• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
Venturesome   Social Purpose Finance 2009
 

Venturesome Social Purpose Finance 2009

on

  • 864 views

Paul Chengin esitelmä Demos Helsingin sijoittaja-aamiaisella.

Paul Chengin esitelmä Demos Helsingin sijoittaja-aamiaisella.

Statistics

Views

Total Views
864
Views on SlideShare
861
Embed Views
3

Actions

Likes
0
Downloads
7
Comments
0

1 Embed 3

http://www.slideshare.net 3

Accessibility

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    Venturesome   Social Purpose Finance 2009 Venturesome Social Purpose Finance 2009 Presentation Transcript

    • Venturesome – social purpose finance Paul Cheng Investment Manager, Venturesome The text in this document may be reproduced free of charge providing that it is reproduced accurately and not used in a misleading context. The material must be acknowledged as Venturesome copyright and the title of the document specified.
    • Agenda  Introduction to Venturesome  Funding needs and financial mechanisms  The challenges of unlocking capital  Case studies (c) Venturesome 2009 2
    • Venturesome: filling a funding gap  Charities are undercapitalised  Weak balance sheets  There are no social investors (just donors)  Our goal: lack of access to capital is no longer a major barrier to charities achieving their social impact  Our mission is to change the way society thinks about how charities and social purpose businesses should be financed (c) Venturesome 2009
    • Mad money – the irrational world of charity finance  Surpluses are bad  Cash is restricted  Price does not have to cover costs  Marginal costs of growth can be ignored  Overhead is a luxury and a distraction (c) Venturesome 2009
    • Our track record  Since 2002, we have offered over £12m to over 200 charities  Default rate is very low: <5%  We are currently managing a fund of £12m  Our investors are charitable foundations, banks and high net worth individuals (c) Venturesome 2009
    • The spectrum of venture capital involvement Mainstream VC Specialist VC VC / Social Social / VC Philanthropy PHILANTHROPIC COMMERCIAL DRIVERS DRIVERS SOCIAL / Environmenta l Commercial Social sustainability, Community Venture Investment in Enterprise CSR and SRI Development Philanthropy / Social / Investment / consideration Venture Charitable Environmenta Social s for Capital Initiatives l Sectors Venture Mainstream Capital VC Investors (c) Venturesome 2009
    • The spectrum of venture capital involvement Mainstream VC Specialist VC VC / Social Social / VC Philanthropy PHILANTHROPIC COMMERCIAL DRIVERS DRIVERS SOCIAL / Environmenta l Commercial Social sustainability, Community Venture Investment in Enterprise CSR and SRI Development Philanthropy / Social / Investment / consideration Venture Charitable Environmenta Social s for Capital Initiatives l Sectors Venture Mainstream Capital VC Investors Venturesome (c) Venturesome 2009
    • Helping individual charities – what we offer 1. Working capital to cover cash flow fluctuations 2. Development capital – ‘hard’ and ‘soft’ 3. Pre-funding of fundraising – bridging loan 4. Underwriting – standby facilities (c) Venturesome 2009
    • Main financial mechanisms used by Venturesome  Underwriting / standby facilities  undertaking to provide financing for a particular project if budgeted income does not materialise  Unsecured loans  not taking security on the charity’s assets  Equity and quasi-equity  the return the funder receives is linked to the financial success of the venture (c) Venturesome 2009
    • Matching financial mechanisms to funding needs (c) Venturesome 2009
    • Matching financial mechanisms to funding needs HIGH CHANCE OF REPAYMENT LOW CHANCE OF REPAYMENT (c) Venturesome 2009
    • Matching financial mechanisms to funding needs HIGH CHANCE OF REPAYMENT Secured loan LOW CHANCE OF REPAYMENT (c) Venturesome 2009
    • Matching financial mechanisms to funding needs HIGH CHANCE OF REPAYMENT Secured loan Standby Facility LOW CHANCE OF REPAYMENT (c) Venturesome 2009
    • Matching financial mechanisms to funding needs HIGH CHANCE OF REPAYMENT Secured loan Standby Facility Overdraft LOW CHANCE OF REPAYMENT (c) Venturesome 2009
