The Fund’s investments will range from £100,000 to £500,000 and finance the growth of existing social enterprises and earlier stage businesses.
The Fund intends to make between 25 and 30 investments having a 5 year duration.
Financial returns are expected to be generated through turnover and profit royalties, interest payments, and capital gains through equity sales.
NESTA’s investment represents the second large investment in the Fund following a £750,000 commitment from the Esmée Fairbairn Foundation. It has also attracted City institutions such as law firm Nabarro, accountancy group PricewaterhouseCoopers, and HSBC, all of which will help on a pro bono basis.
A statement reported Nigel Kershaw, CEO of Big Issue Invest, to say: “I am delighted with NESTA’s investment. It clearly demonstrates confidence in who we are, what we do and what we are trying to achieve. “Our Social Enterprise Investment Fund will provide risk capital for social enterprises that have the capacity for scale, profitability and significant social transformation. By proving that social enterprises can deliver both social and financial returns we can create an embryonic asset class and a sustainable source of capital to drive social change.
“This is a very exciting time to be in business as the recession is continuing to give birth to all sorts of great ideas that create social opportunity and environmental sustainability. We already have a strong pipeline of investment opportunities. Most are in the areas of jobs, education and training, health and social care and the environment.
“Through the fund we aim to show that social enterprises can improve the delivery of public services. With better public services we can deliver a better future for everyone”.
Jonathan Kestenbaum, chief executive of NESTA, said: “Social enterprises can deliver real growth and services that have the potential to relieve some of the burden currently on the public purse.
“It is a model that NESTA hopes will gain wider support as it offers an opportunity to solve problems that have been unresponsive to conventional solutions and are often financed by the tax-payer. Our social finance programme is showing how catalytic investment such as this can create lasting change”.