Big Issue Invest wins battle of social investors at Critical Mass
Social investors were heavily scrutinised by both compere and audience at Critical Mass.
Have you ever thrown a social investor out of a hot air balloon before? That was the premise behind a 'Dragons' Den' style workshop at the UK’s leading social investment conference Critical Mass, which saw five UK investors competing against each other to win the audience vote.
The investment director of Big Issue Invest, Ed Siegel came out on top when put in the hot seat to convince conference attendees “why my social investment offer is better than yours” – a light hearted session that aimed for transparency about the different products available for social ventures.
The debate was split up into rounds, with questions covering price, speed, risk, return on investment and size of funding available.
Chairing the competition was Bernie Morgan, a trustee of RBS’ Community Loan Fund. She timed the individual pitches, giving them two to three minutes for each answer. Then it was up to the audience, which included social entrepreneurs looking for potential backing, to vote on who should continue onto the next round.
The investors going up against eventual winner Siegel were; Holly Piper, head of CAF Venturesome; Vinay Nair, director of business development at Social and Sustainable Capital (SASC); Megan Peat CEO of social and community capital at RBS and Mark Bickford, senior fund manager at the FSE Group.
Big Issue Invest (BII) was founded in 2005 as the social investment arm of The Big Issue. Siegel told the audience considering them for investment what they would get in return: “you pay for a partnership, you pay for a long term relationship, you pay for support”.
In terms of understanding the importance of speed when making a deal with an investor, he said: “We do our best to be as quick and efficient as we can. The way we do that is by managing expectations from day one, letting people know exactly what we are going to need from them and not asking for things that really aren’t necessary.”
When pressed about size of funding by Morgan, Piper admitted CAF’s fund pot wasn’t as big as that of Big Issue Invest. CAF focus on helping a number of smaller social enterprises, whereas Big Issue Invest have invested around £35m over the past decade. She fought hard for her place in the balloon stating: “We are unique in the sector. We are philanthropically backed and that’s going to remain the case. So what we are attempting to do is grow our funds with capital that nobody else is accessing”.
Another interesting point raised was the assessment of risk of investing in start-ups. Vinay Nair said SASC had invested £1.5 million just last week in a start-up in Burnley, which uses technology to train prisoners and help them find jobs in call centres after their release. “By the impact they had, the nature of their drive, the nature of some of the contracts they were able to sign…we were able to take that risk”.
They key message towards the end of the balloon debate was that social return, regardless of the approach, social investment product or even financial return, is the most important thing for investors - seeing that their money is helping organisations to have a large impact in the sector and pioneering social change.