Shine 2011 – part one

I spent sizeable parts of Thursday and Friday at this year’s Shine Unconference at Hub Westminster – ‘London’s first superstudio for the impact economy’.

Social enterprise support charity, Unltd, are the prime movers behind Shine which was launched in 2008 as an alternative (or perhaps antidote) to the formulaic conferences laid on by both the public sector and conventional conference organisers. This year’s event was curated by communications company, Culture Group and social enterprise, Red Button Design.

Shine is unusual in being a social enterprise conference aimed at social entrepreneurs. The major reason why most social enterprise conferences are not aimed at social entrepreneurs is that conferences are riskily expensive to put on and most social entrepreneurs don’t have £300+ to spend on attending a conference.

On top of that, those social entrepreneurs whose businesses are successful enough to enable them to be able spend £300+ on attending a conference are more likely to spend that money on attending conferences related to the sector they’ve succeeded in rather than a conference about social enterprise.

During the 2005 – 2010 period, the political and economic climate supported expensive social enterprise conferences attended primarily by employees of public sector bodies and social enterprise support agencies, along with the army of social enterprise consultants that New Labour was directly or entirely funding in an apparent bid to replace the UK’s shrinking manufacturing base with an industry based on mass production of unimplemented business plans.

Now the money has run out and Shine – aimed primarily at those towards the beginning of their social enterprise journey, and costing a very reasonable £50 for two days – is the future of social enterprise conferences. Of course, early stage social entrepreneurs are just as worried as anyone else about the fact that the money’s run out and Thursday’s programme reflected that – with three consecutive panel sessions on whether you need money, how you get money and making the most of your money once you’ve got it.

I attended the first two of these. ‘Money 1: Chopping Down the Money Tree – Do you really need money and how do you source it?’ included contributions from serial social entrepreneur Dave Dawes of Entreprenurses and former racing driver, Trudy Thompson, of sustainable living centre enterprise, Bricks and Bread.

Although the panel leaned more towards ways of getting money than towards doing without it, they usefully considered this issue from a social entrepreneur’s point of view. Dawes gave a direct illustration of the difference between grants, loans and equity investment by offering the audience a chance, first to give him a pound, then to give him a pound and get £1.20 back, then to put up a pound with the chance of getting five pounds back based on a toss of a coin. He then (slightly controversially) suggested that more social enterprises should be set up to take equity because, if social enterprises weren’t expecting to make a profit they were charities rather than social enterprises. He also suggested that social entrepreneurs needed to think carefully about whether they needed start-up investment at all as, if you can get the business to the point of making a profit reasonably quickly it’s better to use ‘sweat equity’ – working for free or little pay until you start generating income by selling things.

Thompson offered a no-nonsense approach as she explained her frustration with the situation where people wait around for months to find out if they can get a grant to start their business rather than just getting on with it – and generating the money they need by running a viable business. She complained that advisory bodies had advised her to set up as a Community Interest Company (CIC) when in reality it was not a suitable model to attract investment for her business and slammed the state-funded business planning industry: “surely we should be encouraging people to write plans for themselves.”

‘Money 2: The Funding Landscape – Discussing the current funding landscape and options’ featured contributions from some of those looking to fund the current generation of social entrepreneurs and social enterprises.

Jonathan Jenkins, chief executive of the Social Investment Business, which manages government funds including the Communitybuilders Fund and the Department of Health’s Social Enterprise Investment Fund, suggested that social entrepreneurs looking for very early stage investment would be best off looking to trusts and foundations for start-up grants. He said that a current problem with the social investment sector was that many social investors don’t say ‘no’ quickly enough so end up wasting people’s time with applications which aren’t going to go anywhere. Asked about the importance of legal structure he expressed the personal view (not necessarily reflected in the criteria for all his organisation’s funds) that “legal structure is utterly irrelevant to the embodiment of social value in an organisation.”

Theresa Burton, chief executive of the crowd-funding website, Buzzbnk, said that in the early stages social entrepreneurs’ focus should be on demonstrating that their business has traction, while spending the least amount of money possible. She said that friends and family were often the best source of early stage investment and that Buzzbnk effectively provided an enhanced way of generating that kind of support.

