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CHAPTER 6 START-UP INTERVENTIONS
6.1 This chapter identifies targeted initiatives from the rest of the UK, and actions evident that support the formation of social enterprises, but that are not state-provided. We have highlighted some measures that might inform or add to existing provision in Scotland. The newness of most of the initiatives described, however, means that there is usually insufficient evidence as yet to verify the effectiveness or impact of the measures on start-ups.
6.2 The chapter describes initiatives that help to: create a social enterprise culture; actively stimulate new activity; develop the skills needed to get set up; provide start-up funding; provide an incubation space; offer early mentoring and advice; and accelerate the start-up process.
Raising Awareness
6.3 The latest evidence available from the DTI suggests that only some 26 per cent of people in the UK are familiar with the concept of social enterprise 32 (the detailed situation in Scotland is unclear). This lack of knowledge potentially restricts people's ability to make informed choices about the type of business they might set up.
6.4 There is an acknowledged need to raise the profile of social enterprise and encourage potential new entrants that this might be a business model for them.
6.5 Localised initiatives, such as that undertaken by Social Enterprise London and described in Box 6.1, have developed straightforward information and guidance materials that aim to introduce people to social enterprise and to help them to navigate the array of support available.
Box 6.1: The Starting Point Guide |
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This Guide is designed to encourage people to embark on social enterprise and enable them to use the support resources available. It provides a brief introduction to social enterprises for those unfamiliar with them, information about business support organisations and services, and advice on working with business support organisations. The Guide was published by Social Enterprise London on behalf of the Social Economy Taskforce. Further Information: www.sel.org.uk |
6.6 In England, the Office of the Third Sector has taken the lead in creating a Social Enterprise Ambassadors programme to raise awareness of the sector and encourage new entrants to it (see Box 6.2).
Box 6.2: Social Enterprise Ambassadors |
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This programme aims to raise awareness of social enterprise and to attract new entrants to the sector. Delivered by a consortium headed by the Social Enterprise Coalition, the programme will recruit and support 20 ambassadors for social enterprise. These Ambassadors will be social entrepreneurs who will commit some of their time to awareness raising activities, for example, through events and the media. Further Information: www.cabinetoffice.gov.uk/third_sector/social_enterprise |
6.7 Some initiatives have begun to recognise the power of the worldwide web to inform and harness the potential for social enterprise from among a wider audience. This is perhaps best evidenced by the recently launched Be Cause Awards scheme described in Box 6.3.
Box 6.3: The Be Cause Awards |
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The Be Cause Awards were set up by Bebo (an online social network for young people) and UnLtd, to tap into the interests of young people. The scheme enables more than 8 million UK members to devise a social enterprise idea and to vote for the best ideas from among those selected by an expert panel. The project that receives the most votes receives a £1,000 award, as well as ongoing advice from UnLtd to help it on its way. Further Information: www.becauseuk.bebo.com |
Stimulating Action
6.8 There is a view on the part of many that proactive action is required to transform interest in social enterprise into action. This is based on the belief that start-up groups require additional encouragement and support to develop potentially viable social enterprise ideas.
6.9 A number of initiatives have attempted to tap into the passion for social change and ethical business, by stimulating activity among targeted localities and groups. Various methods are being used.
6.10 Initiatives such as the Open Surgeries offered by Social Enterprise London ( SEL) are designed to provide an initial point of engagement with those interested in embarking on social enterprise (see Box 6.4).
Box 6.4: Open Surgeries |
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SEL's Open Surgeries are designed to give people who are new to social enterprise an insight into how it works and space to learn more - ask questions, get advice, and meet others starting-up or growing social enterprises. The Surgeries are free and run regularly. Events are also held on a quarterly basis that focus in-depth on a particular topic. Further Information: www.sel.org.uk |
6.11 Other initiatives, such as the Sparkplugs Programme (described in Box 6.5), work in deprived communities to recruit and support community activists and social entrepreneurs with the ideas and energy to get new ventures off the ground.
Box 6.5: Community Sparkplugs |
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The Centre for Public Innovation operates the Sparkplug Programme in four areas of South West England. The programme finds people with the brightest ideas - the sparkplugs - and gives them training, support, and small amounts of grant funding to help make their ideas reality. This support enables new community projects to get off the ground, some of which progress on to become social enterprises. An evaluation of the first phase of the Sparkplug Programme has demonstrated impressive results. Further Information: www.sparkplugs.org.uk |
6.12 Initiatives such as the Young Foundation's Launchpad Programme described in Box 6.6 are interesting in that they aim to generate new starts by focusing on the identification and incubation of ideas rather than on individual entrepreneurs.
