PORTEFEUILLE

The Social Entrepreneurship – Impact & Finance (seif) works to strengthen social entrepreneurship while fostering professionalism within the field by offering social entrepreneurs (SE) a series of services and programs specially designed to respond to their needs according to their stage of development. An essential part of this work is to contribute to closing the existing funding gap for SE to ensure their sustainable development. This lack of funding is a growing problem as more social enterprises move from the piloting to the growth phase.

Yet, the opportunities for interaction between the entrepreneurs and impact investors are still limited, as the actors’ understanding and awareness of each party’s expectations and particular needs, limiting the chances for successful investment deals.

To help solving this, in 2014 seif decided to develop in collaboration with the CTI a program directed to SE looking for finance: the "Social Entrepreneurship Label certified by seif", or “seif Label”. This was a tailored program that aimed to coach SE on how to clearly, convincingly and credibly show their social impact and potential for economic success to increase their chances of investment. But two years after first implemented and despite the positive feedback of both the participants and national and international experts involved in the program, it was clear that the original format of the scheme made it impossible to scale it. Consequently, during 2016 seif had focused on the development of a new and improved version of the program that would allow for its scalability and facilitate the participation of as many social entrepreneurs in the growth phase as possible. The result is the “Impact Investment Readiness (IIR) program”.

The IIR program is thought as an online service with an additional consultancy service that could be added as and when needed by the social entrepreneurs, and which could be done online or in person. It seeks to contribute to the development among the social enterprise community of the skills and knowhow necessary to develop the documents and information required by most impact investors, while giving social entrepreneurs a practical holistic understanding of the investing process and ensuring the high quality of their business and financial plan. For that, the IIR program is structured in 4 modules:
- Business model: companies’ business plans will be revised and assess by a group of experts who will give them feedback on how to improve it.
- Impact measurement: all participants will have to design and write an impact report where their social effects are clearly stated and impartially measured.
- Financial models and instruments: besides having to develop their own financial model, balance sheet, cash flow, etc. participants will be also informed about the profiles of different investor types, the option to better monetize impact, the pros and cons associated with different types of capital, etc.
- Negotiations and Terms & Conditions of deals (e.g. participation and information rights, key person provisions, terms for future financing rounds and new investors, board setup, etc.), and Exit strategies.

The program also aims to facilitate the interaction between social entrepreneurs and impact investors to increase the opportunities for investment. As a result, seif is integrating the IIR program in its broader offer, including its Impact Investors Circle, where social entrepreneurs would invite to pitch before active investors. Moreover, parallel to the IIR seif is also developing the Impact Network Platform, an online space that aims to bring together the most relevant players within the fields of impact investing, social innovation and social entrepreneurship to form a network of universities experts, coaches, investors and specialist in related areas where they can exchange best practices, ideas and experiences to facilitate and promote the development of collaborative activities.

Seif sees its support services as complementary to the offerings of the CTI. However, while the CTI focuses on technology- and science-based start-ups, seif concentrates on companies looking to have a social impact. Despite these initial differences, the close collaboration between the two organisations is extremely beneficial for the community, as start-ups from all sectors and with all aims are supported either by seif or by CTI in a streamline and optimised manner. It is because of this that the seif IIR program currently in development has been supported by CTI, providing SE without a technological or science angle a comparable support to the CTI Start-up Label.

Moreover, the IIR program is part of the also developing Impact Network Platform a “stop” for all actors within the field of social entrepreneurship and impact financing that aims to promote and further collaboration between the different actors in the field. The final objective is to strengthen the flourishing impact investing sector in Switzerland to guarantee the long term sustainable development of social entrepreneurship.

15 social entrepreneurs were invited to take part in the Impact Investors Circle pitching events where they had the opportunity to present their business and receive feedback active impact investors, as well as network with them. As a result, during 2016 alone 6 of the 15 start-ups successfully closed their funding phase (based on a co-investing model), 1 is currently undergoing the due-diligence process, and 6 more are under-consideration.
Moreover, all social entrepreneurs went through a pre-due diligence process and received training and consulting support before and after pitching to investors to make sure their business matched the impact investors’ requirements. Additionally, 6 social entrepreneurs are taking part in the pilot of the impact measurement course. At the end of the course, participants are expected to be able to develop the 5-steps framework to assess their social (and/or environmental) impact in society. The course will finish in February 2017.

Finally and on the investors’ side, seif established the “Community program”, an educational program specially designed for impact investors to help them understand the impact investment process as well as the potential challenges and opportunities that investing in social entrepreneurs can bring them. This program was structured in 8 workshops that covered the different stages of impact investing in a comprehensive yet easy-to-understand way. Furthermore, to make sure that investors would be able to apply the theory in practice, real life case studies were used throughout the program and pitching events were organised to give investors the opportunity to get in touch with social entrepreneurs in which they could invest.