    • Matching financial mechanisms to funding needs HIGH CHANCE OF REPAYMENT Secured loan Standby Facility Overdraft Unsecured Loan LOW CHANCE OF REPAYMENT (c) Venturesome 2009
    • Matching financial mechanisms to funding needs HIGH CHANCE OF REPAYMENT Secured loan Standby Facility Overdraft Unsecured Loan Patient Capital LOW CHANCE OF REPAYMENT (c) Venturesome 2009
    • Matching financial mechanisms to funding needs HIGH CHANCE OF REPAYMENT Secured loan Standby Facility Overdraft Unsecured Loan Patient Capital Quasi-equity LOW CHANCE OF REPAYMENT (c) Venturesome 2009
    • Matching financial mechanisms to funding needs HIGH CHANCE OF REPAYMENT Secured loan Standby Facility Overdraft Unsecured Loan Patient Capital Quasi-equity Equity LOW CHANCE OF REPAYMENT (c) Venturesome 2009
    • Matching financial mechanisms to funding needs HIGH CHANCE OF REPAYMENT Secured loan Standby Facility Overdraft Unsecured Loan Patient Capital Quasi-equity Equity LOW CHANCE OF Grant REPAYMENT (c) Venturesome 2009
    • Matching financial mechanisms to funding needs HIGH CHANCE OF REPAYMENT Secured loan Standby Facility Overdraft Unsecured Loan LOW RISK HIGH RISK Patient Capital Quasi-equity Equity LOW CHANCE OF Grant REPAYMENT (c) Venturesome 2009
    • Matching financial mechanisms to funding needs HIGH CHANCE OF REPAYMENT Secured loan Standby Facility Overdraft Unsecured Loan LOW RISK HIGH RISK Hard Patient Development Capital Capital Quasi-equity Equity LOW CHANCE OF Grant REPAYMENT (c) Venturesome 2009
    • Matching financial mechanisms to funding needs HIGH CHANCE OF REPAYMENT Secured loan Standby Facility Overdraft Unsecured Loan LOW RISK HIGH RISK Hard Working Patient Development Capital Capital Capital (closed) Quasi-equity Equity LOW CHANCE OF Grant REPAYMENT (c) Venturesome 2009
    • Matching financial mechanisms to funding needs HIGH CHANCE OF REPAYMENT Secured loan Standby Facility Overdraft Unsecured Loan LOW RISK HIGH RISK Hard Working Pre-funding Patient Development Capital Capital Capital Capital (closed) Fundraising Quasi-equity Equity LOW CHANCE OF Grant REPAYMENT (c) Venturesome 2009
    • Matching financial mechanisms to funding needs HIGH CHANCE OF REPAYMENT Secured loan Standby Facility Overdraft Unsecured Loan LOW RISK HIGH RISK Hard Working Pre-funding Working Patient Development Capital Capital Capital Capital Capital (closed) Fundraising (open) Quasi-equity Equity LOW CHANCE OF Grant REPAYMENT (c) Venturesome 2009
    • Matching financial mechanisms to funding needs HIGH CHANCE OF REPAYMENT Secured loan Standby Facility Overdraft Unsecured Loan LOW RISK HIGH RISK Hard Working Pre-funding Working Soft Patient Development Capital Capital Capital Development Capital Capital (closed) Fundraising (open) Capital Quasi-equity Equity LOW CHANCE OF Grant REPAYMENT (c) Venturesome 2009
    • Matching financial mechanisms to funding needs HIGH CHANCE OF REPAYMENT Secured loan Standby Facility Overdraft Unsecured Loan LOW RISK HIGH RISK Hard Working Pre-funding Working Soft Patient Development Capital Capital Capital Development Capital Capital (closed) Fundraising (open) Capital Quasi-equity Equity LOW CHANCE OF Grant REPAYMENT (c) Venturesome 2009
    • Matching financial mechanisms to funding needs HIGH CHANCE OF REPAYMENT Secured loan Standby Facility Overdraft Unsecured Loan LOW RISK HIGH RISK Hard Working Pre-funding Working Soft Patient Development Capital Capital Capital Development Capital Capital (closed) Fundraising (open) Capital Quasi-equity Equity LOW Grant INCREASING SUPPLY LITTLE CHANCE OF REPAYMENT SUPPLY (c) Venturesome 2009
    • Matching financial mechanisms to funding needs (c) Venturesome 2009 15
    • Who funds what? HIGH Increasing evidence CHANCE OF Secured loan of commercial REPAYMENT finance available Standby Facility Overdraft Unsecured Loan LOW RISK HIGH RISK Working Pre-funding Hard Working Soft Capital Capital Patient Development Capital (open) Development (closed) Capital Fundraising Capital Capital Quasi-equity Equity LOW Need for further supply CHANCE OF of capital and REPAYMENT Grant development of financial instruments (c) Venturesome 2009 16
