The Difference Incubator makes blended value a reality – making a better world and good returns – through the development of Investable Social Enterprises (ISEs).
TDI’s approach is to select social enterprises with great promise and potential that are currently stuck in the world of grant dependency. They take them through a rigorous and disciplined, but well supported, program of building a successful ISE. They work with these enterprises to help them secure their first round of genuine investment and can then continue helping them post-investment if needed.
The Social Enterprise Development and Investment Funds (SEDIF) provide tailored finance and support to help Australian social enterprises to develop, grow and sustain their work and impact. Government grant funding of $20 million seeded three SEDIF funds and this was matched with private investment, creating an investment pool of approximately $40 million. Although there has been significant interest from potential social entrepreneurs in these funds, the funds sight a lack of investment-ready social enterprises in which to invest. Many of the social enterprises that approach the SEDIF funds do not have viable business models or strong governance – they are not ready to take on the debt finance on offer. There is need to build the pool of investment ready social enterprises that are able to access the debt capital from the three SEDIF funds. More broadly, there is a need in Australia to identify and support social enterprises to become investable.
The Investment Readiness Program in the UK, specifically the Investment and Contract Readiness Fund (ICRF) provide an interesting model for capacity building in the social enterprise sector. The Investment Readiness Project examined the effectiveness of the ICRF in the UK, evaluated the need in Australia for a similar fund and suggested possible models for a Fund for Australian Investment Readiness (FAIR) to help social enterprises become investment ready.