Impact Finance Bulletin: Social enterprises and charities get £28m from UK's Resilience and Recovery Loan Fund
Our regular impact finance bulletin brings you the latest funds, deals and programmes in the world of investing for good. Read on for our selection of impact investment headlines from the past month.
- UK: £28m for social enterprises and charities via Resilience and Recovery Loan Fund
- Scotland: Revenue-based Catalyst Fund is ‘stepping stone’ for social startups
- Australia: $8m boost for Queensland social enterprises to help create jobs
- Global: Refurbished device platform Back Market raises $335m in bullish circular economy market
- UK: Funding gives go-ahead for country’s largest community-owned solar park
- Africa: CDC commits $100m to help smallholder farmers access global markets
- West Africa: ABC Fund lends €1m to catalyse high-potential agri-businesses
- UK: CDFI lending totals £263m, safeguards 190 social enterprises – and seeks further growth
- Netherlands: 4impact, ABN AMRO and Impact Ventures back “truly disruptive” AI firm Envision
- UK: Nesta prize money to six tech innovators helping cushion Covid financial blow
- Spain: Zubi Capital creates €40m debt fund to back tech for good companies
- More deals, funds and programmes in brief
UK: £28m for social enterprises and charities via Resilience and Recovery Loan Fund
A total of £28m was provided to social enterprises and charities through the Resilience and Recovery Loan Fund (RRLF), the fund’s managers announced this week.
The RRLF was set up in April 2020, running until March 2021, to help social enterprises and charities facing disruption to business as a result of Covid-19. Established within six weeks, it aimed to fill the gap left by the government’s Coronavirus Business Interruption Loan Scheme (CBILS) which few social enterprises and charities were able to access.
Some £24m was provided in loans and nearly £4m in grants to 77 UK charities and social enterprises, including Autism Plus, The Big Issue, Jo’s Cervical Cancer Trust and the Royal Society for Blind Children.
RRLF was run by Social Investment Business with an initial £25m investment and support from Big Society Capital. In August 2020, the Access Foundation added a £4m grant pot for organisations in England. Big Issue Invest, CAF Venturesome, Charity Bank, Resonance, Social Investment Scotland, Social and Sustainable Capital and Wales Council for Voluntary Action were involved in the design and delivery of the fund.
Social Investment Business is developing a successor loan fund under the terms of the government’s Recovery Loan Scheme, expected to launch this summer.
Nick Temple, CEO of Social Investment Business, said the fund had been set up “in record time”, quickly getting money “to organisations who needed it most”. Insights from running the fund would be used to design its successor, and Social Investment Business and its partners would continue “to support charities and social enterprises with patience, flexibility and responsiveness in the post-Covid recovery”.
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Scotland: Revenue-based £15m Catalyst Fund is ‘stepping stone’ for social startups
Scotland’s first social investment fund based on revenue-based repayments was launched on 1 June.
The £15m Catalyst Fund, delivered by Firstport and Social Enterprise Scotland, offers loans starting at £50,000, to be repaid only when investees begin to generate revenue. Monthly repayments will vary, based on a percentage of trading income. There is no specific length of term, meaning repayments continue until an agreed amount is repaid.
The fund is financed by the Scottish government, and was first announced in March 2021 in the 2021-2024 Social Enterprise Action Plan, as part of its £30m Third Sector Growth Fund.
- Read more about Scotland’s 2021-2024 ambitions: Every schoolchild in Scotland to engage with social enterprise under new three-year plan
The fund aims to offer an alternative to conventional growth finance such as debt or equity, providing capital to early-stage social enterprises that need more time to develop technologies or which have uneven revenue streams.
It will support ambitious social enterprises to deliver impact at scale without needing to revise their business model
Daisy Ford-Downes, head of group investment programmes at Firstport, said the gap in social investment for early-stage social enterprises was a “missing stepping stone” that was “preventing too many from reaching their full potential”.
Chris Martin, CEO of Social Enterprise Scotland, said the new fund would support “ambitious social enterprises to accelerate their ambitions and deliver social and environmental impact at scale without needing to revise their business model to access traditional investment”.
Find out more and apply for the Catalyst Fund.
