$1.5 Million to Develop Early Stage Social Enterprises

The School of Social Entrepreneurs (SSE) Australia has committed to raise $1.5 over five years as part of a new scheme to assist the neglected early-stage social enterprise sector.

Recently launched to the Australian business, financial and philanthropic community, Partnering for Scale & Impact (PSI) is designed to help grow fledging social enterprises into robust, self-sustaining and profitable entities by connecting them with advisors, expert support, networks, and finance.

SSE Australia Chair Paul Bide said the social capital market for developed social enterprises was better established than the market for early-stage ventures, citing the Federal Government’s support of impact investing through the $20m SEDIF program, matched by three impact funds managers with private sector money, and the G8-sponsored Impact Investing development initiative in which Australia has a role.

“Foundations and philanthropic capital providers generally find it easier to donate money to more established, less risky ventures that are less likely to fail. This leads to a structural gap in the social capital market where higher risk, earlier stage ventures cannot find philanthropic support. Such ventures are too small or undeveloped for the impact investing market. The result is they are starved of capital and find it very hard to get off the ground,” Bide said.

“PSI seeks to provide capital to those social ventures so they can take off. We want to be able to grow that kind of venture so they are de-risked and in more easy reach of those that do not have a risk appetite for start-ups.”

SSE Australia CEO, Celia Hodson said the sector was in dire need of a solution that connected ventures with the capacity to grow with the people who had the resources to make it happen.

“As the early stage sector continues to grow, so too does the need for investment and engagement. It needs new sources of capital. These fledgling enterprises are providing innovative disruptive influences into the sector. We need them to flourish,” Hodson said.

“There are too many silos in our community and we are driven by the belief that a community can solve its own problems when individuals and the business, government, social and community sectors are all connected.”

“Collaboration is key to success. Innovative infrastructures such as PSI are required to enable early stage social and corporate entrepreneurs to benefit from the resources of the wider community to reach scale and make a significant impact.”

Over the past 12 months SSE Australia has engaged philanthropists, impact investors, social enterprises, and key sector organisations such as Social Ventures Australia, Impact Investing Australia, and Social Traders to develop the program.

In five years the PSI initiative will invest at least $1.5m directly into early-stage social enterprises. The program will seek annual commitments totalling $100,000 from individuals or collectives over three years.

SSE said the PSI fund will tailor its investment in social enterprises to suit the cut of the entity by investing in entities that have 100 per cent social capital and also those which are partially commercial.

“A social enterprise with a mix of social and private equity can deliver the same meaningful social outcomes that a 100 per cent social entity can” Hodson said.

“We may be able to recycle PSI’s capital if we lend to such an entity – that works. Having capital to invest in early stage enterprises is the key and we will deploy it with an eye to maximising meaningful social change.”