The government will invest £5m into a fund that provides risk capital for scalable social enterprises.
The £5m has been committed to the Bridges Social Entrepreneurs Fund, launched by Bridges Ventures last November to invest in organisations that deliver a profound social impact and have sustainable business models.
At the launch of the fund last year, founding chairman of Bridges Ventures Sir Ronald Cohen said the fund was created to address the "chronic shortage of long-term capital" facing social enterprises with viable business models looking to scale.
According to Bridges Ventures, this is the first large government investment aimed at high-growth social enterprises, and it increases the funds under management to £8.6m, following a further £0.75m from the Esmée Fairbairn Foundation this week. It adds to founding investment from Sir Ronald Cohen, the National Endowment for Science, Technology and the Arts (NESTA), Nigel Doughty and the Apax Foundation, among others.
The fund invests up to £1.5m in each social enterprise and aims to give investors both a social and financial return, with all profits reinvested.
“This is an exciting time for social investment, and, despite the challenging economic climate, I believe there are opportunities to be seized," said Angela Smith, minister for the third sector.
“More and more people are seeking out ethical products and services, investors want to know that their investments will not only reap a financial return but will also deliver social benefits. There is a change occurring in the way we do business and social investment is at the heart of that change.”
The £5m will be matched by individuals, foundations and institutions, and Smith hopes it will encourage the introduction of more mainstream capital into the sector.
She added: “Today’s announcement is an example of how the government can fill the gaps in the social investment market, by investing directly and in doing so, leading the way and encouraging the market to follow.”
© Crimson Business Ltd. 2009