Big Society Capital has launched and the hunt for investees is on. The pipeline of ultimate investees – social enterprises that operate at significant scale and can pay at least a modest financial return – however, looks remarkably dry.
Social enterprise boasts a thriving community of start-ups, but few are contenders for Big Society Capital cash. Many start-ups, of course, do not aspire to scale or to generate returns for investors, but of those that do, too few are making the leap to being investible propositions.
The current buzz is around ‘investment readiness’. Workshops on business-plan-writing, how-to-pitch and putting-your-social-media-to-work are going head to head with mentoring, pro-bono and incubator programmes offering everything from desk space to accountancy advice.
Social investors, however, rarely lament their prospective investee’s lack of desk-space or insufficient grasp of Twitter. Like their cousins in the commercial world, they focus on the leadership team. Moreover, they look for teams who will implement plans, put in place and manage processes and deliver against targets – characteristics not always associated with start-up entrepreneurs.
So filling Big Society Capital’s pipeline is not about creating that one killer business plan, it is about capacity building: developing people who will inspire confidence in investors and deliver social and financial returns over and over again. And given how difficult it is to run a social enterprise, it is about making sure social enterprises work with the very best.
is about building this kind of capacity. We have chosen to do this by helping high-calibre professionals from all walks of professional life to transition into social enterprise jobs early on in their careers.
There is no lack of interest in social enterprise amongst this group, but early enthusiasm if often blunted by a series of barriers. The first is finding a salaried job (rather than a start-up opportunity). Even if they do land an offer, many are cautious about taking the plunge into the uncertain world of social enterprise. Critically though, this type of job hunter – more risk averse than an entrepreneur, accustomed to and re-assured by high standards of management and motivated by tangible targets – is precisely the kind of team member investors look for: leaders who will minimise risk and deliver returns.
What, then, can social enterprises do to reduce these barriers? From our experience at On Purpose, we’ve learnt the following:
1. Make an effort. Reputation or a higher moral purpose isn’t enough. The best people always have options and it takes time, attention and perseverance to persuade them to work for you.
2. It is not all about salary. Career changers will often reduce their salary as long as there is a prospect of it going up again in future (ultimately, though, social enterprise will have to pay competitively).
3. Learning and development helps. People may be leaving behind big training budgets – social enterprises can rarely replicate this, but you can foster a learning culture even with no budget.
4. Career advancement is a must. People need to able to see somewhere they want to be in five years’ time and have an idea of how this opportunity will help them get there.
5. People want impressive peers. Schemes such as the Civil Service Fast Stream to Teach First have long recognised the significance of this.
The good news is that much of this can be achieved with little money – the right attitude, a bit of imagination and awareness can go a very long way. Your training programme, for instance, needn’t be a week’s offsite in the Alps; a series ‘brown bag lunches’ might do the trick just as well.
Unless we can quickly produce a credible pipeline for the growing pot of social investment funds, we risk investors becoming disillusioned with social enterprise all too soon. I don’t know what the organisations, ideas and business models in this pipeline need to look like, but I definitely want to know that we’ve got the very best minds working on them.
Tom Rippin is the CEO of On Purpose, the leadership programme that enables professionals to transition into social enterprise early on in their career. It combines paid work experience with weekly training and regular 1:1 support. If you are interested in applying to become an On Purpose Associate or your organisation would like to work with an Associate, please visit www.onpurpose.uk.com.
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