Today the Prime Minister launched Big Society Capital, the much-heralded social investment wholesaler. Big Society Capital will invest in social investment finance intermediaries (SIFIs) - organisations which provide finance and support to social sector organisations, such as social enterprises.
It will invest £400m from dormant bank accounts and £200m from the four largest UK high street banks - Barclays, HSBC, Lloyds and RBS, via Project Merlin.
At the launch in the City, David Cameron said: "Big Society Capital is going to encourage charities and social enterprises to prove their business models – and then replicate them. Once they've proved that success in one area they'll be able – just as a business can – to seek investment for expansion into the wider region and into the country."
Reaction from social enterprises and social investors
Social Enterprise UK chief executive Peter Holbook:
"Today's launch of Big Society Capital signals to all, but especially to those in the financial sector, that capital needs to be raised in new ways to support the social enterprises and charities working tirelessly to address the country's social problems and support those at a disadvantage.
"The setting up of the world's first social investment bank is to be wholly applauded, and will provide much needed finance to social enterprises and charitable organisations. The capital is likely to be in high demand as traditional pots of funding become more difficult to secure as a result of the economic downturn.
"Big Society Capital will be an important anchor within the UK's growing social investment market and has the potential to direct capital to where it's needed most – into frontline organisations and sustainable businesses making a positive difference in communities across Britain. Access to finance has long been the biggest barrier for social enterprises keen to grow, broaden their reach and have a greater impact.
"Big Society Capital is helping to finance a number of projects including the Social Stock Exchange that will invite people to seek a social return on their investment as well as a financial one. The process needs to be made easy for potential investors seeking a blended return, but in equally important measure we need to ensure that social enterprises are ready to take that investment.
"Today's announcement will raise awareness of social investment in the mainstream, and people will naturally be interested to find out what it is and what it can achieve."
UnLtd chief executive Cliff Prior:
"We welcome the launch of the Big Society Capital (BSC). It raises the bar for social ventures, offering the finance to allow them to grow to achieve their full potential and the social impact the country needs.
"It also sets a challenge to get enough new and growing social ventures to the stage when they ready for BSC backed finance. Right now there is insufficient seed and angel stage finance to create the deal flow needed. Many of the early Big Society Finance Fund investees had help from UnLtd to develop their work, for example BikeWorks and Franchising Works.
"BSC is a valuable and transformative new arrival on the scene. The next step is to expand the support to start up and early stage social entrepreneurs to match. UnLtd is keen to work with Government and sector partners to meet this new challenge."
Social Investment Business via Twitter:
"@bigsocietycap will fuel a nascent market, give it credibility with investors and draw capital from new sources"
What impact do you think BSC will have on the social enterprise sector? Let us know on Twitter or by leaving a comment.
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