. Track record

5. Strategy & plans

6. Market

7. USP

8. Customers & relationships

9. Innovation10. Income mix

11. Cashflow

12. Financial management

13. Reserves

14. Social return

15. Financing

16. Gearing

17. Security

LeadershipPlans & market potentialPerformanceFinancing

Attractiveness to fundersWhilst this chart shows the relative strength of the organisation compared to the most widely used factors for investment readiness, every funder will have their own perspective on risk and the relative importance they place on each.

For example banks and loan funders would want to see potential security on assets whilst seedcorn funders will accept higher levels of risk where there is strong leadership and a clear opportunity even though there may be little security. Many grant funders expect to see good social returns and a positive level of reserves.

Room Average

Risk The coloured areas of the chart show the relative strengths of the organisation. The white areas are an indication of risk. The more white space, the higher the level of risk

Investment SizeThe size of any investment or financial requirement will also have an impact on risk. Some funders or commissioners will accept higher levels of risks for relatively small financing requirements.

Reading the chartThe colour shaded areas in the chart represent four broad aspects that help to highlight investment readiness.They are in a logical sequence starting with the leadership and management (blue) with this continuing on a clockwise basis as indicated by the arrows.

Investment and Contract Readiness

Fund

Minister for Civil Society Nick Hurd said:

"We want to make it easier for charities and social enterprises to access capital. This fund is for ambitious organisations who want to access social finance but know they are not yet investment ready. It allows them to get the support they need." 

Investment and Contract Readiness Fund

• £10m grant over 3 years (OCS money & SIB managed)

• Grant between £50k & £150k For ‘high growth’• To deliver contracts (£1m+) / receive returnable

investment (£500k+)• 130 awards over fund lifetime • Locality is one of 22 (approx) support providers• Providers develop bids with applicants• www.beinvestmentready.org.uk

Tips for success

• Prepare a decent pitch to support providers• Be specific about what your aiming for (e.g. the enterprise needing

£500k investment for / the contract opportunity worth over £1m)• Be clear about your capacity building needs• For investment –business model needs to be able to service at

least a £500k ‘returnable investment’• For contract readiness – substantial track record is important• Take your time – this is a three year programme and providers

won’t take forward weak ones (because of the work and risk involved)

AND IF ICRF ISN’T FOR YOU…

Social Incubator Fund…will significantly increase the number and quality

of early stage social ventures (Nick Hurd)

•£10 million (OCS)/ Big Lottery Managed

•3 years (up to 2014)

•Intensive support for social enterprise start ups /early stage

•Delivered through ‘Social Enterprise Incubators’ (combination of support and investment [matched by SEIs])

•Deadline for Social Incubators is 21st Sept

•Providing pipeline to ICRF and Big Society Capital

•Grants for social ventures awarded in Jan 2013 (1st round)

Community Right to Challenge Support

Programme• £11.5m over 3 years (£10.5m ‘resources’ / £1m

capital) • Grants Scheme (pre feasibility up to £10k, feasibility

up to £100k + Investment capital grant up to £100k)• SIB managed• Helpline + Support provided by Locality• Linked to the ‘right’ and general procurement support• http://mycommunityrights.org.uk/community-right-to-

challenge/grants/

Community Right to Bid Support Programme

• £19m over 3 years (£9m capital)• Grants Scheme (pre feasibility up to £10k,

feasibility up to £100k + Investment capital grant [threshold to be confirmed])

• Helpline + Support provided by Locality• Linked to the ‘right’ and asset transfer• Managed by SIB• http://mycommunityrights.org.uk/community-

right-to-bid/grants/

And• School for Social Entrepreneurs

http://www.the-sse.org

• Unltd Big Venture Challenge http://unltd.org.uk/bvc/

• Mutuals support programme

• http://mutuals.cabinetoffice.gov.uk/further-information-mutuals-support-programme

• Outcomes Fund www.gov.uk/social-impact-bonds

Questions

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ContactJeff Scales

Development Manager (Northwest)

t: 01254 889925m: 07912 269668e:  jeff.scales@locality.org.uk Website: www.locality.org.uk