Big Lottery Fund and CEO of Social Stock Exchange talk about SSE launch in UK

Author

Alfred Poon Alfred Poon

Date

January 7, 2015

Earlier this month, the Social Stock Exchange (SSE), an initiative to connect public financial markets with social impact investments, was launched in the UK by Prime Minister David Cameron. The SSE is an online platform that helps potential investors find social investment opportunities globally by informing them of the social impact of active organisations.The SSE, which is affiliated to the London Stock Exchange, launched with 12 companies listed from sectors such as social and affordable housing, cleantech, water, waste, recycling, renewable energy, sustainable transport, health, education and culture. Another 12 companies are pending admission into the exchange.

AVPN spoke with Matthew Roche (MR), Head of Funding – England Directorate at the Big Lottery Fund (BIG), which is a funder of the SSE, and Pradeep Jethi (PJ), CEO of the Social Stock Exchange.

Why did the Big Lottery Fund support the SSE?

MR: Within England at least, the overarching goal of the Big Lottery Fund is to support the development of the social investment market. We think the SSE will enable new tools and new sources of finance for non-profit organisations in England and that is why we are backing it. With the SSE, we became interested in learning how to get money into not only social organisations, but also how to get money into some of the emerging funds that we are seeing, such as charity bonds. The question then became:‘how do you get mainstream investments into those?’
SSE came up with the idea for what is now a listings platform for organisations that are already listed on a recognized stock exchange elsewhere, so that people can know which organisations have a positive social impact. It’s about getting mainstream money into this market. Similarly, we have also backed the social investment platform Ethex, which seeks to make ethical investment easier to understand and undertake.

How is the Big Lottery Fund backing the SSE?

MR: Between July 2011 and March 2012, we hosted the interim committee of Big Society Capital and we supported some of its early investments. At that time, the committee decided to get the SSE going. That was the first interesting touch point that we had with SSE. Early this year, the SSE faced a number of issues. The first was that in order to gain entry to the SSE, it is necessary for a venture to demonstrate that it has sufficient social impact and to do that, the requirement is to have a social impact report. This was difficult because the ventures had to pay some money upfront for such a report. In order to kick start that process of getting listings, we set up a Kick-Starter fund worth just under £300,000 for the project, of which about £160,000 will be used to pay for the development of 20 social impact reports to enable the initial 20 listings.

What impact do you foresee the SSE having on the social investing/ venture philanthropy sectors in UK?

PJ: I believe that impact investing has to be the big story for 2013 – and it is definitely the way forward for social innovation and the entire social space. I am very excited by the launch and definitely think that this will help to bring more resources into the sector.

MR: We are hoping that it will enable funding to come in from mainstream investors and financiers, and the retail sector more generally. Both institutions and individuals have got a place where they can go to find out what they can invest in and buy shares. That will be the biggest change. A lot of the social investment in England happens by trusts and foundations so there is a need to get mainstream money in.Also from purely a broader point of view, for the UK, it is about building London showcasing itself as a centre for social investment.

What do you think will be the biggest hurdles for the SSE after the launch?

PJ: My main concern is that the market is still not mature enough for this. However, changes take time and to be able to launch this is a big achievement already. Even 2 years ago, I would never have imagined that this would be possible.

MR: The main hurdle for them is to become sustainable, so it is about them using the initial organisations to prove that the concept works, and to prove that listing on the site will enable them to bring in finance that they will need. The funding from us is about giving them a critical mass so they can demonstrate that it is an attractive proposition for social enterprises to be listed. Over time, social ventures will pay for their own reports and the pay fee for being listed. A lot of this is about sustainability. The SSE is targeting 160 listings by 2016, and once it hits that number, it will become profitable and self-sustaining.


About Author
Alfred Poon
Alfred Poon Technology Lead AVPN

Alfred Poon is Technology Lead of AVPN's Knowledge Centre.

He is a geek by nature, adman by passion, and holds a Masters in Nonprofit Communications from Indiana University. Alfred spends his time building communications infrastructure that brings people together. Prior to joining AVPN, Alfred has consulted for Social Purpose Organisations in over thirty countries, bringing his unconventional mix of nimble technology to enable data driven communications.

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