Posted by: bevmeldrum | December 10, 2007

New Investment Product for Social Enterprises

On 28 November 2007 Third Sector magazine reported that Venturesome, a CAF project, had launched a new investment product they are caling “quasi-equity”. You can read the article here.

Effectively, what happens is that the social enterprise sells a percentage of their future revenue to Venturesome – similar to selling shares in the enterprise.

New ways for social enterprises to access investment are always welcome. And this product is being promoted as being for those enterprises that have been unable to access traditional loan investment.

Maybe, it was the way the article was written, but I agree with Adrian Ashton, an independent consultant, who commented in Third Sector the following week, that it all sounded a bit too much like a loan.

The example given in the original article was of a social enterprise and registered charity that took on a £25,000 investment at an interest rate of 10 per cent.

It may be a riskier investment to Venturesome but is this not just a CDFI loan by any other name.

We are all for getting new investment into social enterprise – particularly as we are seen to be such a risk – and it is great to have access to new products but what we are really waiting for is and that will really get us all excited is when the social investment market grows up and starts offering some real alternative to high interest loans.

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