Pub. The wee hours. Table of opinionated, belligerent, boozed up social entrepreneurs who've known each other for years: "Liam, you're destroying your legacy by giving credibility to those corporate and private banker *****!" shouts one of them at me, finger in my face. Cue couple of hours of Jameson wisdom and Guinness insight. Such fun.
The emerging social impact investment scene in the UK is shaking things up and old certainties are being challenged as new money and new people enter the world of the socially enterprising. In 2013 I helped set up two funds totalling £30m plus. One is backed by Centrica and focuses on energy entrepreneurs . At Ignite – "have you got the energy to change society?" – we invest across the spectrum from high risk start ups to proven models which need a million quid to seriously scale. Impact Ventures UK focuses on growth social enterprises and brings to the UK the wealth of experience LGT has gained from its portfolio of social business investments around the globe.
Our first IVUK investment of £800,000 in to K10 was especially satisfying for me given my Irish family's history as brickies and navvies on England's building sites. The pipeline of potential investments is pretty good – not brilliant though and I wonder what it will look like once we've got through the first few rounds.
I love reading the reports of our investment teams. A lovely mix of wow inspiration and cold-eyed analysis of the social and financial claims of the businesses they investigate. I have been shocked at the fragility and lack of professional rigour of some well-known enterprises which have popped up on our radars. One or two clearly are kept alive only by the energy and charisma of their founders.
It angers me that some social entrepreneurs still seem to believe that good intentions and great stories should make the cash flow to them. As the social investment market grows more and more social enterprise rabbits will be caught in the unforgiving glare of the professional investor's headlights. This is a very good thing.
This phrase from a recent report to one of the investment committee sums it up: "Poor reporting and the lack of rigorous metrics are a common problem for many social enterprises that we review." I want to see this in the near future: "Excellent reporting and honest rigorous metrics are common for all the social enterprises we review."
The discussions around the investment committee tables about how social and financial can come together in one value proposition are endlessly fascinating. There's nothing like having to decide to release a million quid or not to focus the collective mind of the interplay between brute commercial realities and the uncertainties of future social impacts.
The wholly legitimate on-going debates about 'social investment' – elitist bullshit syphoning money away from austerity hit grassroots or exciting pioneering early days of a new way of doing business – has been the background noise over the last couple of years as we have developed these funds.
Talk is cheap and easy so we intend to answer critics through our actions. Our goal is to demonstrate through the quality of our investments and the ongoing support we give that we are adding genuine lasting value where it matters – not in conferences, blogs and social media but in the robust financial health of our social enterprise partners and the deepening quality of their social and environmental impacts.
I'm so looking forward to the next year.
Some advice to potential investees:
Be ambitious but don't bullshit – you will be found out
Data beats opinion every time
Under promise, over deliver
Do your homework and understand who you are talking to
Know the limits of your charm
Don't wear trainers to an investment pitch
Liam Black has led some of the UK's best known social enterprises and is the co-founder of Wavelength www.thesamewavelength.com. He is an adviser to Ignite and Impact Ventures UK and everything written above are entirely his own views. Follow him on Twitter at @LiamABlack
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