BigInvest's pioneering Social Buy Out Fund will help to create new social enterprises that also bring employment to disadvantaged people.
The fund, which BigInvest hopes will attract between £5m and £10m of investment, is expected to provide returns of between 5 and 10 per cent, with the added social return of growth and transformation in the social enterprise sector.
"It just struck me in this eureka moment that we spend a lot of time creating start-ups, so why couldn't we do scale-ups?" said Nigel Kershaw, chief executive of BigInvest. "Why can't we take firms and turn them into social enterprises? This would enable us to open new social enterprises very fast.
"We would avoid all the problems associated with start-ups, such as finance and growth. We are taking a buyout and acquisition model and saying 'here is a way you can use these financial instruments to create change'. We could then convert all workers from a minimum wage to a living wage."
BigInvest is hoping to raise £2m for two pilot projects that will test the scheme over the next year.
Allison Ogden-Newton, chief executive of Social Enterprise London, said: "I think this is a great idea. Its best chance is with small and medium-sized enterprises that are already very profitable, because my concern is the margin for profit.
"The obvious advantage is capacity, because this means you can step straight up to a profitable business, and you can cut out the angst and development in the early stages."
Meanwhile, Eaga, a social enterprise providing sustainable energy, has taken the opposite route and is currently preparing to float on the stock market.
A spokesman for the organisation said: "We have grown into a successful organisation, but there are other opportunities that we would like to move into. At present, we don't have the adequate access to capital that flotation would bring."