A potential new £25m social investment fund is announced today, offering flexible and patient capital to start-up social enterprises to scale their impact, with a minimum of 50% funding reserved for leaders from backgrounds underrepresented. Big problem Investing, UnLtd and Gap have come together to launch the Growth Impact Fund, to level the playing field in social investing.

This landmark fund is built in coalition with social investment experts and, at launch, is backed by supporter funding, including Bank of America and Access Foundation.

Big Issue Invest, UnLtd and design agency Shift developed the fund to tackle the structural barriers of inequality within social investing, as highlighted the Adebowale Commission. The commission ran between February 2020 and January 2022 and found that despite £600m of public investment since 2010, the social investment market has remained unchanged.

The Growth Impact Fund was developed with social entrepreneurs of various genders, ethnicities, ages and people with disabilities, who helped design this social investment fund for organizations that address inequality.

The Fund, which is funded solely by professional investors, will offer between £50,000 and £1.5 million to its beneficiaries. He has a unique approach to making social investing work better for social enterprises.
The fund will:

  • Offer issuers the option of patient and flexible capital or alternative options, including 70% of the funding invested by equity and quasi-equity products.
  • Provide comprehensive grant-funded support throughout the investment process (from start-ups to established organizations, and from pre-investment to post-investment)
  • Commit to ensuring that the fund’s team, management and governance are representative of the entrepreneurs the fund seeks to support.

Each portfolio entity will have access to grants and in-kind assistance to grow their social enterprise and social impact. Recipients can use the support for needs such as family responsibilities, accessibility support, counseling or professional development.

One of the main eligibility criteria is that more than 75% of the board and 50% of the management team of each social enterprise must identify as at least one of the inclusion groups: women, disabled people ; Black, Asian, ethnic minority, Gypsy, Roma or Traveler; LGBTQIA+; have direct experience of the social issues on which social enterprise focuses; experienced socio-economic disadvantage. Organizations that do not meet these criteria will be eligible if they can show their commitment to improving their diversity, equity and inclusion.

In addition to the eligibility review, a new resource is being developed by Big Issue Invest, UnLtd and Social Value UK – the Diversity, Equity and Inclusion (DEI) Toolkit. The fund will use the toolkit to assess potential grantees’ existing commitments and DEI improvement plans and provide support as needed. An open source version of the toolkit will be shared in the coming year.

Social entrepreneurs will be represented on the fund’s advisory board and investment committee, bringing their lived experience and expertise to decision-making for their peers. Their voices will influence the fund to be inclusive, accessible, fit for purpose, and responsive to the needs of the diverse founding teams.

Sara Redford, Chair of the Growth Impact Fund’s Social Impact Investing Committee, said: “The Growth Impact Fund has been structured by listening to the industry, being open-minded and thinking differently. I’ve seen firsthand the frustrations that social purpose organizations and investors experience, and believe that the flexible and patient supply of capital and technical assistance will help growing businesses thrive. The Growth Impact Fund will address the bias that we know can close doors to organizations led by diverse people, and share its learnings to open those doors for more funds and entrepreneurs to follow.

Danyal Sattar, Managing Director of Big Issue Invest, adds: “At Big Issue Invest, we have a strong track record of supporting social entrepreneurs. We know there is a large pool of talented and diverse investors that are not being served by current products. By co-creating the Growth Impact Fund with UnLtd, we are concretely injecting money to support the various entrepreneurs for whom current funding does not quite work.We believe in human potential and this Fund invests in it.

Chief Investment Officer at UnLtd, Mathu Jeyaloganathan said: “This is an opportunity to rethink the way we support, provide investment and partner with underserved leaders and organizations. A decade of working in the sector has shown me that this is really needed. L Social investing isn’t just about investing in “good” projects, it’s about investing in influential people and social enterprises that disrupt the status quo in all its forms: leadership, governance, delivery, and more. This includes how organizations source and staff finance, not just how businesses operate.With the Growth Impact Fund, we don’t just want to show it’s possible, but inspire others to change their practices, implement reforms and learn from our efforts.

Social enterprises interested in the Growth Impact Fund can visit growthimpactfund.org.uk to find out more and register their interest. Social investment organizations are also welcome to contact us with any questions or concerns.

Big Issue Invest and UnLtd would like to express their thanks and appreciation to Dechert LLP and Kirkland and Ellis International LLP, who provided invaluable pro bono expertise and support throughout the development and establishment of the Growth Impact Fund.

* Big Issue Invest Fund Management (BIIFM) is the fund manager of the Growth Impact Fund, and the fund is intended for professional investors only. Capital at risk. BIIFM Ltd is authorized and regulated by the Financial Conduct Authority (FCA) FRN 610618.