Launch of the Catalyst Fund, a new social investment fund for social enterprises

Posted: 01 June 2021, in News

We are delighted to be launching the Catalyst Fund today, a new kind of social investment product designed to support ambitious social enterprises to start and scale their businesses.

Delivered jointly by Firstport and Social Enterprise Scotland, the Catalyst Fund offers loans starting at £50K using a flexible, revenue-based repayment model. This unique model enables social enterprises the flexibility they need in their early stages of development and fills a gap in the existing social investment framework.

Most social investment products on the market are like bank loans – social enterprises make fixed repayments over a specific period until they have repaid the loan amount plus interest. This model often doesn’t work for early-stage social enterprises who, for example, might need time to develop technologies or whose revenue streams might be uneven to begin with.

The Catalyst Fund repayments are based upon a percentage of the trading income earned by the enterprise, making it more flexible. There is no specific length of term either – revenue-based repayments continue until an agreed amount is repaid. This form of repayment means the Catalyst Fund is completely aligned with the growth of the enterprise, meaning they can prioritise growth and impact.

Revenue-based financing is growing in popularity as an alternative to more traditional mechanisms to help companies grow and the Catalyst Fund is the first to use this model to finance social enterprises in Scotland

The fund has been made possible by a £15 million investment from the Scottish Government. It will complement existing Scottish social enterprise support and funding to build on the current ambition of the sector.

Daisy Ford-Downes, Head of Group Investment Programmes at Firstport said: 

“The Catalyst Fund could really transform the way we build social enterprises in Scotland. At Firstport and Social Enterprise Scotland, we have been listening to social entrepreneurs, and reviewing the data, and we know that there is a gap in social investment for early-stage social enterprises. It is a missing stepping-stone in the path, and it is preventing too many from reaching their full potential. We’re so excited to launch this fund and to start helping social enterprises to build successful, sustainable organisations. We’ll be looking for ambitious social entrepreneurs with viable growth plans and commitment to making a positive impact, so if that sounds like you – get in touch!”

Chris Martin, Chief Executive of Social Enterprise Scotland said: 

“Scotland has an excellent track record of social investment and I am delighted to see the Catalyst Fund launch as a complementary financing option for social enterprises who can’t currently access mainstream social investment. Our evidence shows us social enterprises need patient, flexible loan investment to help them grow without moving away from the impact model, particularly if they face high start-up and scaling costs. The Catalyst Fund will help support ambitious social enterprises to accelerate their ambitions and deliver social and environmental impact at scale without needing to revise their business model to access traditional investment.”  

You can find out more about the Catalyst Fund by visiting the Firstport website here, sign up for an information webinar in June, and submit a note of interest. Take part in the conversation on social media and help us share the word about the launch of this innovative social investment model in Scotland by using the hashtag #CatalystFundScot.

Download the launch press release here.

Catalyst Fund - Launch graphic - Social Enterprise Scotland and Firstport