Nesta, the UK’s innovation foundation, has announced the first closing of a new £25m impact investment fund, Nesta Impact Investments, through its wholly-owned subsidiary, Nesta Investment Management.
Nesta Impact Investments brings together Nesta’s experience of early stage venture capital and impact investment to invest in organisations developing innovative solutions to address social challenges facing the UK. The fund will invest where there is potential for scalable social impact and financial viability. Investments will be evaluated against Nesta’s Standards of Evidence for Impact Investing, launched alongside the fund.
With a target size of £25m, the new fund represents a step change in the investment available for social innovation in the UK. Over £17.5m of commitments have been made for this first closing. Alongside Nesta, the current investors in Nesta Impact Investments are Big Society Capital and Omidyar Network.
The fund will substantially increase the supply of risk capital for social ventures at a time when their innovations are greatly needed. The UK is facing major social and economic challenges: one in six 16-24 year olds are not in employment, education or training (NEETs); half of NHS spending is committed to over 65 years olds and set to rise by 65 per cent in the next 25 years and 5 million households in the UK live in fuel poverty, half of whom are in the bottom 10% of household incomes.
The fund will make investments in innovative social ventures that address core social concerns in the areas of the:
- Health and wellbeing of an ageing population
- Educational attainment and employability of children and young people
- Sustainability of communities
Joe Ludlow, director of Nesta Investment Management said, “Nesta Impact Investments will be investing in higher-risk early stage innovations where we intend to create value for those benefitting from the social innovations we back and for our investors. Nesta has long been at the vanguard of supporting social innovation whether through research, funding programmes or investing in early stage technology.”
Nesta has a track record of backing many successful high impact social innovation programmes and ventures, providing funding, skills, networks and other resources. With Nesta’s support, a range of high impact, sustainable and scalable social innovations have been developed. Increasingly technology is at the core of such innovations, tackling issues through increased collaboration, connection, information, accessibility and inclusion whilst reducing cost of service delivery.
“Nesta Impact Investments promises to catalyse a crucial, emerging sector,” said Matt Bannick, managing partner of Omidyar Network. “We believe the focus on tech-enabled, early-stage platforms is part of a winning strategy that will help prime the pump with innovative and scalable solutions to some of society’s most pressing challenges.”
Nick O’Donohoe, CEO, Big Society Capital says “There is clearly a gap in the market for early stage investment in social ventures and Nesta is extremely well placed to address this. Also, the work Nesta has done on evidencing outcomes establishes a high standard for others to follow. We are very excited to be able to support this ground breaking initiative.”
Nick Hurd, Minister for Civil Society, says “Nesta’s first Impact Investment Fund is another welcome milestone in the UK’s growing social investment market. We are getting increased interest from investors and intermediaries, which is exactly what we wanted to see in response to creation of Big Society Capital. We are determined to make it easier for charities and social enterprises to access finance so that they can expand their services and develop better solutions to our social problems.”
Ludlow continues, “The fund has been established to focus on high impact innovations and so we will be placing great emphasis on evidencing the impact of the investments that the fund makes, ensuring that capital flows to the innovations that can increasingly demonstrate real impact in society.”
Nesta has developed ‘Standards of Evidence for Impact Investing’ as a framework for assessing the impact performance of Nesta Impact Investments. The standards, available at www.nesta.org.uk, will help develop tailored evaluation strategies for investees, informing further product or service development and future funding decisions.
Notes to editors
For further information or to arrange an interview with Nesta, please contact Suzi Browne on 020 7438 2606 or Natalie Hodgson on 020 7438 2614
www.nestainvestments.org.uk / www.nesta.org.uk
1. Nesta Investment Management LLP (NIM) is the fund management arm of Nesta
2. NIM is a wholly owned subsidiary of Nesta and is authorised by the Financial Services Authority to manage and invest funds on behalf of Nesta and external investors
3. NIM is currently the appointed fund manager of Nesta Impact Investments, an eight-year limited partnership
4. Investors in the fund: Nesta, Omidyar Network, Big Society Capital
5. Standards of Evidence for Impact Investing are available here:
They have been developed for application in impact investing from the standards of evidence framework that underpins the Great London Authority’s Project Oracle, an innovative, city-wide programme that seeks to build the evidence behind youth programmes in London
Nesta is the UK’s innovation foundation. Nesta Investment Management is a wholly-owned subsidiary of Nesta.
Nesta helps people and organisations bring great ideas to life. We do this by providing investments and grants and mobilising research, networks and skills.
Nesta is an independent charity and its work is enabled by an endowment from the National Lottery.
Nesta Operating Company is a registered charity in England and Wales with a company number 7706036 and charity number 1144091. Registered as a charity in Scotland number SC042833. Registered office: 1 Plough Place, London, EC4A 1DE