How to be a social investor
So, what’s it all about?
Social impact investment uses private capital to generate social as well as financial returns.
Investors around the world are all interested in this groundbreaking use of finance. It provides sustainable ways to help tackle some of society's most intractable social and environmental challenges, by linking the power of markets to social innovation.
Social impact investing is an exciting opportunity to align financial return with building a responsible and sustainable society, which can see impact both within the UK and across the world.
Why is the UK the best place to make a social impact investment?
The UK is home to a great social economy, made up of thriving social ventures and the world’s most advanced social investment market.
Social problems from health and ageing to homelessness and unemployment affect every country around the world. The UK is leading the way in developing innovative and sustainable answers to these challenges. From leading socially minded companies, which make up close to 1 in 5 businesses, to the most attractive environment in the world for social impact investors, Britain is at the heart of achieving social impact at scale.
The social investment market in the UK is supported by the world’s first social investment bank in Big Society Capital, which will provide £600m into the UK market, alongside leading business support schemes. The UK also draws in the full range of investment opportunities, from retail to institutional investors. UK financial innovations include the first charity bond, social impact bond and the first mainstream Social Stock Exchange
The UK has specialist legal, accountancy and banking services, and the most complete network of financial intermediaries anywhere in the world.
To ensure an effective regulatory and tax environment, the UK government has supported the social investment market. This includes the world’s first tax relief for social investment, and the UK placing social investment on the G8 agenda. Find out about the UK government's strategy on social investment.
Social angel investing
Meganne Houghton-Berry, originally from the US, has been investing her capital, expertise, networks and energy since 2005, latterly focusing on high-growth commercial businesses that also address a social need. Megan is part of a group of other angel investors who are looking for social impact as part of their angel investments.
Megan invested in an £800,000 angel investment round in Aduna. Aduna is a social venture operating in the health and beauty sector. It produces products using the nutrient dense baobab plant and in doing so supports the communities growing it in Africa.
When you're a social investor you get really excited by the mission and it really feels wonderful when you know that you’re actually doing more than just investing your money, that you’re investing in a passion that you’re investing with a group of people who are trying to do something good in the world.
Success story #1
Institutional investment in the arts
Bank of America Merrill Lynch has made a number of social investments in the UK and the US. In 2015 BAML invested in the Arts Impact Fund for arts organisations that are delivering artistic and social impact.
Maintaining a vibrant arts sector is critical to the social and economic development of our communities, and with traditional funding sources constrained, social investments and the Arts Impact Fund offered an innovative financial solution with tremendous potential for scale. This innovative UK is the first of its kind in the world, and we are delighted to offer not only financial support but also our proven experience of global impact investing to help create sustainable change in UK communities.
Andrea Sullivan, Head of Corporate Social Responsibility at Bank of America Merrill Lynch
Success story #2
Global social investment funds
Ananda Ventures is one of the leading venture capital investors for social enterprises in Europe. Based in Germany, they invest in social change in high growth companies based in Europe and targeting social issues.
Through their Social Venture Fund, they invested in primary maths teaching platform Third Space Learning alongside UK based Nesta Impact Investments and the company’s existing angels.
Third Space Learning was founded in London in 2013 to address issues with maths attainment, and the social attainment gap, in UK schools. It has built a global online teaching community, using technology to provide live one-to-one maths support, during the school day, to reinforce what pupils are learning in class.
The investment was used to accelerate growth in the UK, increase investment in its platform and grow the number of teaching centres it operates around the world.
As pan-european venture capital investors, we are always positively impressed by the quality of deal pipeline from the UK, clearly driven in large part by a vibrant start-up sector but also by the UK Government's commendable will to support and develop the social enterprise sector. Third Space Learning is exactly the kind of scalable, technology-driven social business led by an outstanding entrepreneur and team that we want to invest in, grow and ultimately internationalise.
Lennart Hergel, Investment Director
Success story #3