MBM have advised on the first two social investment tax relief deals in Scotland. Last month, we advised Delivered Next Day Personally CIC (“DNDP”) and Breadshare Community Interest Company (“Breadshare”) on their respective investments from well-known Scottish business angels.
It has been over 18 months since social investment tax relief was introduced by the UK government. In the intervening period, there has been a lot of interest in social investment but no reported deals in Scotland which have taken advantage of the new tax break. It is, therefore, encouraging to see ambitious social enterprises such as DNDP and Breadshare successfully use the tax relief as a tool to access finance to scale and grow and, in turn, maximise the social impact which they can achieve.
Both DNDP and Breadshare are part of the LaunchMe programme, Scotland’s first accelerator for early stage social enterprises. The LaunchMe programme is delivered by First Port and funded by Big Lottery Scotland. FirstPort facilitated the investments by bringing together the social enterprises with prospective investors. DNDP secured funding from a number of business angels including Barry Sealey (co-founder of Archangel Investors Ltd). Mr Sealey commented on the recent deal:
“I was a business angel for 20 years investing in young companies so I know about small businesses. The idea of applying this experience to the social world appealed to me. Applying good commercial principles to tackle important social problems is so much better than looking for charity money. It’s a two way thing. I chose to invest in DNDP because as well as providing employment and a sense of purpose for disabled and disadvantaged people, it is also generating income and delivering commercial impact.”
The completion of the first two social investment deals is undoubtedly an important milestone for the social sector in Scotland. As social enterprises such as DNDP and Breadshare lead the way, other early stage social enterprises should feel more confident about taking on investment.
If you would like to find out more about social investment or you have any queries arising from this article, then please email Jennifer Noble.