This pilot project will investigate the prospects for the creation of a sustainable social venture fund in Scotland. Such a fund would provide social economy organisations in Scotland with access to investment capital rather than loan finance.
Phase 1 of the project will focus on the following areas:
Defining what we mean by "social venture" covering charities, revenue generating social enterprises, socially driven businesses, legal structures and charitable status.
The "Patient Capital Gap" covering the need for additional types of risk capital, the influence of Futurebuilders Scotland and the developing market for loan finance in Scotland.
The social venture market in Scotland, covering the size of the market across Scotland and types of ventures which might be supported by investment capital.
Other areas to be addressed include the most appropriate structure for a social venture fund, the interests of potential investors and how incentives such as Community Investment Tax Relief could play a role in any capital raising exercise. A report summarising the conclusions drawn from the completion of the first phase will be produced by the end of December 2005.
Social Equity Scotland will be innovatory by:
Emphasising the social rather than financial return
Using individuals with existing business skills to help those organisations invested in
Plug a funding gap in Scotland and help to maintain the flow of finance to the social economy
A wide range of organisations working within the sector have been interviewed to ascertain their views on the potential for investment capital for social economy organisations. A report "Investment Capital for Social Ventures" is now complete and is available for download
Following distribution of the "Investment Capital for Social Ventures" report we have been liaising and meeting with potential pilot organisations who may partipate in Phase 2 (pilot investments). In addition we have been identifying potential investors for the fund and we have undertaken preliminary approaches to a few of them and plan to step this up during the next quarter.
Mainstreaming activities:
SIS are raising the prospect of Investment Capital as part of discussions with clients on mainstream loan finance activity. The prospects for introducing investment capital as part of core activities will be considered in light of the pilot activity although experience to date would indicate that the market for investment capital at this time is very small and there are sigificant issues around "investment readiness".
Social Investment Scotland www.socialinvestmentscotland.com Tridos Bank www.tridos.co.uk Tridos offer a comprehensive range of services for social businesses, charities etc along with a variety of savings accounts to individuals. Unity Trust Bank www.unity.uk.com specialist bank for voluntary organisations Royal Bank of Scotland www.rbs.co.uk RBS has a Community Development Banking Team to provide support and access to funding for community based social enterprises
