By Alastair Davis

SCOTLAND’S economy is at a crossroads. The financial crash of 2008 exposed many weaknesses in our economic model, weaknesses which have been addressed but still undoubtedly remain. At the same time, our global economy, politics and society have become becoming increasingly defined by the need to respond to major social, environmental and economic challenges.

These two dominant factors have given rise to the emergence of a purpose-driven economy, underpinned by a new breed of business, focused on marrying profit with purpose. While Scotland is by no means at the vanguard of this movement, it has the opportunity to embrace purpose as genuine model for creating a future path for sustainable economic growth.

Demand for a more purpose-based economy has undoubtedly been driven by society. However, it is business which holds the power to effect actual long-term change. From our start-up entrepreneurs to some of our leading CEOs, we are already seeing a shift in business attitudes towards wider social, environmental and economic concerns. Business is beginning to embrace the creation of stakeholder value and not just shareholder value, with the goal of shaping a more symbiotic and impactful society.

A key ingredient in the successful development of a purpose-driven economy in Scotland is the financial support available to helping our young businesses grow and flourish. Within the existing investor community, it is fair to say that there has been little historic appetite for investing in purpose-focused businesses. However, there are positive signs of change.

SIS Ventures was set up just over a year ago, and is now Scotland’s leading impact investor in Scotland. At SIS Ventures, we believe that impactful enterprises, those that deliver profit with purpose, should be the bedrock of our society; supported with the full power of the investor community.

We launched our first £1.3 million fund just over a year, and during that time we have seen demand from early-stage high growth businesses far exceed supply. That’s why we are today launching a second fundraising drive, seeking up to £3.7m from investors to support a portfolio of high-growth early-stage enterprises, focused on delivering profit with purpose.

Our investment approach is simple. We seek a commitment from an entrepreneur to lock the social mission into their company; ensuring that social impact and financial success are symbiotic and the organisation is accountable for the impact it creates.

The social mission is then locked into their mission statement which is written into their articles of association, and can’t be changed without the impact investor’s consent. Provisions are established for quarterly impact reporting and organisations are also expected to comply with SIS Responsible Business Principles, meeting thresholds for a range of measures, including, equality, diversity and pay.

With such stipulations in place, we are able to screen out any businesses who are impact-washing to secure some quick investment. However, more importantly, these requirements enable us to work closely with our investees to help them increase their impact in line with their scaling ambitions. Our experience during Year 1 is that these businesses, and the management teams behind them, highly value the unique role which we play within the investment chain.

The proof, as always, is in the pudding. As we begin to see some of these high-growth mission-driven businesses prosper and scale, more will inevitably follow in their footsteps. However, for a purpose-driven economy to truly take hold in Scotland, we need to work hard at building a climate of political, economic and social support for purpose-based business. With the right environment and a readily available supply of capital, we have an exciting opportunity to effect lasting change in the way we do business.

Alastair Davis is CEO, SIS Ventures