Hot Air or a New Way Forward?
Our recently created Responsible Investment Advisory…
As private equity and venture capital practitioners, our members are very much part of the economic mainstream. As such, they recognise that responsible ownership and business success go hand in hand. Their investments are made on behalf of large public and private sector pension funds, insurance companies, government agencies and private foundations, all of which take responsible business seriously.
Private equity and venture capital firms and individuals are also actively involved in social and sustainability issues. Within the industry, there is a long-standing culture of personal giving and other kinds of support for social sector organisations. Increasingly, the industry is developing more commercial and quasi-commercial models with a mix of social and financial returns, as outlined in the spectrum of private equity involvement below.
This spectrum highlights the activity from purely commercial investment to philanthropic giving, with various forms of socially-driven investment between. The range of activity is extensive across our membership and we encourage members to map their current activities against these categories; with a view to articulating the social value the industry is creating. For an example please click here.
Fully commercial VC/PE investments
Many of our members already invest in companies that operate in the social sphere (ie health, education or environment-related opportunities) or clean technology or similar sectors where the “sustainability” agenda is prevalent.
Social mission-driven VC/PE investments
Our members involved here seek a full commercial return on their investments - for example, specialist funds operating in the social and environmental arenas, or in deprived economic areas. Bridges Ventures is one example that does both - they seek to generate a commercial return while making investments in companies located in regeneration areas and/or social sectors like education, healthcare and the environment.
Philanthropic Investments
Those of our members involved in this area give money away to charities or social enterprises with a view to achieving a social impact with no financial return. They see themselves as active investors, not passive donors. For an example please click here.
Venture philanthropy is key to this area; it represents opportunities for VC/PE houses to leverage their core skills, as well as their financial resources, to achieve a social impact.
Impetus Trust and Private Equity Foundation (PEF)
BVCA members’ primary focus in the field of venture philanthropy is with two main organisations, Impetus Trust and the Private Equity Foundation (PEF). Both of these organisations incorporate stringent private equity-style due diligence processes when assessing potential portfolio charities, and adopt a high engagement and rigorous measurement of performance once the agreement to invest has been taken. Support is typically agreed over a three to five year time frame. The business model they use provides strategic funding combined with private equity-type expertise in helping charitable organisations leap to a new level of influence and impact; securing a growth trajectory with a cost-effective delivery model and a diversified funding mix.
Impetus Trust pioneered one of the most effective models of charity support in the UK, winning the prestigious 'top grantmaker' award last year. This leading venture philanthropy organisation helps charities and social enterprises deliver their services more effectively to more people, so they can have a much bigger impact in ending the cycle of poverty in the UK. Impetus invests in charities addressing economic disadvantage through programmes and services that increase the skills, education and employability of the poorest 20% of the population. Leverage is part of the model: for every £1 in Impetus cash invested in the portfolio charities, another £5 is generated from co-investment and the value of pro bono expertise. Charities backed by Impetus increase the number of people they help by an average of 53% a year, and grow their turnover by an average of 29% a year - six times the sector average! More on www.impetus.org.uk.
PEF is focused on one of the most urgent issues of our time, youth unemployment. PEF is a vehicle through which 70 private equity firms, their banks and advisors, donate both cash and time. It has raised £11m in just two years and supports 12 education and employment charities. The board is run by nine private equity professionals and the team includes a mix of expert and business skills. The Foundation gives firms the opportunity to engage with charities and enable the next generation to succeed.
BVCA is keen to hear from members with interests in this field. All ideas and feedback on this aspect of member activity should be directed to Andrew Graham, Chief Operating Officer, on agraham@bvca.co.uk or 020 7420 1800.
In the last month, the private equity sector has…