Box 6.6: Launchpad |
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Launchpad aims to provide a platform for turning promising ideas into new social enterprises. It draws on current research and frontline experience to identify unmet social needs. It generates ideas to address these needs by bringing together leading experts, innovators and practitioners. It develops the best of these ideas, often working in joint ventures, into new sustainable and replicable/scalable social enterprises. Further Information: http://launchpad.youngfoundation.org |
Training
6.13 While people may be sufficiently motivated and have a sound social business idea, they may lack the knowledge and skills to turn it into reality. They may not have the skills to put together the business model, find a market, test its viability, or develop its full market potential.
6.14 As in any form of business creation, new-start social entrepreneurs will require a mix of enterprising skills and capabilities. These include the 'hard' economic knowledge of business and the 'soft' skills of entrepreneurship, innovation, and leadership.
6.15 A number of initiatives are now emerging to promote enterprise and leadership skills within the social enterprise sector. These often provide specific learning programmes to support the start-up process.
6.16 Scotland has already tested a seemingly effective model for training budding social entrepreneurs (the School for Social Entrepreneurs) and has a national publicly-funded training provider that is delivering an increasing array of provision.
6.17 Elsewhere in the UK, however, programmes of support are being tested to embed social enterprise within the education system. For example, the Cantilever Partnership has developed the Social Enterprise at Schools programme to provide information and support to schools (see Box 6.7).
Box 6.7: Social Enterprise at Schools |
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This initiative was developed by the Cantilever Partnership (a social enterprise itself) in association with Department for Education and Skills ( DfES) and others. It aims to promote the development of social enterprises at school and college locations. Based on a 'partnership schools' model, it provides information about social enterprise to young people and schools, and provides support to help set up social enterprises. Further Information: www.seas-online.org.uk |
Funding and Finance
6.18 New and fledgling social enterprises are likely to cite access to funding and finance as a particular barrier to starting up. There is an acceptance that many social enterprises will require an element of public funding subsidy or financial intervention, certainly where market failure exists.
6.19 Grants are usually seen as the answer to start-up and early phase financing for social enterprises. Demand for debt finance is often limited (particularly at the start-up phase) by the availability of grant funding and a cultural aversion to borrowing among those initiating the new activity.
6.20 There are now a growing number of funders explicitly focusing support on the social enterprise sector, some of which are providing catalytic funds to promote start-up work.
6.21 There is a small but increasing number of established UK funders, such as the Coalfields Regeneration Trust in Wales (see Box 6.8), which are beginning to use funds specifically to provide flexible support to start-up social enterprises, rather than to 'buy' particular project outcomes.
Box 6.8: Coalfields Social Enterprise Development Fund |
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The Coalfields Regeneration Trust, Community Enterprise Wales and The Scarman Trust have worked together to deliver a £1.4m pilot Social Enterprise Grant Fund aimed at stimulating new social enterprise in the former Coalfield areas. The fund offers a tailor made package of grant funding combined with professional advice, guidance, and training. It offers three levels of grants ranging from £500 to £60K, and an Associate Fund to support the costs of business consultancy. Further Information: www.coalfields-regen.org.uk |
6.22 Although the Unltd funding model has been firmly embedded in Scotland, this is going in new directions elsewhere in the UK. It is now being applied successfully to targeted client groups. A noteworthy example is Unltd's Refugee Initiative for Social Entrepreneurs ( RISE) scheme in England, described in Box 6.9.
Box 6.9: The Refugee Initiative for Social Entrepreneurs ( RISE) |
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RISE was set up by UnLtd with the Home Office and the European Refugee Fund to encourage refugees in England to form new activity groups. It provides grant awards of between £500 and £5,000 to help individuals and small groups of refugees, together with training, tools and other support. The scheme will fund and support more than 75 refugees over two years and will benefit over 2,000 people in the community. Further Information: www.unltd.org.uk |
6.23 Similarly, there are funding measures such as the Big Boost that have been set up to encourage and support social entrepreneurship among young people (see Box 6.10).
Box 6.10: The Big Boost |
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The Big Boost, which is funded by the Big Lottery Fund as part of its Young People's Fund programme in England, is supporting budding social entrepreneurs aged between 11 and 25. It provides awards of between £250 and £5,000 to support a wide range of youth ideas from school-based enterprises to larger scale social ventures. Since 2004 it has provided more than 300 awards to young people. Further Information: www.thebigboost.org.uk |
6.24 There have also been pilot initiatives such as the Enterprise for Inclusion (E4I) programme described in Box 6.11, which have demonstrated the potential to stimulate rural social enterprise activity.
