Social enterprises avoid capital injections

| July 26, 2010
Social enterprises avoid capital injections

A £3m fund designed to help social enterprises expand has closed after making only one investment in two years.

Triodos, the bank operating the fund, said most social enterprises are not yet ready for large capital injections.

“The recession is having an impact,” said Charles Middleton, Triodos UK managing direction.

“But our experience was mainly not finding the number of social enterprises that were ready for, and had the appetite for, equity.”

Many social enterprise owners don’t want to take the risk of having large debts, he added.

“Entrepreneurs have to be comfortable with letting go that sense of control and ownership which is not easy to do and we have to respect that,” Middleton said.

Andrew Robinson, director of market development at social lender CCLA, said other lenders will fill the gap created by Triodos’s withdrawal.

“Triodos cancelled its product because the market it was trying to target was underdeveloped,” Robinson said.

“At the same time, other lenders are experimenting with new ways of bringing in risk capital to develop that fledgling market – and this is crucial.”

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