The Gritty Reality of Social Investment: Taking a look in the mirror… | Big Society Capital

You are here

The Gritty Reality of Social Investment: Taking a look in the mirror…

If I learnt anything from my 20 plus years in retail it was that the customer really is king and we ignore them at our peril.

It’s time to take a long hard look in the mirror and ask if social investment is working for those at its heart: charities and social enterprises.

Often real first hand experiences can be uncomfortable listening.  As one chief executive told me “getting social investment for my social enterprise was not a pleasant experience, I had to kiss and court an awful lot of frogs before I finally found the one!” While the good news is that the reward of the final investment helps to offset the pain of the journey, are we happy with the bumps in the road?

 

 

‘Time is of the essence’

Timing can be vital to the social enterprise or charity, they might ‘need’ the investment in order to be able to take on a contract or take the next action in a sequence of events.

So, as investors we need to ensure there is mutual understanding of the realistic time that the decision will take.

 ‘Due diligence is painful’

There is no easy way to say it. No organisation I have met either who has succeeded or failed in gaining investment has said that they enjoyed the process! The only upside is that the more times they do it, the more bearable it gets.

So we need to be frank and upfront about the challenges, as well as the gains.

‘Driving a hard bargain’

Negotiating the best deal is an everyday occurrence now, as we all seek best value and getting bang for our buck, and yet strangely potential investees often feel powerless to get a straight answer about what the cost of the finance will be. I have heard tales of first time investees waiting for the investor to confirm an interest rate or it being hiked in order to secure the deal. It may be that this is to mitigate risk but if so then why not get this elephant out on the table early?

Let’s face it if we were looking for a car loan or a mortgage deal we would absolutely expect to know the rate up front. As the customer gains confidence I can’t believe this isn’t set to change.

‘It’s all in the hands of the gods’

Deals that fall over late in the process have a really negative impact. Many organisations were shocked to find that a ‘done deal’ was suddenly turned down at the final Investment Committee hurdle. Especially if they’ve spent all their time and effort speaking to one lender, and have a match requirement (e.g. Big Venture Challenge), this can be catastrophic.

So, are we clearly communicating the steps to investment, who has sign off and what the rejection or deal failure at this stage is? How many deals come to mind that fit this profile?

‘I want to know why’

Learning from what went wrong, or what needs to change, is often the only way to justify the time and energy that went into seeking an investment. Too many social enterprises and charities say that they needed, and wanted, better quality feedback so that they could learn and move on. There is a great sense that once you are no longer a potential investment then the phone calls stop. So, are we equipped to have these courageous, and admittedly challenging, conversations?

Going back to the high street - what would your after sales or after customer contact scores look like if you didn’t respond to an enquiry? And would you be confident it would stand public scrutiny in an Amazon or Ebay style ranking?

I believe there is the will and commitment to do better but improvement gains pace when driven by self-assessment and self-awareness. So what we all need to do is to took a long hard look in the mirror and decide if we really like all that we see!

Last updated | 
21 March 2016

Comments

Add new comment