Box 6.11: Enterprise for Inclusion (E4I) |
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E4I was a Defra-financed action research programme that examined the potential for rural social enterprise activity. It provided £1m of funding to 98 new and fledgling social enterprises in rural England. As well as funding, each project received advice/mentoring from an approved support provider. The initiative demonstrated significant demand for social enterprise among rural communities and highlighted the effectiveness of combined packages of grant and advisory support. Further Information: www.enterprise4inclusion.org.uk |
6.25 Adopting a somewhat different approach, the Department of Health's Social Enterprise Investment Fund (see Box 6.12) is attempting to open up a particular market to new entrants through the use of targeted set-up grants.
Box 6.12: Department of Health Social Enterprise Investment Fund |
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The Department of Health set up a Pathfinder programme that has invested £1.4m in 26 new social enterprises that are seeking to introduce innovative services in the health and social field. The Fund has provided set-up costs and access to wider business support. From April 2007, the Department will hold a Fund of at least £73 million over four years. Further Information: www.dh.gov.uk |
6.26 To date, less use has been made of loan funding as part of start-up initiatives. However, the Ulster Community Investment Trust described in Box 6.13 provides an example of how an established lender is taking financial products to new-start social enterprises, in this case as part of an integrated package of start-up support.
Box 6.13: The Ulster Community Investment Trust |
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The Ulster Community Investment Trust Ltd ( UCIT) has become the key provider of loan finance to social enterprises in Northern Ireland. Since 2001, its Loan Fund has assisted over 100 social enterprises, providing loans totalling more than £12m. UCIT now provides an integrated package of loan funding of up to £25K for enterprises supported as part of the Northern Ireland's national Social Entrepreneurship start-up scheme. Further Information: www.ucitltd.com |
6.27 Increasingly, both loan and grant funders of start-up activity are recognising the importance of integrated funding and technical assistance. The London Rebuilding Society's Smart Finance Programme described in Box 6.14 provides such an example.
Box 6.14: The Smart Finance Programme |
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London Rebuilding Society specialises in providing investment/finance to social enterprises in Greater London, and in helping them to acquire the skills to raise investment and run successful businesses. Its Smart Finance programme provides an organisational health check, assesses investment needs, and offers a mixture of specialist workshops and one-to-one consultancy from a Smart Finance coach to build 'investment readiness'. Further Information: www.londonrebuilding.com |
Incubators
6.28 Business incubation is a supported process that aims to reduce the failure rate, and improve the prospects for, start-up companies.
6.29 Successful incubation is about creating a supportive environment, usually a physical workspace with a range of shared facilities within which young enterprises can grow, coupled with the provision of a wide range of development support and other business-critical services.
6.30 Business incubation methods are increasingly being applied to the social enterprise sector throughout the UK and beyond.
6.31 There are a number of examples of successful social enterprise incubators in the UK, such as the Hub in London (see Box 6.15), which have been developed and managed by social entrepreneurs themselves.
Box 6.15: The Hub |
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The Hub is an incubator for social and environmental entrepreneurs. It offers flexible and atmospheric spaces for working, meeting and networking in the heart of Islington, London. The Hub has now been replicated in three cities (Bristol, Sao Paul, and Johannesburg). Further Information: www.the-hub.net |
6.32 While this type of incubation approach has now been extended to Scotland this has occurred largely an ad hoc or piecemeal basis. By contrast, and although not specifically focused on social enterprise, the Community Enterprise Centre Scheme in Ireland (see Box 6.16) has provided an impetus for the expansion of the physical infrastructure for business incubation across the country.
Box 6.16: Community Enterprise Centre Scheme |
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Since 1989 the Irish Government has invested £29.7m in the creation of 100 community enterprise centres (incubation spaces for small and fledgling firms and social businesses in areas of need). This is a community-led scheme, whereby 50% of the cost of the facility is provided by way of grant funding under the scheme and the community itself must raise the remainder from local sources. Further Information: www.enterprise-ireland.com |
Mentoring and Peer Support
6.33 Given that the social enterprise sector is still underdeveloped, start-up social entrepreneurs and enterprises may often develop in relative isolation. They may not have immediate access to a wider network of contacts that have already accumulated such experience.
6.34 Structured mentoring and peer support offers the opportunity for start-up social enterprises to tap into existing sources of expertise, knowledge, advice, and encouragement. This may be particularly important during the post-start phase where critical business challenges are likely to arise.
6.35 Various forms of business mentoring and networking support are now beginning to be applied to the social enterprise sector.
6.36 Initiatives such as the Partners in Leadership with Community Enterprise scheme run by Business in the Community (see Box 6.17) reflect a growing interest in applying private sector skills to the social enterprise sector.
