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New £10m risk capital investment fund for Social Enterprises announced

CABINET OFFICE News Release (CAB/016/08) issued by The Government News Network on 27 February 2008

Phil Hope, Minister for the Third Sector, today announced that a radical proposal to set up a £10million Risk Capital fund for Social Enterprises will go ahead. The fund will be the first of its kind for social enterprises and will particularly benefit them at the critical start up and early growth stages of developing their business.

Through extensive consultation, social enterprises have told the Government that equity or equity-like investment is a crucial finance option for the long-term sustainability of the sector. Therefore, the fund will be run as a 'pathfinder investment scheme' where the Government's £10million investment will be matched by private and independent investors. This will ensure a legacy by building relationships and understanding between social enterprises and commercial investors.

Phil Hope, Minister for the Third Sector, said:

'I'm extremely excited about this fund and what it means for the long-term development of social enterprise as a mainstream business option. Investors are increasingly looking to maximise their profits whilst also being able to benefit the wider world. I hope that the legacy of this fund will be to show investors the potential of ethically driven investment. Although this method of investment will not suit all social enterprises I am encouraged that this initiative will open up social enterprises to a greater choice of investment opportunities.'

Jonathan Bland, Chief Executive of the Social Enterprise Coalition, said:

'We welcome the fund as a step in the right direction for helping social enterprises scale up. We feel it is a useful pilot for increasing vital risk capital investment into social enterprise.'

The Government will appoint one or more independent fund managers following a tender process. Under the rules of the investment fund the Government will make the same return on investments as independent investors. It is expected that the fund will open to applications in the autumn.

The Risk Capital investment fund was first recommended in the Government's Social Enterprise Action Plan published in November 2006.

Notes to Editors

1. The Government defines social enterprises as; businesses with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners.

2. The social enterprise action plan: 'Scaling new heights' was published in November 2006 by the then Chancellor of the Exchequer, Gordon Brown. It aims to open the door to thousands of new social enterprises, raise awareness of what they can achieve and encouraging more people to make a difference, either by involvement or investment. It is available online at: http://www.cabinetoffice.gov.uk/third_sector/social_enterprise/action_plan/

3. The Office of the Third Sector (OTS) in May 2006 to drive forward the Government's role in supporting a thriving third sector, and join up sector related work across government.

4. The Social Enterprise Coalition (SEC) acts as a voice for social enterprise and provides a national platform for showcasing its benefits. SEC holds for the annual VOICE social enterprises conferences. For further information please see: http://www.socialenterprise.org.uk/

Cabinet Office Press Office 22 Whitehall LONDON SW1A 2WH

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