1 Social Capital Partners: Investing in Social Enterprise St. Michaels College October 21, 2005

2 1. About Social Capital Partners 2. The Context for Our Work 3. Our Work in Action 4. Roles You Can Play 5. Questions Agenda

3 Our Mission Invest in social enterprises that employ people from economically marginalized communities Enable these organizations to grow and succeed financially Support these organizations to create improved social and financial outcomes for employees Catalyze other innovative financing models for social initiatives About SCP

4 How We Got Started 2000 Bill Young leaves the private sector after 20 years as a successful executive and a successful liquidity event 2001Bill approaches The Monitor Group to help him develop a strategy to “give back” while still using his business skills 2001 Non-profits and thought leaders from across North America are interviewed to identify areas where SCP can add value 2001 Key tenets of the social enterprise strategy are developed and SCP is “born” 2002 SCP runs a national business plan competition to find its first social enterprise investment – Inner City Renovations About SCP

5 What We Bring to the Table 30 years of combined experience in the private sector as entrepreneurs, consultants, and senior managers Strategic partnerships (Monitor Group, RBC Capital Markets) One of the few Canadian sources of risk capital Backed by C$10MM in initial funding by the founder Relationships with regional co-funders  Business Experience / Expertise  Social Enterprise Expertise Extensive social enterprise research in Canada and the US Hands-on social enterprise experience Hands-on experience with Social Return on Investment  Appropriate Capital About SCP

6 Our Investment Approach Using the principles of venture capital To invest in high potential social enterprises And create a network of successful enterprises across Canada That ultimately employ thousands of people Risk capital Deep engagement Management support Growth oriented Profitable Strong job creation per dollar invested Cross pollinate ideas and best practices Engage communities Make the concept “mainstream” Provide a positive alternative to social assistance Make long lasting changes in communities About SCP

7 Portfolio Company Profits Target Employees Non-Target Employees Results From Our Portfolio Companies Portfolio Company Revenue Target Employees: 260 Total Employees: 400 Portfolio Company Revenue: 10.6M Portfolio Company Profit: 600k Individual Portfolio Companies About SCP

8 Government Funding Private Investment Charitable Donations Context: Traditional Investment Lenses Social Safety Net Civil Society Wealth Creation Blended Outcomes ? We tend to think of investment through traditional sector- based lenses...

9 Context: The Need for Multiple Lenses Private Investment Charitable Donations... but innovative solutions to social and economic challenges may exist between these silos E.g. Sustainability and Conservation Inner-city economic development First Nations economic development Affordable housing Government Funding

10 Joint venture of nonprofit housing corporations in Winnipeg Renovates run-down housing in the inner city Employs low-income inner city residents, mostly Aboriginal Canadians Has revitalized dozens of homes and commercial buildings across the Winnipeg inner-city Generated nearly C$1.5M in business revenue in 2004 / 2005 but is struggling for profitability... and some ground breaking organizations already defy these traditional views Context: Blended Returns Example

11 Business generates revenue, strives for profitability and services loans However, Profitability and returns do not meet typical private investment hurdles Jobs are provided for those who might otherwise rely on social assistance However, Government is reluctant to support an organization that competes within the private sector Affordable housing is constructed and at-risk individuals receive job training However, ICR does not fit the traditional definition of a charity and cannot receive philanthropic gifts Investment Outcomes Policy Outcomes Charitable Outcomes However, these organizations often fall between the cracks of traditional financing programs... Context: Blended Returns Example

12 Blended Outcomes Pure Social Outcomes Pure Financial Outcomes Traditional Charities Social Enterprises Traditional Businesses In these cases we must set aside traditional lenses and create hybrid financing mechanisms... Context: The Social Capital Market Hybrid Financing Vehicles are Required

13 Our Work in Action: Renaissance Chain of second hand stores in Montréal Operate under the Fripe-Prix name Mission to integrate difficult to employ into the workforce C$150k in 5 year subordinated debt at competitive rates C$150k in equity capital Payback linked to performance Seventh store opened in fiscal 2004 with eight planned for fiscal 2005 Expect C$5M in store revenue and 700k in profit for fiscal employees (120 target) Description Hybrid Investment Results

14 Our Work in Action: Franchising SCP provides unencumbered capital and business support for franchisee Franchisor provides its system and expertise Franchisee hires employees through YMCA job training programs and provides social support programs Unencumbered capital provided to franchisee who might not otherwise qualify Payback is linked to business cash flow Investment covenants include both financial and social requirements Actively developing partnerships with o Two Men and a Truck o Active Green & Ross o ServiceMaster Clean Description Hybrid Investment Results

15 And allow... Which creates... Develop... New Risk Capital Vehicles Social Investors  Entrepreneurial Solutions to Social Problems Which encourage... And attracts new... Our Work in Action: Creating a Positive Cycle Risk taking and Innovation Greater social returns

16 What Role Can You Play? Can your CSR strategy include not only charitable giving but also investment in community projects? –Affordable housing, sustainability projects, etc. Are there unique ways for your company to connect with community partners? –Employment or training for those facing employment barriers? Are there opportunities to procure goods and services from community- based businesses? –Turnaround Couriers ( –Social Purchasing Portal Sponsorships and donations will always be important but there are other creative ways to make a difference...