Of angel investors and pinstriped idiots
The UK social investment space is messy and contradictory, with huge opportunities laced with elements of arrogance and naivety. That’s social innovation for you, says Liam Black in his latest missive
Dear Jude –
We recently celebrated the 25th birthday of FRC Group in Liverpool, the social enterprise where I earned my spurs over 12 years as Chairman and CEO and in the process made some of my best friends and bitterest enemies!
In the early nineties on the banks of the Mersey as we made the gruelling shift from a fundraised to an earned income culture – from being reliant on the kindness of strangers to having belief in the strength of our products and services - we were told in no uncertain terms by many in the voluntary sector that we were mad or, worse, selling out by daring to talk about the need to make profits and compete in real markets. I was regularly booed and hissed at during conferences of charity and community leaders when I challenged the entitlement culture and sheer laziness of thinking in the sector. On one memorable occasion in the north east a particularly irate audience member threw his shoe at me (it missed). Ah, happy days, Jude.
I could not have imagined in 1992 when we were struggling to keep the lights on that 21 years later I’d be sitting around a table with two of Europe’s oldest financial institutions discussing how we might invest £30,000,000 to build a socially enterprising economy. But this is exactly what I have been doing this year.
Impact Ventures UK is one of two new funds that I have been helping to create. My aim has been to bring new money and – perhaps as importantly – new players into the field. I want us to become the go to places for ambitious, socially enterprising innovators for investment, mentoring, supply chain access, impact assessment support and much more. The cash is the easy bit.
The UK social investment space is messy, emergent, contested and contradictory. There has been too much social investment sizzle and nowhere near enough social enterprise sausage. And there have been too many eejits from the City sniffing around in their pinstripes displaying an arrogant stupidity which makes me ache to slap their smug chops.
We haven’t wanted to add to the hype so have been quietly building a pipeline of investments.
At a recent investment committee meeting, our rather good team gave their assessment of the market.
They had read the 2013 report on the state of social enterprise in the UK. If you push aside the hyperbole and over claiming, the hard fact at heart of the findings is this:
“The median turnover of social enterprises has decreased since the 2011 survey, from £240,000 in 2011 to £187,000.“
In other words most social enterprises are small, shrinking, vulnerable, low margin businesses with little cash. Not exactly a target rich investment environment!
In their conversations with social enterprise leaders around the country our investment team found deep passion, commitment and hard work alongside inefficient governance structures, low appetite for risk, inability to articulate and quantify social impact, lack of commercial nous and some naivety about what ‘investment’ is.
But we know too that out there are strong ideas with credible business models which, with the right support, can scale, have enhanced and verifiable social impact – and pay us our moolah back.
It’s ambitious, not without considerable risk, there is no shortage of naysayers and it will take time and much effort. How could it be otherwise when we are trying to build something new?
Peace, love and profit Jude.