Last year, Bridges Ventures, the UK-based social investment group founded by Sir Ronald Cohen, celebrated its 10th birthday. And to commemorate this milestone, in February this year it released a report looking back at how the firm – and the sector in which it operates – has changed over the course of the last decade.
When Bridges started raising its first fund, in 2002, the idea was a tough sell, admits co-founder Michele Giddens. “When we started talking about investing for positive social impact as well as financial returns, the honest truth is there was a lot of scepticism,” she tells PEI. “It’s a reflection of the era – back then there was very little talk about the environmental or social aspects of investment. Those that were bold enough to come in were really bucking the trend; it was almost a leap of faith.”
As Giddens freely admits, the fund probably wouldn’t have got away had it not been for a £20 million cornerstone investment from the UK government – which reduced the risk and enhanced the potential upside for other investors.
These days, however, Bridges doesn’t need to be propped up by public money: the bulk of the money in its latest Sustainable Growth fund (its third) comes from institutional investors. So what’s changed, exactly?
Three things, according to Giddens. “First, Bridges has a track record; it’s no longer a leap of faith.” As such, she argues, it’s now clear that there doesn’t have to be a trade-off between social and financial returns; in fact, if a business is solving a big social problem, the reverse may be true. “By Fund III, we realised that if you select a business that has part of the solution to a difficult social challenge, you can find some really special growth opportunities. And these days, in this economy, growth opportunities are what investors are looking for.”