Key ingredients of investment readiness: guest blog Seb Elsworth

Seb Elsworth is Director of Partnerships and Communications at the Social Investment Business, one of the leading social investors in the UK. He shares his insight with us to help you reach investment readiness.

seb_elsworth_pictureWhen providers of social finance get together and discuss the challenges in growing the market, the number one issue is the lack of deal flow. What do we mean by that? We mean that broadly it can be hard to find organisations which are ready right now to take on finance. Rather they might need some support in becoming investment ready.

Exactly what investment readiness looks like will obviously vary from investor to investor, and will be proportionate to the size and aim of the investment.

However most investors would agree that there are some key things they are looking for:

Effective leadership

Does the organisation have leaders in place that can drive growth and change, both at executive and board level? Is there a culture of entrepreneurship? We look for leaders who have the ability to build and develop effective partnerships especially with commissioners.

It is vital that they can effectively communicate strategy through the organisation and to external stakeholders too.

We don’t just look at skills, but also attitude. Do the leaders have courage, confidence and resilience, particularly an ability to see changes in the environment as an opportunity?

Business planning, strategy and impact

Loans have to be repaid and so we need to be convinced that there is a comprehensive and well evidenced business plan backed up by effective project management and risk management that will generate sufficient revenue.

It’s not just the finances which need to stack-up though; we are also looking for evidence in that plan of the social impact which will be generated.

Finance

To back up that business plan we will look closely at the way the organisation manages its finances, including controls and reporting. We want to understand not only that there is a plan, but that there is sufficient financial skill so that the organisation can adapt to changing circumstances.

Governance

In addition to the board providing robust leadership, we need to be confident that governance basics are in place. Does the organisation have an appropriate legal form? Is authority delegated effectively with appropriate checks and balances? Does the board understand it’s skill gaps and how it intends to fill them?

Policy and procedures

Finally we want to be confident that the organisation is complying with relevant laws and regulations, and that it has a culture of performance embedded in its policies, not just conformance.

How is performance and quality managed and how does the organisation learn from its mistakes?


Seb Elsworth is Director of Partnerships and Communications at the Social Investment Business (SIB), one of the leading social investors in the UK. Seb leads SIB’s external relationships across government, civil society and financial institutions and is a leading commentator on the professionalization of the sector in the UK.

SIB supports third sector organisations at all stages of their investment journey and so we run a number of grant funds to support organisations in building their capacity to be ready to take on investment. In particular we run the Investment and Contract Readiness Fund.

For more information see the websites www.sibgroup.org.uk/our-funds/ and  www.beinvestmentready.org.uk

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