Jonathan Jenkins has good news. The director of ventures at Unltd, a charity set up to promote and support social entrepreneurship, is keen to encourage would-be entrepreneurs to think big.

Jenkins has identified longer-term support for projects as a missing piece in the jigsaw of investment. “There’s a gap between the top end of awards and those that most funding bodies offer,” he says. He explains that it is not economical for funders, in terms of their returns, to offer awards of between £50,000 and £200,000 to entrepreneurs, although he believes that this gap is narrowing. “Nature abhors a vacuum so it’s something that will change,” he says.

Entrepreneurs, Jenkins says, are often confused about what sort of funds they can apply for when they want to expand and grow their ventures. They may be applying for bank funding, but have no assets or no cash flow, for example.

“There are increasing amounts of investment for social entrepreneurs, but lots of entrepreneurs don’t know which sort of fund to apply for,” Jenkins says.

Even once you’ve found the right funds there are still several steps on the journey towards investment readiness. “Funds providers aren’t seeing enough entrepreneurs with the right matching criteria,” Jenkins says.

Strong candidates for funding are good at making their aims tangible. Any business looking for investment faces the same challenge – their aims - and thus their numbers - must be both credible and tangible. But social enterprises must also ensure that their social aims are extremely clear. “The longer the track record the better,” says Jenkins, “They must prove they can tackle their issue locally, then regionally, then nationally.”

Motiv, a Manchester-based social enterprise that tackles the issue of truancy in schools by rewarding and encouraging good attendance, is one example of a social enterprise that has managed to successfully grow their model. They launched a pilot scheme at one Manchester school in 2005, and have now spread their model out to 170 schools and are on a journey towards further expansion.

Rose Marley, a founder and co-director of Motiv says that the process of applying for funds for expansion has not been easy. “I’ve never been asked for so much detail by a bank,” she says. “They need precise details, and it’s a lot of work to pull together the information the funders need.”

Deciding to expand is a tipping point,” Jenkins explains. “Enterprises have to ask themselves ‘do we stay as we are or do we grow’?”

The answer for Motiv was growth. The enterprise had impressive results to show funders, while its social value was readily quantifiable. For example, in Oldham, 54 per cent more pupils attended school for 100 per cent of the school day during the Spring 2008 term than had in the previous year. Tangible data that enabled them to secure a £200,000 loan from a social investment fund.

“This is considerable growth. Up until now they’ve grown organically with grant support – this is a seismic step,” Jenkins says. But gaining outside investment can be fraught with difficulty and Jenkins points to a gap between what entrepreneurs think investors want to see and what really are credible results.

“It’s natural to try and make [your enterprise] look as attractive as possible,” he says. “But if the investor can start shooting holes in the numbers early on, its credibility falls apart.”

On the flip side, entrepreneurs can be overly wary of external shareholders, fearing that they will have to compromise their aims and ideals.

However, Jenkins believes that’s not necessarily the case: “I see external investment as a positive. You can boost your board of trustees, and the right external investor can be extremely helpful,” he says.

Jenkins has a long track record in commercial business. He was a joint managing director of Ofex, a stock exchange for small companies, and fundraised for small and medium sized enterprises for seven years before joining Unltd.

“In the business world investment readiness is an industry in itself, and now there’s an increasing recognition of investment readiness as an issue in the entrepreneurial sector,” he notes.

www.unltd.org.uk
www.motiv.org.uk