It’s a pleasure to welcome so many angel investors and related organisations to 11 Downing Street to celebrate the enormous potential that angel investing presents for Britain’s burgeoning social sector.
I’d like to thank the social and business angel groups who have worked with Cabinet Office to organise this evening’s event.
Like many start-up businesses, fledgling social ventures often face persistent barriers which can prevent them succeeding, such as lack of finance, lack of expertise and limited access to markets.
For many promising enterprises, the support from angel investors represents the ‘big break’ that can help them overcome these barriers and fulfil their potential.
There are currently an estimated 18,000 angel investors in the UK, and they invest about £850 million in early stage small businesses each year, which is about 2 and a half times more than venture capitalists do.
So to those angel investors here today, I’d like to say “thank you”. Because small businesses go on to become big businesses, creating jobs, investment and wealth and helping our country prosper, so ultimately we all benefit from their success.
But we believe angel investors can also play an important role in increasing the supply of capital for young social ventures, which is what today is about.
The UK already has the most developed social economy in the world. Social enterprises currently employ over 2 million people and contribute £55 billion to the economy each year.
This is a fantastic start – but we’re only scratching the surface.
The UK is a nation of entrepreneurs and capitalists; we also have a fantastic heritage of philanthropy and social reform. Too often we think of these traditions as being separate, when it should be perfectly possible for people to invest in a way that makes good business sense while also supporting good causes.
It’s about combining financial hard-headedness with altruism and social concern – allied together these can be an incredibly powerful and effective force.
Look at issues like homelessness, reoffending or long-term unemployment – these complex problems aren’t new, but the solutions have eluded successive governments for decades.
Government doesn’t have all the answers, and social ventures are often better able to tailor services around the needs of communities and individuals; they can be more responsive and agile and can help find the kind of lasting and comprehensive solutions that are necessary.
I’m proud of the part this government has played to bring forward new forms of social finance, including the first Social Investment Tax Relief, creating the first Social Impact Bonds, passing the Social Value Act and helping to launch Big Society Capital, the world’s first social investment bank, with £600 million from dormant bank accounts.
But government can’t do it alone. Nor should it, because the best and most successful movements are always the ones that grow from the grassroots rather than top down.
So the fact that an angel movement is now emerging in the social sector is fantastic.
Social angel investing
There are already some great examples of social angels making a decisive difference – not just to the ventures they support, but to the individuals and communities who benefit in turn.
Rapanui, for instance, was established by young social entrepreneurs to manufacture clothing from sustainable fabrics in sustainable factories. They’ve set up base on the Isle of Wight with a mission to alleviate local unemployment. And thanks to the support of an angel investor the company is on track to help over 200 people into long-term employment by the end of next year.
So angel investors can help social enterprises grow and succeed, enabling them to make a lasting social contribution.
Tonight we are going to hear from two compelling social organisations, Third Space Learning and FC United, to whom angels have been critical for their growth.
Third Space Learning works with schools to connect children from all backgrounds with maths tutors from across the globe. This social tech start-up was incubated by a Cabinet Office-backed social incubator. It was then supported by a group of angel investors – many of whom are here tonight – to raise the finance necessary to reach more children in more schools.
FC United of Manchester, which was created as a community alternative to mainstream football clubs, last year started to raise funds to build a football stadium. After a hugely successful £2 million community share issue, angels supported the club in a £275,000 loan stock issue, which was one of the first deals in the UK to benefit from the new Social Investment Tax Relief.
I’m delighted to see this movement of social angels growing across the UK: in the last few months alone social angel networks have formed in Manchester, Birmingham and Edinburgh.
This is thanks to the tireless work of social angel supporters such as Clearly So and the UK Business Angel Association, as well as the social incubators like Bethnal Green Ventures and Wayra UnLtd, and many others who are here tonight.
And I’m pleased that government initiatives such as the new Social Investment Tax Relief – the first such scheme in the world – and our backing of 10 new social incubators around the country, have supported the acceleration of social angel investing.
So, in conclusion, the social angel sector in the UK is growing rapidly and is receiving global attention. We’re on the cusp of something hugely exciting and transformational, but the best is yet to come.
We have 100 angels here today – half of you have already invested in social ventures, the other half might be thinking about, and may want to learn more.
So to those of you who are already social angels please keep on doing the fantastic things you do. Today we’re celebrating your achievements because we want others – many others – to follow in your wake.
And to those of you considering social investment, then I would encourage you to talk to some of the social investors here today and find out about the opportunities and the benefits that are available. You have the power to make a difference: not just to a single venture, but to individuals, communities and to some of the biggest issues around.