Box 6.17: Partners in Leadership with Community Enterprise ( PILCOM) |
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The PILCOM scheme was operated by Business in the Community between 2003 and 2005 and matched 900 experienced business people with the leaders of social enterprises. Together, through at least six meetings and regular phone calls and emails, the partners were provided with the opportunity to find business solutions to the challenges faced by social enterprises and to share respective insights and experience. Further Information: www.bitc.org.uk |
6.37 Some schemes, such as BizFizz described in Box 6.18, have sought to stimulate, mentor and support socially entrepreneurial activity in the most economically deprived areas of the country.
Box 6.18: BizFizz |
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BizFizz was developed by the New Economics Foundation as an innovative programme for entrepreneurs (private and social). Its focus is on mobilising the skills and resources already within communities to support start-ups, micro and small enterprises. It does so by providing a BizFizz Coach who offers tailored one-to-one support, and access to the expertise and know-how of a local panel of mentors (e.g. community activists, community leaders, business people etc.). Further Information: www.bizfizz.org.uk |
6.38 Social enterprise mentoring initiatives are now also targeting particular client groups - in the case of Striding Out (described in Box 6.19) it is young social entrepreneurs that are the focus of attention.
Box 6.19: Striding Out |
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Striding Out is a social enterprise that supports young social entrepreneurs. It brings together entrepreneurs under the age of 30 to coach, train, and support each other. Its focus is on educating and inspiring young people about social enterprise and helping them through the challenges of starting and managing a successful social business. Further Information: www.stridingout.co.uk |
Accelerators
6.39 Reflecting the perceived potential to develop and grow new social enterprises, various hybrid forms of interventions are now being tested to accelerate the prospects for promising start-ups.
6.40 These initiatives: provide seed capital; rapidly assess and test out new ideas; enable the rapid dissemination of learning and successful innovations; and establish clear pathways for scaling-up the most promising social enterprise models.
6.41 Such approaches have so far been tested in a small number of contexts, and have used varying approaches.
6.42 Franchising and social franchising approaches have been tested, albeit to varying degrees of success, through CAN's Beanstalk Programme (see Box 6.20). This offered an approach whereby enterprises replicate their successful business formulas enabling others to start-up more quickly.
Box 6.20: Beanstalk Programme |
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Supported by the Phoenix Fund, CAN's Beanstalk Programme promoted and supported growth of some of the UK's best and most promising social enterprises through replication. Beanstalk provided advice and support using experienced professionals from social, business and franchise backgrounds. Support was tailored to the specific needs of each enterprise. Beanstalk also explored opportunities to make commercial franchises available to the social enterprise sector. Further Information: www.beanstalk-biz.org.uk |
6.43 The accelerator model is being applied to the health sector, through the NESTA-Young Foundation Health Innovation Accelerator. As described in Box 6.21, this focuses on speeding up the development of social enterprises in the health sector.
Box 6.21: Health Innovation Accelerator |
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The aim of this initiative is to stimulate innovative ideas and to turn these into new social ventures in the health field. Seed funding is provided by NESTA from the early stages of research and business planning, to incubate the new enterprises until other funders are brought on board. Technical assistance is provided by the Young Foundation's Launchpad team to support rapid development of the idea: concept definition, business planning, prototyping, and bringing on board relevant expertise. Further Information: www.health-innovation.org.uk |
6.44 A small but growing number of social investors such as Social Ventures Australia are adopting a targeted and selective model to identify and scale-up potentially high impact start-up social enterprises (see 6.22).
Box 6.22: Social Ventures Australia |
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The focus of Social Ventures Australia is on identifying and scaling innovative solutions to unmet social needs. It has adopted a 'venture capital model' to investing in promising start-up social enterprises. This includes: the rigorous appraisal and selection of potential investments; a year-long programme of mentoring for assisted social entrepreneurs; access to a modularised programme of training workshops; and ongoing and hands-on review of the impact of the portfolio of ventures. Further Information: www.socialventures.com.au |
Key Points
6.45 There are a number of main observations that have arisen from this chapter:
- there is a range of interventions that might contribute to an increased rate of social enterprise formation in Scotland, which go beyond traditional forms of funding, training, and advice, and are not just state-provided;
- increasingly initiatives are taking a segmented or differentiated approach, targeting start-ups in particular sectors (e.g. health), geographies (e.g. rural areas), and client groups (e.g. youth);
- various examples highlight the potential to mobilise, motivate, and support higher levels of socially entrepreneurial people from which start-ups will emerge; and
- there is increasing experimentation, and interest in, initiatives that seek to harness the brightest and best social enterprise ideas and accelerate their early development.
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