Social Entrepreneurs
2021 Summarised
Ferd Social Entrepreneurs (FSE) invests in social entrepreneurs that can demonstrate measurable social results and the ability to become financially self-sustaining in the future. FSE also works to facilitate their market access. Further, FSE provides these companies with network, knowledge and capital in an active partnership with defined milestones and social goals.
Like 2020, 2021 was influenced by Covid-19. The restrictions had a significant impact on many of the companies and meant they had to change how they operated. However, we saw the companies manage to adapt to the situation and they are looking forward to the coming year. We also saw positive progress in the field of social entrepreneurship, despite the difficult environment.
Ferd Social Entrepreneurs organised two consecutive events at the Arendalsuka conference, which were titled: “How will I as a social entrepreneur provide welfare services? A discussion with four social entrepreneurs: Gammel Nok, Generasjon M, Atlas Kompetanse and iMal”, and “Social Entrepreneurs – Innovators or Profit-Seekers?”. The latter event was an interesting debate about social entrepreneurship’s role in welfare services with the youth politicians from the major political parties. Both the events were live-streamed on Facebook, due to the pandemic the number of physical seats were limited. A total of 190 people followed the events.
At Johan H. Andresen’s suggestion, the winner of the 2021 Social Entrepreneur of the Year Award will be announced at the Confederation of Norwegian Enterprise’s annual conference in Oslo in front of 1,300 people. This should have taken place on January 6th 2022, but the Confederation of Norwegian Enterprise has postponed its conference until May 12th2022 due to the pandemic. Announcing the winner of this award at this conference is a major boost for social entrepreneurship, and is something we are looking forward to.
Portfolio
In 2021 FSE continued to strengthen its collaborations with its innovative portfolio companies. As a consequence of the pandemic, we worked closer with the companies, and strived to help create synergies across the portfolio where it was natural to do so. We were impressed with how the social entrepreneurs supported each other and shared information and opportunities with one another.
FSE has a number of significant and high-quality collaboration partners who have meant a lot to the companies, and also to us as a team. Advokatfirmaet Schjødt, a law firm, has provided the companies with legal support, which proved particularly valuable in 2021 given the challenges associated with the pandemic. Sopra Steria, a digitalisation consultancy, contributed pro bono time and training to various portfolio companies’ teams in 2021. McKinsey supported four of our companies as part of its ‘Day of Service’. Consultants from Deloitte provided some pro bono time to portfolio companies and Impact StartUp. Zynk, a strategic analysis and advisory firm, carried out very interesting stakeholder surveys for a couple of the companies. Advokatfirmaet Selmer, a law firm, helped a number of the companies in the Alumni portfolio with pro bono legal support.
At the end of 2021, FSE had 11 companies in its portfolio, two fund investments and four active social impact bonds. Medarbeiderne and Atlas reached the end of their portfolio agreements in 2021 and are now part of our alumni portfolio.
In 2021 we made one new fund investment in a venture fund that only invests in autism-related businesses (the Autism Impact Fund). The fund is the first of its type in the world, and will invest primarily in the USA and Europe. We believe investing in this fund will provide us with a great opportunity to learn more about the field of autism, to discover exciting companies and to learn new methods and mindsets that will help us progress in our own work.
In 2021 Unicus made its first international acquisition, namely of Specialisterren in the Netherlands, with financing provided by FSE. Unicus provides high-quality IT services in areas including software development and testing, quality assurance and data science. Specialisterren and Unicus complement each other in that they provide different types of IT services. Both the companies only hire consultants with the autism-spectrum diagnosis. Completing an international investment in the middle of a pandemic was both challenging and exciting.
Early in 2021 we invested in the health tech company Mindmore, which develops digital cognitive tests, including for dementia, ADHD, burnout etc. for an international market. Mindmore is based in Stockholm and represents FSE’s first investment in Sweden.
We increased our ownership interest in Gammel Nok Holding AS in 2021. The company has seen strong growth in demand for its senior workforce, and the company has, for example, provided personnel to solve tasks related to Covid testing and vaccination.
Lifetools was admitted to FSE’s ‘First Steps’ program in 2021. The company has developed a digital tool that helps people who do not have verbal language to understand and be understood. The solution delivers clear positive changes in the form of, for example, improved participation and expression, and greater inclusion in the community for a very vulnerable target group.
In 2021 FSE was involved in financing three new social impact bonds. In a social impact bond, a social investor provides the initial financing for a measure and is then repaid by the public sector once the agreed social results have been achieved. This enables the public sector to scale up measures that prove to work well for the target group and to discontinue measures that do not work without incurring major costs and with a low level of risk. The contracts are with Øvre Eiker municipality and Lillehammer municipality in collaboration with SOS Barnebyer, and with four municipalities in Vestfold and Telemark in partnership with Back in the Ring. The contracts confirm that many municipalities are becoming increasingly interested in new methods of delivering social innovation.
