Government consults on £10m social enterprise fund

The Cabinet Office has launched a consultation on its new £10m risk capital fund to help social enterprises grow.

The Government has proposed that the fund, which was first announced as part of the Social Enterprise Action Plan in November, could be matched by an additional £10m of investment from the private sector in due course.

Key questions in the consultation include whether social enterprises encounter particular difficulty in accessing equity finance and whether venture capitalists' focus on established businesses means small enterprises are being left behind. The Government has also asked for guidance on how the fund should be managed – either by one fund manager running a single large fund or several fund managers overseeing smaller funds.

“This new fund will help many social enterprises grow their businesses and flourish,” said Campbell Robb, director general of the Office of the Third Sector. “Our proposals will also make it a catalyst for market change by bringing social enterprises together with private and independent investors. This is vital if we are to build a sustainable future for risk capital financing for social enterprises that is not reliant on government subsidy.”

Nigel Kershaw, chief executive of social enterprise finance provider Big Issue Invest, said he hoped the fund could use a growth model in which the investment is paid back out of future income, rather than an equity model, which involves selling shares. “This shouldn’t just be about equity-based risk funds – any venture capital fund can do that,” he said. “What we need is a fund that can be used to invest in growth to be paid out of income.”

All responses to the consultation must be received by 2 November.

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