Why 2013 should be really interesting

Happy new year, and it promises to be an exciting new year, as late in 2012 we launched a new venture fund, but a fund with a real difference, a fund that is explicit about its intended impact in some areas of major need in the UK. A fund that is looking to drive both impact return and financial return and to help grow the UK Impact Investment market.

I thought it worth capturing some of my thoughts at the start of the year, as we look to begin investing the fund  – it will help remind me of what is important about what we are trying to build but also I hope, be an interesting signal of our ambition and intent.

We have spent a year bringing the Nesta Impact Investment fund to life, we have brought together an initial set of 3 cornerstone investors – Nesta, Big Society Capital and Omidyar Network, assembled a really interesting investment committee and created a team that is passionate about backing innovation for public good.

But why do this – most of my career has been in venture capital, backing early stage innovations with the aim of growing companies of value and making a return.  This fund is no different in so many ways and I think many of the lessons I have learned will be very relevant  -

  • We want to back early stage innovations that address some significant challenges in the UK -the ageing population, the education and employability of young people and how our communities become more self sustaining. As in venture capital innovations are created by people, our job is to find and work with great entrepreneurs – leaders with ideas, vision, drive and a mission to tackle some of these large challenges -finding and working with these entrepreneurs is what makes early stage investing so exciting and fun!
  • We want to help grow the organisations we support through the capital we provide and the network and people we can introduce.  The ventures we back have to grow – we want ambition – an ambition to deliver the product or service to everyone that can benefit and therefore an ambition to have a big impact – real impact at scale is our objective. Our team has to work hard to bring this “value added investor” promise to life
  • We also want to make a return and here we are both similar and dissimilar to pure venture capital.  The return we seek is primarily about impact – not just growing an organisation’s outputs but proving that the innovations we back truly have a positive effect in the areas of need we have identified. We want to measure that impact and tell others about what our ventures and we have learned.  However importantly we also seek a financial return for two reasons – primarily as without growth and profitability the ventures we back won’t be sustainable for the long term but also importantly our capital is to help finance risk and if we want to bring more long term capital into the Impact investment market we have to show different types of investors that returns can be made.

So 2013 should be really interesting – creating a fund is always exciting, bringing a fresh approach to a growing market is also a real challenge.  Our whole team is excited about the journey we are embarking on – we have a real mixture of talent in our group -and have the opportunity to create something.  We want to build our network, work with our investors, work with other players in the impact market,  help build organisations that make a difference and have some fun on the way. I know there will be challenges but we will learn from those and I hope over the years build an impact investment organisation of real substance.

If you have an interest in the impact market follow our journey here. If you are an entrepreneur with a growing opportunity or a great idea – please get in touch with us!

Matthew Mead - Chief Investment Officer