On the basis of the interest in social impact bonds, we have decided that the 2022 SosEnt Conference will focus on this topic once again, as it was two years ago. This year, we are organising the event in partnership with the Norwegian Association of Local and Regional Authorities (KS). As a result of the pandemic, we have decided to postpone the conference this year to 12 September 2022.
Social impact bonds have significant potential to increase the level of innovation taking place in important areas of welfare. We hope that the conference will inspire more public sector organisations to demand measurable social results when carrying our procurement in the future.
We saw that our social entrepreneurs and their customers had become increasingly well adapted to the Covid situation in 2021. However, some of companies saw their revenue decline relative to normal circumstances. Those companies that had furloughed staff in 2020 were largely able to take them back on in 2021, either fully or in part. The outbreak of the Omicron variant created new uncertainty in December, and the ripple effects of this can still be seen. The FSE companies have continued to be proactive and creative in their work to develop new products and services, and thereby to find alternative sources of revenue.
The underlying trend of growing interest in investing in companies with a double or triple bottom line continued despite the difficult market conditions. A range of private and institutional investors, as well as a number of foundations, are providing financing for an ever increasing number of distinctive social entrepreneurs. We are pleased to see more competition both in terms of supply and demand, and we note that the market is maturing at a rapid pace. We are convinced that the increased professionalism we see among many social entrepreneurs will create better market opportunities, improve their access to the financing they need, increase the number of sustainable companies and consequently grow their overall social impact.
Impact Startup
Our accelerator program, Impact StartUp (set up in 2017 as Social StartUp) was formally established as a separate company in 2020, Impact StartUp Norge AS. The company has strong collaboration partners on board, including Wilstar, Klaveness Marine, Sparebankstiftelsen Østfold Akershus, SoCentral, Innovation Norway and Deloitte. The company has entered into a pan-Nordic collaboration with Denmark’s the Social Capital Fund (Den Sociale Kapitalfond), Sweden’s Prosper and Finland’s Arvolitto. In 2021 they organized a successful joint demo day at which the accelerator participants were able to meet with potential investors from across Norway.
Impact StartUp has gone from being a network-based organisation that uses many consultants to having a strong core team of six people. In 2021, a Finance and Investor Relations Manager was appointed, as well as a new business developer with strong tech expertise, and a trainee in communication.
Impact StartUp is a tailor-made accelerator program that helps fledgling entrepreneurs with a double or triple bottom line ambition to become financially sustainable earlier than they would otherwise have achieved. Social entrepreneurs are publicly invited to apply to take part in the Impact StartUp program. 30 are selected to take part in an intensive three-day bootcamp that focuses on business development, following which 10 are selected to join a six-month accelerator program. The 10 companies are assigned to an experienced business development professional who works shoulder-to-shoulder with them during the accelerator program. The participants attend three camps that look in detail at topics including commercial operations, sales and impact management.
Impact StartUp ran two accelerator programs in Norway in 2021. The autumn program was focused on children and young people, and six foundations and investors helped to finance it, in addition to its permanent partners, Wilstar and Klaveness Stiftelsen. The spring accelerator was open to all social entrepreneurs regardless of their focus. Both programs were run using the same model as before, but most activities had to be completed digitally.
Organisation
FSE had the equivalent of 6.5 full-time employees with seven actual employees, one of whom was appointed in June as a trainee. In 2021 we directed extra importance to developing the procedures and systems we use in our impact work with our portfolio companies. We also investigated new financing tools for social investment and the continuing development of the field in Norway, and three of our employees took courses at the University of Oxford’s Saïd Business School this autumn on the subject.
Future prospects
We expect 2022 to be another challenging year for many social businesses, and we are continuing to support the social entrepreneurs in FSE’s portfolio individually and as a group. We hope that they will be able to resume their full range of activities and will be well placed to strengthen their social value creation and to grow financially as the coronavirus pandemic dissipates.
We believe that the public sector will enter more social impact bonds soon. We want to actively contribute to progress in this area, and we also want to help develop the expertise and capacity that other investors have in relation to this type of financing. We will intensify our work on impact management processes in the companies, doing so will help to highlight the relationship between their activities, measurable social results, enduring change, and social impact.
In 2020 and 2021 we saw the digitalisation of society accelerate rapidly; this trend is expected to continue in 2022. Many of the social entrepreneurs in the FSE portfolio need to make some major changes to their business models or service deliveries in order to adapt. We will support them in making this transition.
There is an ever-increasing recognition that social entrepreneurs represent an important force to innovation within the welfare state. The previous Norwegian government succeeded in becoming very familiar with social entrepreneurs, and we are making good progress in terms of our dialogue with the new government with the goal of ensuring that small, innovative companies are not forgotten. Our aim is to contribute to the identification of solutions that solve social problems, and w will continue our work to inspire both the public and private sector to use innovative procurement activities and collaborations that challenges traditional structures.