The European Social Innovation and Impact Fund (ESIIF) is a new fund aimed primarily at European social entrepreneurs and social startups. The initial closing is at €4.5 million. Current investors in the ESIIF include IBB and GLS Treuhand, along with several high-net-worth private investors and family offices. Additional investors may contribute over the next twelve months.
Less risk for investors
The ESIIF is an innovative solution for improving the ecosystem for social enterprises in Europe. How? Because many investment firms are more cautious about investing in social enterprises, the new fund will be additionally protected. A guarantee, the European Union's so-called EaSI Guarantee Mechanism (provided by the European Investment Fund), is intended to attract significantly more impact investors to invest in high-impact, early-stage social enterprises. This makes the ESIIF the first mezzanine fund in Europe to benefit from this derisking mechanism.
For professional and semi-professional fund investors in Germany, senior and junior tranches with different risk-return profiles are still available. Interested parties can here with the fund initiators FASE and Avesco as fund manager company.
For the fund's initiators, the ESIIF is an opportunity for investors to participate in social innovations in a sustainable way beyond donations. And capital is needed more than ever to develop new, entrepreneurial solutions to pressing issues of our time, such as healthcare, inclusion, education, and the environment.
The ESIIF aims to promote the scaling of social innovations
The European Commissioner for Jobs and Social Rights, Nicolas Smith, explained:
"The added value of social enterprises is clear, but access to financing is often the missing link. This EU-backed fund will connect early-stage social enterprises with investors so the entrepreneurs can implement their ideas. This is more important than ever in the context of the current crisis."
The new impact fund plans to provide its first mezzanine capital to outstanding social entrepreneurial solutions in 2020. The companies will receive investments in the form of mezzanine capital. These subordinated loans are typically granted to early-stage social startups in amounts between €100,000 and €500,000.
Since social enterprises have so far had limited access to this type of financing, the fund aims to create an innovative financing option for social startups. The ESIIF aims to build sustainable bridges between impact investors and social enterprises. Through early-stage financing, the fund aims to make an important contribution to ensuring that outstanding business models can achieve their positive impact sustainably and extensively.
