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Breakthrough programme raises stock of social enterprises

By Paul Jump, Third Sector Online, 2 November 2007

A pioneering support and investment scheme has helped social enterprises to increase their turnovers by an average of 20 per cent in two years.

The Breakthrough initiative, started by the social enterprise support organisation CAN and private equity firm Permira, said it also saw the enterprises’ social impact rise by 40 per cent between 2005 and 2007.

The programme was designed to address perceived barriers to the growth of social enterprise, such as a lack of access to suitable finance and staff, the absence of external stimuli such as competition and the tendency for enterprises to underestimate the value of their products.

Each of the five enterprises involved received an average of £105,000 in investment. CAN and Permira also offered a total of two months in working hours of support and mentoring.

A CAN spokeswoman said Permira had received no return on its investment of £690,000 because, in CAN’s view, the social enterprise sector is “not yet ready to give market-rate returns”. Almost 20 per cent of Permira’s London staff were involved in the programme.

Damon Buffini, managing partner of Permira, said: “We found that there are many similarities with our day job, where we back entrepreneurs, people with energy and vision. We found social entrepreneurs who do exactly the same thing but with a social context, and that really had some resonance with our values.”

Permira has committed itself to investing another £1.4m in an extension of the programme called Breakthrough 2. CAN hopes to raise a total of £5m, which it will invest in up to 15 social enterprises over three years.

The CAN spokeswoman said all of Breakthrough’s existing beneficiaries were interested in continuing their involvement, but she said other companies were welcome to approach CAN if they had existed for more than three years and had turnovers of between £500,000 and £2.5m.

Adele Blakebrough, chief executive of CAN, said she hoped Breakthrough would set an example of the kind of support established social enterprises need. “The Government is focused on supporting start-ups rather than the more established social enterprises, which have huge potential but are struggling to scale-up,” she said. “Breakthrough was set up to address these issues, and we are delighted that our efforts are starting to make a real difference.”