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Financing Alternatives: OACFDC Annual Conference June 1, 2004. Our Mission. Invest in businesses that create employment in economically challenged communities Help these organizations to gain scale and exist without subsidies
Our Mission • Invest in businesses that create employment in economically challenged communities • Help these organizations to gain scale and exist without subsidies • Help these organizations provide improved social outcomes and financial self sufficiency for the individuals they employ • Become a catalyst for encouraging other innovative approaches to solving important social issues
Our Vision Create a network of businesses that are . . . • Financially self sufficient • Growth oriented • Significant in size • Achieving improved social outcomes
What We Bring to the Table • Management team has 30 years of combined experience in the private sector • Founder has extensive experience as entrepreneur and CEO • Partnership with strategy consulting firm The Monitor Group • Business Experience / Expertise • Extensive social enterprise research in Canada and the US • Hands-on social enterprise experience • Hands-on experience with Social Return on Investment framework • Social Enterprise Expertise • Variety of financing alternatives offered • Backed by C$10MM in initial funding by the founder • Relationships with regional co-funders • Appropriate Capital
Financing Alternatives • Provided through funding partnerships • Grants are generally in the C$20K to C$100K range • Provided only to enterprises acting with a ‘qualified donee’ • Grants • Loans are generally in the C$50k to C$200k range • Interest rates will be assessed based on the risk profile of the business and the value-added support required • Businesses must pass due diligence and SCP will take an ongoing governance role • Loans • Mostly subordinated debt with “sweeteners” (e.g. royalties) • Desired rates of return are assessed based on risk profile and value-added support required • Businesses must pass due diligence and SCP will take an ongoing governance role • Near Equity
Our Current Status • Began actively seeking investments in 2002 • Looking to invest approx. C$10,000,000 over 10 years • Reviewed over 200 business plans from across the country • Total investments to date of approximately C$1MM • Provided financing for 8 businesses
Portfolio Sample: Inner City Renovations (ICR) • Start-up home renovations company in Winnipeg Manitoba • Joint venture of several nonprofit housing corporations • Renovates run-down housing in the inner city – a niche market • Employs low-income inner city residents, mostly Aboriginal Canadians • Goal is to become employee owned over time Description SCP Investment • $200,000 in equity and loans • Co-invested with local funder (Community Ownership Solutions) • Funded start-up costs and working capital SCP Value Added • Support strategy, financial planning, HR and marketing functions • Advise on the creation of social support infrastructure and measurement • Take a leadership role on the Board of Directors
Current Results • Employs low income individuals from inner-city Winnipeg • Employs up to 25 full time staff 2/3 of whom are target employees • Majority of employees are aboriginal • Social worker hired to assist with issues unrelated to the job • Laying groundwork for future employee ownership • Social Mission • 2003 business revenue of approx. C$1MM • Expect break-even in year 3 • Professional management has been added and skills re-aligned • Financial Mission • Revenue generating partnerships with nonprofit housing corps. • Leverage social mission to secure other inner city contracts
Our Next Steps • Learn by doing: • Complete 5 - 10 more deals over the course of the next 2 years • Test different models: • Test franchising concept • Invest in for-profit and non-profit enterprises • Scale our portfolio companies: • We have invested in businesses that are conducive to growth • We see opportunities to expand into new markets • We see opportunities to expand within current markets
What We are Looking For in a Business Plan • Modest Profit Potential • Through strong business principles not through subsidies • While meeting financing obligations • Strong Growth Potential • We are looking to create dozens of jobs in each of our portfolio companies • Balanced Financial and Social Missions • The business must draw the majority of its employees from an economically challenged community • Where necessary, the business should provide for the social needs of its employees
Contact Information Post: 205 Richmond Street West, Suite 601 Toronto, Ontario Canada M5V 1V3 Phone: (416) 646-1871 ext. 106 Online: email@example.com www.socialcapitalpartners.ca