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
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here