Stephen Rockman, of Merism Capital, the UK’s first dedicated social enterprise investment fund, pointed out that social entrepreneurs shouldn’t worry about getting ‘the right kind of money’ as long as they were able to put that money to work in the right way. He said that investors and the social enterprise sector needed to acknowledge that ‘failure is part of the story’ and suggested that enabling social entrepreneurs to be based within incubators such as Hub Westminster was more useful than sending them on an investment readiness course.

The underlying message of both sessions seemed to be ‘there is money out there if you can convince people that your business is likely to sell stuff’.

Part two to follow.

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4 Comments

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4 responses to “Shine 2011 – part one

  1. claudia

    Excellent round up so far, thanks David.
    This stuff about waiting around for a grant – I get it, but when people are on the breadline with mouths to feed, and no spare savings or capital, it requires the most extraordinary person to risk starting something without any money. I know that many of those truly who passionate will just muddle their way through and work in any spare time and squeeze the life out of themselves, but what about the people with good business skill and a conscience who don’t want to wring the life out of themselves?

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  2. Beanbags admin

    My instinctive reaction is that people with good business skills and a conscience who either don’t want to or can’t take any financial (and other related) risks should apply for a job in an existing socially enterprising organisation. There’s nothing wrong with that – different people are suited to different roles.

    That said, I think there’s a spectrum. I’ve met people at conferences who have an idea for a social enterprise and are looking forward to getting started, once they’ve found a funder who will give them enough money upfront to maintain their public sector wages and pay to rent an office for a year. Even in the event that were lots of funders going around writing cheques for those costs, people who need that level of security to get going are unlikely to have the right mindset to get a small social enterprise up and running. Once the money’s in they’ll just find other reasons not to do things.

    On the other hand, the SE sector does need to be able to attract talented people who don’t have a trust fund. In my experience, at least, there isn’t an obvious alternative to supporting the initial development work by having another job and getting to the point where people will pay you for stuff as soon as possible. I suppose this is an area where crowd-funding is a possible alternative in terms of getting a bit of start-up funding more quickly than you would from a grant-making trust.

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  3. Claudia’s comment above about taking an extraordinary kind of person has some resonance. Ours began, in a practical sense, with a homeless man taking off to Russia to create a proposal for a development initiative in Siberia which created 10,000 micro enterprises. When he returned again homeless to the US in 2003 he began fasting for economic rights. I tried to help which is how we came together.

    He’d been able to leverage $6 million of “equity investment” for the Tomsk Regional Initiative, that was handed over to Finca who managed microfinance for the project. I was in ‘conversation’ with Finca’s CEO Rupert Scofield a couple of weeks ago on Social Edge. We seemed to have some common ground.

    http://www.socialedge.org/discussions/social-entrepreneurship/the-social-entrepreneurs-handbook

    Aside from your own transparency, which is valued, can you imagine anyone in the UK social enterprise sector, engaging in this way?

    We made the same discovery as Trudy Thompson albeit before CICs came into being, that a guarantee company wasn’t going to find any equity investment from traditional lenders and social lenders, for example ICOF, Charity Bank were only available to those who joined their respective ‘churches’ This was I point I’d made in my letter to the SEC Chair, Baroness Thornton early in 2005. Par for the course and indicative of an increasing trend toward opacity, my letter to the House of Lords was not replied to. It had been Jerr Baschee, another prominent American on Social Edge who’d pointed in her direction.

    htttp://www.box.com/shared/9c3x229hll

    Is there something peculiar to Brits which makes our social enterprise representative unattainable, or does it have more to with the mentality of the public sector?

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  4. Beanbags admin

    “Aside from your own transparency, which is valued, can you imagine anyone in the UK social enterprise sector, engaging in this way?”

    Well, Jeff, off the top of my head, Peter Holbrook and Nick Temple from SEUK, Allison Ogden-Newton and Dom Potter from SEL and Lucy Findlay from Rise/SE Mark all have blogs and engage in online debate to a lesser or greater extent. Along with leading figures from beyond the lobby such as Rod Schwartz (ClearlySo) and Craig Dearden-Phillips (Stepping Out). All on the blog roll and I think they’ve all commented on here, apart from Peter, who’s done an interview.

    What specifically is it that you’re hoping UK social enterprise leaders will say or do? In my exciting new role on the SEUK council – attending my first meeting next month – I’m very happy to pass on people’s suggestions.

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