The Big Venture Challenge will recruit 30 social enterprises which UnLtd will support in their attempts to raise money from investors, and will also match fund if they are successful in taking on investment.
It will help organisations raise between £50,000 and £250,000 of funding, and will provide match funding of up to £100,000 to organisations that are successful in raising capital.
The programme is open to charities, social enterprises and businesses with a social purpose. Other tranches of the fund, to support organisations working in other fields, will be launched in 2014 and 2015. Total funding for the programme is £8.5m.
Dan Lehner, director of ventures at UnLtd, said the first round of the challenge, which began in 2011, worked with 25 organisations and raised £1.2m of investment for 12 businesses. He said two-thirds of the money in the first round came from ‘angel investors’, who had never invested before.
But he said the challenge had also shown how much easier it was for profit-making businesses able to offer share capital to attract investment.
"The profit-distributing models we supported are the ones that moved fastest," he said. "We think it’s because there’s more return for the investors, and also because it’s easier to make investments in profit-making organisations.
"One of the things we’ve identified in our research papers is that we need to find a way to make it easier to get the same sort of investment into not-for-profits."