    • Charity or business? (c) Venturesome 2009
    • Social enterprise What is “social enterprise”? (c) Venturesome 2009
    • Model 1 “Profit Generator” (c) Venturesome 2009
    • Model 2 “Trade off financial and social returns” (c) Venturesome 2009
    • Model 3 “Lock-step” (c) Venturesome 2009
    • The investor universe + 8% (c) Venturesome 2009
    • The investor universe + 8% Market-rate return (c) Venturesome 2009
    • The investor universe 0% + 8% Market-rate return (c) Venturesome 2009
    • The investor universe 0% + 8% Capital-protected Market-rate return (c) Venturesome 2009
    • The investor universe - 100% 0% + 8% Capital-protected Market-rate return (c) Venturesome 2009
    • The investor universe - 100% 0% + 8% Grant-makers Capital-protected Market-rate return (c) Venturesome 2009
    • The investor universe - 100% - 15% 0% + 8% Grant-makers Capital-protected Market-rate return (c) Venturesome 2009
    • The investor universe - 100% - 15% 0% + 8% Grant-makers ? Capital-protected Market-rate return (c) Venturesome 2009
    • Successful social enterprise IDEAS PEOPLE FINANCE (c) Venturesome 2009
    • Effectiveness vs Efficiency QUALITY ACCESS COST (c) Venturesome 2009
    • The challenges to unlocking capital  Changing the grant-making mindset (c) Venturesome 2009
    • The challenges to unlocking capital  Changing the grant-making mindset  Creating guarantee funds (c) Venturesome 2009
    • The challenges to unlocking capital  Changing the grant-making mindset  Creating guarantee funds  Using subordinated debt (c) Venturesome 2009
    • The challenges to unlocking capital  Changing the grant-making mindset  Creating guarantee funds  Using subordinated debt  Creating retail social investment products (c) Venturesome 2009
    • The challenges to unlocking capital  Changing the grant-making mindset  Creating guarantee funds  Using subordinated debt  Creating retail social investment products  Exploring the negative return spectrum (c) Venturesome 2009
    • The challenges to unlocking capital  Changing the grant-making mindset  Creating guarantee funds  Using subordinated debt  Creating retail social investment products  Exploring the negative return spectrum The emergence of a new financial services industry around social enterprises (c) Venturesome 2009
    • “Not everything that counts can be counted. And not everything that can be counted, counts.” Albert Einstein (c) Venturesome 2009
    • Case studies – working capital  Mental Health Media (2006)  low reserves but refocusing of activities required unrestricted funds to meet expenditure  open working capital needed  standby facility of £50,000  remains undrawn as funds were raised as expected  Questscope (2004)  grants from World Bank and EU up to 14 months late, resulting in significant working capital problems  closed working capital needed  unsecured loan of £60,000  repaid in full once grant payment was received (c) Venturesome 2009
    • Case studies – development capital  Women Like Us (2005)  budget shortfall plus a cashflow difficulty arising from committed funding being paid in arrears  open working capital and soft development capital needed  £25,000 standby facility and £25,000 unsecured loan  £20,000 drawn down, being repaid monthly  Facility extended in 2007; £50,000 standby facility offered  Charity Technology Trust (2007)  transitioning from grant-dependency to a more commercial model  soft development capital needed  £50,000 in the form of a Revenue Participation Right  first payment expected April 2008 (c) Venturesome 2009
    • Case studies – pre-funding of fundraising  St. Cuthbert’s Church (2003)  third phase of extensive redevelopment project required building contracts to be signed, but fundraising was not 100% committed  pre-funding of fundraising  £80,000 standby facility  undrawn, facility ‘recycled’  facility renewed 2007  £50,000 underwriting ahead of BLF grant  undrawn, facility recently recycled (c) Venturesome 2009
    • Contact details: Paul Cheng pcheng@cafonline.org +44 207 832 3056 (c) Venturesome 2009