A Good Case for Social Investment

Big Issue Invest Regional Investment Manager, Alan Tudhope shares several focus points for social enterprises to raise social investment.

It would be very easy to be prescriptive about what makes a good case for investment – a history of generating surpluses, strong balance sheet, detailed business plan, 3-year forecasts with cash flow, strong leadership team, complimentary skillset etc. Of course, if every social enterprise or charity had a track record of generating a sustainable income stream, had healthy reserves and were able provide this level of detail there would be no need for Social Investors as the organisations seeking investment would just approach their local bank.

From our experience, many – of course not all – of the social enterprises and charities that approach us for investment, are under resourced, operating at a loss, have weak balance sheets, low cash balances and have been turned down by their local bank. This does not mean we shouldn’t be investing in them, it just means our due diligence will take a little longer as we try to understand the organisation and the reasons they have found themselves in this position. In fact, I would argue these are exactly the types of organisations that we should be investing in.

In fact, I would argue these are exactly the types of organisations that we should be investing in.

Why else are we here, if not to enable high impact social enterprises and charities to work their way out their current predicament. Of course, they need to convince us that their proposal is viable, our investment will be repaid and the vision they have for the organisation is the right one.

To do this there are several key focus points I would suggest make a good case for social investment which includes

  • people and motivations,
  • social impact,
  • financials,
  • and perhaps the most under estimated bringing everything together – story telling.

Being able to tell a compelling story about the organisation’s history, performance and plans is incredibly important. Financial information often tells us the what has happened but not the why. The context is fundamental. This means being open, transparent and collaborative.

To find out more on how to prepare your company for investment watch the webinar below with Good Finance on ‘Why is storytelling important for raising social investment?’. I delve into how we look at social enterprises compared to high street banks.

Alan Tudhope is a trusted Regional Investment Manager. For more insight you can get in touch with Alan at alan@bigissueinvest.com.