BUSINESS BIO

Where is the enterprise based? London (but operates nationwide)

Key business markets: Funding & investment

Investments made: £5.35 million

% of annual income from trading (as opposed to grants): 100%

Number of employees: 5

www.bigissueinvest.com

ambassadors

Nigel Kershaw

Nigel Kershaw
  • Big Issue Invest

  • CEO

  • London

Social entrepreneurs need innovative forms of finance to help them thrive but finding investors who understand their business model is not easy. The Big Issue spotted a gap in the market.

The Big Issue was one of the pioneers of social business, and is still one of the best known. Founded in 1991 it gave homeless people the opportunity to be involved in a business venture and help themselves off the streets.

The business has grown enormously in the intervening years. But, for most of those years, social enterprise as a whole had not grown as much. Big Issue Invest was launched by The Big Issue in 2005 and set out to try to change that.

With £5million to invest, the idea was to scale up the sector, providing investment opportunities and helping social enterprises to grow.

“We are a social enterprise ourselves, so all the profits that we make from investing in social businesses, are reinvested back in to The Big Issue or more social enterprises,” says chief executive Nigel Kershaw.

One of Big Issue Invest’s early investments was in Belu, the first carbon neutral bottled water company in the UK and also the first to use compostable bottles. Other investees include Jamie Oliver’s Fifteen restaurant and Pines Calyx, a sustainable environmental conference centre near Dover.

Apart from loan finance, ranging from £50,000 to around £500,000, Big Issue Invest this year launched a Social Enterprise Investment Fund (SEIF). The Fund is the first commercially-structured fund of its kind in the UK to specialise in social enterprise investing and delivers both financial returns and measured social impact to investors. The Fund has a unique structure which can take in straight investment capital, mission related investment and charitable contributions.

Big Issue Invest is pioneering a new asset class in which social impact creation is a defining feature.  It is called INVERSE - INVE (Investment) R (Return) on S (Social) E (Enterprise).

We live and breathe social enterprise, and The Big Issue was one of the founders of the sector. We understand what it is to run social businesses, and we know how to run them in good and bad times.

Its focus is on social enterprises in the health and social care, environment, employment and skills sectors, with investments of anywhere from £100,000 and £500,000 in each business.

Big Issue Invest hopes to offer a return of three to five per cent net annually and investors will be locked in for ten years. The first dividends should be payable on the fourth anniversary of its launch.

The Esmée Fairbairn Foundation has invested £750,000 in the fund, which has also attracted pro bono help from City institutions such as HSBC, Nabarro and PricewaterhouseCoopers. Meanwhile, Ron Sheldon, managing director of private equity company Advent International is chairing the fund’s investment committee.

What sets Big Issue Invest apart is that it is run by social entrepreneurs, for social enterprises – so there is a deep level of understanding of the sector.

“We live and breathe social enterprise, and The Big Issue was one of the founders of the sector,” says Nigel. “We understand what it is to run social businesses, and we know how to run them in good and bad times.”

This translates into being more creative with loans, for instance. Rather than asking for loan repayments, it might take royalties. This helps businesses that don’t yet have significant assets, and can help prevent the cashflow problems faced by so many start-ups.

As Dai Powell, chief executive of HCT Group said “Big Issue Invest understands our mission and values and how profit is essential in growing social enterprise.”

For Nigel, what’s exciting about working in the social enterprise sector is that it is made up of real businesses, making real profits while also achieving social impact.

“That’s what we want to bring to the sector,” he says. “Companies like Belu and Fifteen are market-based businesses, and we’re promoting those who create both financial and social returns.”

Quick Facts

  • Big Issue Invest also runs an alternative credit scoring initiative that adds alternative data, such as rent payments, to traditional credit scoring models. This initiative may bring as many as 1.5 million low-income people into the mainstream credit market.
  • The recently launched Social Enterprise Investment Fund (SEIF) hopes to offer a return of 3 per cent to 5 per cent net annually, and investors will be locked in for ten years.
  • Big Issue lnvest launched with a start-up fund of £3.5 million, sourced via a mix of government grants from the Phoenix Fund and private investment.

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