Australia: $8m boost for Queensland social enterprises to help create jobs
Queensland social enterprises can apply for a share of AU$8m to help them grow and create new jobs over the next two years.
The Queensland government’s Social Enterprise Jobs Fund aims to grow the sector and to create more training and employment opportunities, particularly for vulnerable and disadvantaged people. The fund builds on commitments in the Queensland Social Enterprise Strategy of 2019 to help develop a sustainable and thriving social enterprise sector.
The Social Enterprise Jobs Fund will see $3m in grants delivered over the next two years through business development grants, with a further $5m earmarked to “build the strength and resilience of the sector and maximise opportunities to supply to government”.
Queensland Social Enterprise Council president Richard Warner described the fund as “a significant milestone” that would “create catalytic change for the sector and its beneficiaries, including many highly disadvantaged job seekers”.
There were an estimated 3,500 social enterprises in Queensland in 2019, according to the Queensland Social Enterprise Strategy.
Global: Refurbished device platform Back Market raises $335m in bullish circular economy market
Refurbished electronics marketplace Back Market announced a series D investment round on 18 May of $335m.
Three years after it first launched in North America, the company now operates in 13 countries – with four more coming soon – and is approaching 5 million customers. It has been valued at $3.2bn
The latest investment round was led by equity firm General Atlantic, with the support of Generation Investment Management – the sustainability investor chaired by former US vice-president Al Gore – as well as existing investors Goldman Sachs Growth Equity, Aglaé Ventures, Eurazeo and Daphni.
Back Market CEO Thibaud Hug de Larauze said: “Our goal now goes beyond making renewed tech a viable option. We want to make it the first choice for electronics purchases. The support and confidence of these prominent funds, together with our growing customer base, marks an important step in Back Market’s journey, and more importantly for the refurbished sector as a whole.”
The confidence of these prominent funds marks an important step in Back Market’s journey, and for the refurbished sector as a whole
UK: Funding gives go-ahead for country’s largest community-owned solar park
Construction will begin this year for the UK’s largest community-owned solar park thanks to “unprecedented” interest in community shares, government funding and a loan from sustainable bank Triodos.
Ray Valley Solar in Oxfordshire aims to generate enough power for more than 6,000 homes annually from its ground-mounted panels. It will be built and operated by Low Carbon Hub, a social enterprise in Oxford that develops community-owned renewable energy projects.
To fund Ray Valley Solar, Low Carbon Hub raised £4.5m through a community share offer. The original target was £1.5m by March 2021, but this was extended to £3m and the offer was closed early due to “unprecedented” interest, according to a spokesperson. The other £1.5m came from investments made into the share offer in 2020.
Triodos Bank UK is providing a £2.4m construction facility, and additional £2m facilities to manage cashflow during construction. Once commissioned, Triodos will refinance the construction facility into a long-term operating facility.
Read the full story on Pioneers Post.
Africa: CDC commits $100m to help smallholder farmers access global markets
The UK's development finance institution CDC Group has announced a US$100m debt commitment to ETG, an agricultural conglomerate which connects smallholder farmers to global markets.
It is one of the largest corporate debt investments ever made by CDC, which was created 70 years ago.
The debt commitment will support the growth of ETG’s food and agriculture business and help it to strengthen food value chains by expanding its logistic networks, boosting agriculture yields and the production of staple foods such as grains, rice and cocoa. CDC will also support ETG's efforts to align with international environmental and social standards.
ETG works with over 550,000 smallholder farmers across Africa and aims to significantly improve their livelihoods by providing consistent future demand for their produce through access to regional and global markets. Farmers supplying produce to ETG also get training, expert farming support and mechanisation.
CDC also announced investment in Ascent Rift Valley Fund II, a new fund from African private equity fund manager Ascent which will back small and medium-sized enterprises in East Africa.
West Africa: ABC Fund lends €1m to catalyse high-potential agri-businesses
Three west African agri-businesses have secured loans totalling €1m from a dedicated impact fund, providing working capital and to help them expand.
