Scotland’s fintechs to play major role in the growth of mission-driven business

Over the past ten years we have witnessed some truly game-changing developments in the world of business. On the back of the worst financial crisis in living memory, distrust of large institutions has grown, consumers have become increasingly empowered, and a new generation of socially-conscious business leaders have emerged.

Rise of the social enterprise

While such economic uncertainty has bred volatility within the more traditional markets, some other markets have flourished and prospered. The rise of the social enterprise has been rapid, fuelled by a demand from everyday consumers to consciously choose or buy from businesses underpinned by strong ethical values.

At Social Investment Scotland (SIS), we have seen social enterprise morph from being a niche movement within local rural communities to a business model of choice for ambitious entrepreneurs in Scotland. And things are already changing again.

Innovation in the social enterprise

Innovative forms of delivering social impact are being delivered via a range of business models beyond the classic forms of social enterprise – this is part led by education but also by investment needs and capital required to achieve impact at scale.

These new ‘mission driven businesses’ (businesses that focus on the achievement of both conventional business aims alongside a clear and definable social mission) require investment that is aligned with these dual business objectives, something that is not yet widely acknowledged by more conventional forms of investment.

A good example is Storii (www.storiicare.com) set up by Scottish entrepreneur Cameron Graham in 2014. Storii seeks to improve the lives of those in care living by providing a platform via which they can engage with photographs and other memories of their past.
The useful and intuitive software has a range of applications across different care settings and has a clear business model alongside a definable social mission.

Through the launch of SIS Ventures, we plan to provide the tools and mission-aligned investment required to help early stage businesses, such as Storiicare, and social enterprises grow and deliver social impact at scale.
Over the next three years, SIS Ventures hopes to set up funds to raise up to £5m of new funding – utilising both Social Investment Tax Relief (SITR) and the Enterprise Investment Scheme (EIS). The plan is to provide debt and equity to entrepreneurs, particularly those early stage ventures that might struggle to access investment from existing sources and have a mission to deliver impact at scale.

What about fintechs?

So where does fintech fit in you may ask? In our view, fintech will play an absolutely pivotal role in the continued development and growth of the mission-driven business sector. Underpinning this belied are two key factors.

Firstly, Impact Investing has expanded in scale in recent years, and one of the key drivers has been the development of new financial technologies. Innovative companies will continue to leverage new technologies to connect social enterprises with investors and raise awareness about sustainable investing opportunities.

Secondly, fintech offers a considerable solution to some of the common financial problems affecting societies across the world, ranging from money transfers and access to insurance and banking, to financial literacy and debt management. We’re already seeing a number of fintech operators emerge within this space, and we’ll continue to see more.

One such example is Sustainably, a fundraising app which enables user to round up their change for charity every time they shop. Another is Gigly – an innovative, free to use platform helping people to navigate the gig economy, by finding them jobs, mortgages, training, services and more.

As one of the UK’s leading fintech hub outside of London, Scotland can play a leading role in marrying its expertise within fintech to its experience and experience in social enterprise. The prospect of developing a mission-driven sector with global scale is one that truly excites us. The launch of SIS Ventures now provides us, and Scotland, with an investment platform to help turn this prospect into reality, by supporting and investing in entrepreneurs who are passionate about making a difference.

For more information about SIS Ventures, visit www.sisventures.com