CAF Venturesome (http://www.venturesome.org) was founded in 2002 in the UK and is an innovative pioneer of financial instruments for supporting social enterprises - and is an example of the growing market for funding social entrepreneurs. Social entrepreneurship as a fundable activity has grown through new financing provided by not only Venturesome but also the Impetus Trust, Ashoka: Innovators for the Public, Skoll Foundation and Futurebuilders England. By providing risk capital and customised financial advice to small and medium-sized social-purpose organisations, it aims to build their capacity to achieve lasting social impact. Venture philanthropists supporting the work of Venturesome want to see their money working hard, recycling 4 or 5 times in contrast to the one-off donation of a traditional grant-maker. Venturesome uses investment mechanisms such as underwriting, unsecured loans and equity-like instruments (such as quasi-equity).
Since it was founded in 2002, Venturesome has demonstrated demand for its risk capital approach, the recycling of funds is ahead of target (82% weighted average recovery rate (historical plus expected losses) against 75-80% target. Furthermore, the fund has made a distinctive contribution to growing the UK’s social investment market - 4 years track record of the risk capital model, and leadership of the Social Investment Market Group.
Funding social entrepreneurs
Venturesome fills the gap in the financing spectrum between grants and bank loans by providing risk capital and advice to small and medium social enterprises that are UK based. Venturesome generally provides three types of finance:
- Pre-funding capital fundraising: bridging finance for fundraised projects
- Working capital: underpinning cash flow/ financial stabilisation
- Development capital: building new streams of income generation
As traditional grant-makers become more strategic, some are beginning to augment their grant-making toolkit, by, for example, providing loans or supporting intermediaries such as Venturesome in the social sector. They also are more often funding core costs, over a longer term, and focusing on fewer charities. Additionally, private investors increasingly are interested in blended value investing – or seeking both a social and financial return from their investments.