The Agri-Business Capital Fund (ABC Fund), a blended finance impact fund, provides catalytic financing to underserved yet profitable segments of agribusiness value chains in developing countries. It makes loans and equity investments in farmer organisations, rural SMEs and financial institutions that have high growth and job creation potential but that lack capital needed to grow.
Launched in 2019, the fund is managed by Bamboo Capital Partners with partners Injaro and Agriterra, and funded by investments from international institutions including the EU, the International Fund for Agricultural Development (IFAD), the Luxembourg government and the Alliance for a Green Revolution in Africa (AGRA).
The ABC Fund’s latest loans are to Kaworo in Burkina Faso (€450,000), which produces grains and seeds for local sale; and to mango exporters Etablissement Yaffa & Frères (Mali, €250,000) and ROCFED (Côte d’Ivoire, €300,000). Lenders are typically reluctant to finance mango activity due a short harvest season, which lasts only three or four months a year.
Small-scale farming is one of the biggest industries in the world, with 2.5bn people relying on it each day.
UK: CDFI lending totals £263m, safeguards 190 social enterprises – and seeks further growth
Community development finance institutions (CDFIs) in the UK lent a total of £263m to enterprises in 2019-2020, according to data from industry body Responsible Finance.
CDFIs are purpose-driven lenders that aim to develop their communities while remaining financially sustainable themselves. As well as lending to businesses and social enterprises, they also lend to individuals.
From April 2019 to December 2020, CDFIs made loans to 5,887 startups, businesses and social enterprises – 90% of which had already been turned down by another lender.
Too many businesses and social enterprises can’t access affordable finance because they don’t fit mainstream banks’ lending profiles
Of the £263m, £109m went to 668 social enterprises, with an average loan size of £163,000 and a five-year loan term on average. Interest rates ranged from 0%-12%. Funding was provided among others through the Resilience and Recovery Loan Fund (see top story above) and the Social Enterprise Support Fund.
The number of businesses securing loans during this latest 21-month reporting period is lower than equivalent figures for the 12 months from April 2018 to March 2019, when CDFIs lent £171m to 4,600 businesses and social enterprises. CDFI loans safeguarded 191 social enterprises in the 21 months of 2019-2020 (compared to 122 in 2018-19, and 362 the previous year).
Theodora Hadjimichael, CEO of Responsible Finance, said CDFIs were the “superpower” of the UK finance system.
“Too many businesses and social enterprises can’t access affordable finance because they don’t fit mainstream banks’ lending profiles,” she said. “We must continue to scale up community development finance so more businesses, social enterprises and people can access appropriate and ethical options, especially in places starved of investment.”
Netherlands: 4impact, ABN AMRO and Impact Ventures back “truly disruptive” AI firm Envision
Artificial intelligence tech firm Envision, which creates products to help blind and visually impaired people, has raised €1.5m in growth capital.
The investment round includes three impact funds, with existing investor 4impact joined by ABN AMRO and Hungary-based Impact Ventures, along with a group of angel investors.
The Hague-based Envision will use the funds to expand its research and development team to further develop its technology and to boost marketing of its AI-powered app and smart glasses through a network of distributors around the world. Its products are currently being used in more than 200 countries.
Karthik Mahadevan, Envision co-founder and CEO, said: “We are excited to enter into this new phase where we can accelerate our mission of making all kinds of visual information accessible to everyone. We are just at the beginning of what is possible and the new partners and resources have now provided us with fuel to launch this product to its full potential.”
Pauline Wink, founding partner at 4impact, said the company’s drive and dedication was “unparalleled”, and highlighted further areas of opportunity. “Next to the blind and visually impaired, Envision’s assistive technology products can cover a much larger market, for example people with reading disabilities such as the 700m people with dyslexia.”
UK: Nesta prize money to six tech innovators helping cushion Covid’s financial blow
Six UK tech innovators have won £150,000 each to prevent more people falling into unemployment or who face financial insecurity following the coronavirus pandemic.
Nesta’s £3m Rapid Recovery Challenge aims to improve access to jobs and financial support for over 1m people in the UK, by helping social innovators to quickly scale up their work. It is funded by Nesta with support from JPMorgan Chase and the Money and Pensions Service.
