Tag Archives: HCT

Why “impact enterprises” outperform

Last week I had the pleasure and privilege of attending the annual social impact review of the HCT Group. HCT has been a client of ClearlySo for quite some time. In fact we met the company about a decade ago, so readers are welcome to take my comments with a pinch of salt.

This annual review has become a key date in the impact enterprise equivalent of the summer calendar. Dai Powell, the chief executive of HCT, discussed trends and how they are increasing the impact of their operations. HCT, as many readers already know, is a charity, but is also considered one of the UK’s largest impact enterprises.

The event was punctuated with glowing references to the various enterprises that provided products on the night. The venue was the St Luke’s Community Centre and the beer was Toast Ale. The highlight of the event was a funny video about someone with disabilities who had gone through independent transport training ans was now able to travel on buses and trains alone. Another video featured HCT chairman Sir Vince Cable, who was appointed leader of the Liberal Democrats on the very same day as the presentation. This video was not as funny, although I suppose that depends on one’s sense of humour.

What struck me during the meeting was the realisation that this company has been enjoying rapid growth at a time when the UK bus market has been in relative stagnation. I’m sure there are many factors behind HCT’s success, but I think there is one factor in particular we can’t ignore: values are “in”.

Observers who dwell on the limitations of enterprises with a social, environmental and/or ethical impact overlook the advantages of being an impactful organisation, especially these days. More and more, people want to work for organisations with values, people want to purchase from organisations with values, people want to invest in organisations with values and, luckily for HCT, local authority commissioners really want to purchase from organisations with values.

This point really was driven home (pun not intended) to me when one of the guests who presented at the event was a commissioner for the three boroughs of Kensington & Chelsea, Hammersmith & Fulham and Westminster. He spoke about how great HCT was and how excited they were about the contract they had recently signed. I suspect the Grenfell Tower disaster happened well after this contract was agreed, but now it’s hard to imagine any other outcome. Up and down the country commissioners are increasingly asking themselves questions such as “does this provider have the best interests of our community in mind, or its firm’s profitability and its personal bonus pool?”

For this reason, among others, HCT has grown at a compound rate of 12 per cent in revenues since 2009 in comparison with a relatively flat UK bus market. Other organisations we work with have seen similar growth and, in many cases, it is the social value provided that is winning the contracts. I believe there will be a lot more of this going forward as more and more commissioners and consumers get on board (sorry again).

This blog was originally published on Third Sector on 26 July 2017.

The benefits of collaboration in impact investment

I recently had the opportunity to give a workshop presentation at the annual SEIF congress in Zurich, Switzerland. SEIF is an outstanding Swiss organisation that helps to develop high-impact enterprises in the Swiss, German and Austrian market and is also building an impact angel network. We at ClearlySo have had the pleasure of working with it cooperatively over many years.

It is therefore not surprising that I was asked to speak about “bringing together different partners to create new models in impact investment”. It felt rather daunting, and I sometimes think that actors in impact investment spend far more time talking about the benefits of cooperation than practising it. However, as it developed, it seemed to me that there were many different types of cooperative or collaborative endeavours and that each worked differently in supporting innovation in impact investment.

The first example I gave I described as “client collaboration”. As observers know, ClearlySo launched ClearlySo ATLAS in December 2016. This is a tool focused on private equity and venture capital fund managers, and it assesses the impact of their conventional private equity investments. The spark for this idea was a conversation with Octopus Investments four to five years ago, which continued as we designed ClearlySo ATLAS. As this was a new product in a new market, we decided to work with the PE/VC community in developing it. In a sense, the end-buyers played a significant role in constructing what they would later buy. ClearlySo coordinated all of this, but the cooperation of client prospects was essential.

Second, I spoke of “partnership collaboration” in the case of the Big Venture Challenge. This was a programme funded by the Big Lottery Fund and managed by UnLtd Ventures. After the first pilot of the programme, UnLtd wanted to improve its effectiveness and contacted three partners: the Shaftesbury Partnership, the Social Investment Business and ClearlySo. Each had a specific role to play and was allotted a share of the programme budget. Our role was to help the more than 100 high-impact ventures to secure external investment, which was matched by grants from the BVC. Securing impact investment is what ClearlySo does, so UnLtd gained access to this expertise at a reasonable price and we delivered our objectives with a combination of existing and new resources.

Finally, the third type of collaboration I would describe as “competitive collaboration” and is a key feature of nearly all impact-investment deals, although I used the landmark HCT quasi-equity transaction as an example. In such deals, each party seeks, as best it can, to get what it wants. HCT is looking for low-cost finance, the end investors (in this case led by Bridges Ventures) are looking for a high return, and we are looking to complete the transaction and secure a fee. If each party pushes too hard, the deal falls through and everybody loses. Everyone needs to work together while pushing for their own interests to get the best possible deal. Such competitive – or even antagonistic – collaboration is the essence of all investment transactions.

In conclusion, collaboration is essential to pushing the frontiers in impact investment, but there are different types of collaboration, and each might be more or less appropriate in different circumstances. In collaboration, there has to be a successful outcome for all – there can be no winner take all, or things speedily unravel, which some of you may know as the “prisoner’s dilemma”.

This blog was first published here for Third Sector on 01/02/2017.