Big Issue Invest SEIF

Social Enterprise Northwest
Social Finance Fair
February 2014
Big Issue Invest
For social entrepreneurs – by social entrepreneurs
 Big Issue Invest was founded in 2005 as the social investment arm of The
Big Issue
 It provides a range of investment options, from debt to equity and quasiequity finance to social enterprises from £50,000 to £1 million
 Lending business:
 Loans from £50,000 to £250,000
 Typically up to ten years
 Over £20 million lent to 180 social enterprises with c. 3% loss rate
 June 2010 launched the BII Social Enterprise Investment Fund limited
partnership investment vehicle for ‘equity like’ risk capital finance
 £9.2 million raised from a diverse range of social impact investors
 Can invest from £100,000 to £1,000,000
BII – Approaches to investing
‘Conventional’ lending
Convince me that you can pay me back
Security – secondary source of repayment
‘Risk capital’ investing
Convincing case for growth
More intensive due diligence
More active involvement post-investment
Higher potential loss, higher potential return
Investment Targets
BII SEIF - Investment Targets
Social Impact
 Clearly identifiable, high social or environmental value creation
Growth Potential and Ambition
 Viable business model which is either scalable or replicable
People, Products and Projections
 Strong management team with proven capability to deliver
 High value-for-money product or service
 History of positive cash generation or a clear near term path to cash and
surplus generation
Example ‘patient capital’ investment
Sandwell Community Caring Trust
Total financing requirement: £4.25 million to acquire a newly built
residential care facility
Source of funds:
Senior secured debt (first mortgage, 75% LTV)
Unity Bank
£3,250,00 (83%)
Subordinated term loans (secondary security)
Consisting of:
Big Issue Invest
£725,000 (17%)
- Fixed rate term loan
- Term:
7 yrs, 4 yrs interest only
- Rate:
7.5% fixed
- Revenue participation loan
- Term:
7 yrs, bullet repayment
- Rate:
1.8% of the uplift in “Trading Income” from the base year, with annual cap
BII’s Impact Assessment Scorecard
1. Mission & Vision
Grade ranges
91-100 Excellent Performance
2. Scale of impact
81-90 Very Good Performance
71-80 Good Performance
3. Transparency
55- 70 Low Performance
0-54 Inadequate Performance
4. Market transformation
Investee Performance Metrics
 Agreed, not imposed (but required)
 Simple, verifiable
 Usually, 4-8 quantitative output measures
 Relevant to the business
 SROI if relevant and desirable
 Metrics + targets
 Targets reported quarterly, reviewed and reset annually
(concurrent with financial budgeting process)
Discuss progress with Boards and work to drive improvement
 Annual social impact report
Investee Performance Metrics (example)
Investee is on target, within a negative variance of 25%, to meet the following social performance targets
for the 12 month accounting period to 31 March 2012:
600 service users with mental health problems demonstrate improved well-being and have
reduced dependency on state services;
150 service users with long-term mental health issues live independent of acute care;
60 service users who are homeless or have inadequate housing needs are re-housed;
45 families with children in care or at risk of going into care receive support;
50 victims of domestic violence receive support;
30 perpetrators of domestic violence are no longer considered a threat to their families;
30 children gain safe access to a non-resident parent; and
20 services users that have been offenders within the criminal justice system do not reoffend.
300 service users for whom English is not their first language use Investee’s services.
Economic well-being:
100 service users become more economically independent or useful either through
employment or a return to work after sick leave.
Thank you!

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