The finalists, announced last month, include Beam, which has created a digital hub for disadvantaged jobseekers; Evenbreak, which supports disabled jobseekers; and IncomeMax, which helps people access unclaimed benefits, grants and other financial support.
Turn2Us, Udrafter and Hastee were also selected from the 12 semi-finalists, which last year received £125,000 each plus expert support. Of the six, two final winners will get a further £200,000 in September 2021.
Research by Nesta, a UK-based innovation foundation, found that 18 to 24-year-olds are twice as likely to have been made redundant or furloughed than those over 45. People earning between £20,000-£30,000 a year are twice as likely to be furloughed than those earning over £30,000. One in five of those polled said they would not recover financially from the pandemic for several years.
- Read more from Nesta’s Tris Dyson: Tech's crucial role in supporting UK workers
Spain: Zubi Capital creates €40m debt fund to back tech-for-good companies
Zubi Capital Impact Venture Finance will provide debt financing to socially responsible companies that do not have access to traditional financing schemes, mobilising capital from co-investors and promoting impact investment.
Zubi Labs will act as anchor investor, committing 25% of the targeted €40m fund. First closing is expected in the coming months.
Lucas de la Vega, director of Zubi Capital, said: “There is a lack of credit alternatives in tech companies that do not have access to bank financing due to a volatile credit profile linked to their exponential growth. Venture debt allows us great flexibility when it comes to investing in profitable and sustainable business models.”
Zubi Capital’s Venture Debt is a tailored term loan facility of up to €2.5m; the loan includes a small remuneration in shares. The fund expects double-digit returns ranging between a traditional VC fund and credit funds.
More deals, funds & programmes in brief
- Brazil: Natura & Co – the B Corp that owns the Body Shop and Avon – has issued a $1bn sustainability bond, claimed to be Latin America's largest to date. Funds raised through the bonds will be used to refinance existing debt; the bond commits Natura & Co to delivering on climate action and sustainable packaging, Edie reports.
- Ghana: Ghana plans to raise up to $1bn through a sale of sustainable bonds, Bloomberg reports. The proceeds would help refinance domestic debt used for social and environmental projects. Experts expect other African countries to follow Ghana’s lead.
- Kenya: Solar developer Renewvia Energy has secured a $1m commitment from impact investment manager SIMA to bring electricity to rural communities.
- India: Social enterprise Haqdarshak, which provides access to welfare services via technology, closed Rs6.65 Cr in a pre-Series A round from investors including the Deepak Group, Impact India Investment Partners, Beyond Capital Fund, Shalini Chhabra, and 3i Partners. The investment round was led by Acumen Fund and supported by Upaya Social Ventures.
- Tanzania: The US$77m Agriculture and Fisheries Development Programme aims to help rural people to boost productivity, improve food security and nutrition, and increase their resilience. The International Fund for Agricultural Development (IFAD) is providing a $59m loan; Tanzania’s government is providing $7.7m with a further US$8.4m from the private sector
- UK: AutonoMe, a Bristol-based digital job training service for vulnerable people, has raised £406,000 in its third funding round. Local investors City Funds and Bristol Private Equity Club contributed £150,000.
- UK/Wales: Clean energy business Egni Co-op last month passed a £4m milestone in a community share offer. It is using the money raised to refinance a loan with the Development Bank of Wales so that it can put more money into climate change education in schools. Egni Co-op has raised its final share offer target to £4.6m.
- UK: Bolton-based energy social enterprise Box Power has announced it will donate £1m to good causes over the next year.
- UK: Virgin Media O2 launched the £500,000 Together Fund to support UK charities. The fund will give £1,000 grants to charities with environmental and “community belonging” projects.
- Ireland: The Equality Fund announced grants to 11 civil society groups supporting women, Travellers and migrants among others. Rethink Ireland, which set up the fund in 2018, also said it would be expanded from €3m to €10m over five years.
- US: Social enterprise Cara Plus secured investment of $725,000 from retail giant Walmart to expand its work on inclusive employment.
Header image: Robert, a vendor of The Big Issue, at work in 2016. The street paper was among the organisations to secure funding from the Resilience and Recovery Loan Fund (credit: The Big Issue)
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