2.2.5 Investment Propositions
The Booster Programme aims to develop new forms of investment proposition, institutional support, and business appraisal methodologies that will improve the formation rate and success of community businesses. We will be devising new approaches to business appraisal for specific community business trade sectors, and using these appraisal methodologies to encourage institutional support for community businesses. We want to experiment with innovative forms of investment proposition that can be targeted at other institutional investors, with a view to building a more robust capital market to support community businesses. Our pilot programme helped us to identify ten types of investment proposition we want to explore and develop further.
We are now looking to support community businesses that can explore and develop one or more of the following investment propositions:
1. Incentivising local investment: We are seeking applicants who would be interested in using match funding to incentivise local membership and investment. Under this proposition Booster funding can only match investments made by applicants living within the geographic boundaries of the local community, as described in the offer document.
2. Member subscriptions: We are seeking applicants who would like to experiment with member subscription offers, where members commit to invest small amounts on a regular basis over an extended period of time of up to five years, to build up a stake in a community business. Booster will match the full amount pledged by members at the beginning of the investment period, withdrawing this match as it is replaced by subscription income.
3. Transitions to open offers: We would like to support established societies who are ready to make the transition to an open offer, by providing match funds that will enable the society to allow the withdrawal of share capital, replacing some of this with new share capital invested by existing and new members. Applicants must be prepared to make an open offer, with Booster matching the inflow of new capital, some of which will be used to support the phased introduction of share capital liquidity and withdrawals.
4. Capital restructuring: We are interested in supporting established societies that want to make a time-bound offer to raise share capital to replace more expensive and shorter-term debt, as part of a capital restructuring exercise. We are also interested in supporting new community enterprises that have been established with institutional debt support and now wish to replace this debt with community share capital.
5. Opening-up new sectors, regions or communities: Community share offers are under-represented in some trade sectors and in some regions. There is also under-representation among sections of the population, specifically black and minority ethnic communities. Under-represented regions include the West Midlands, the North East and London. Under-represented trade sectors include community transport, libraries, and personal development services (such as education, training business support etc).
6. Partnerships with local authorities or other public institutions: We would like to work with local authorities, public sector services, housing associations, large national charities and membership organisations interested in developing community businesses at a local grassroots level. This may include the spin-off of public services, or existing trading activities, where local ownership and engagement would improve the competitive advantage of the business.
7. Conversion of established community businesses: We would like to work with established community businesses that have been trading for three or more years that are interested in converting to a society form as part of a business growth and community ownership strategy
8. Other investment propositions Exceptionally, we will consider innovative investment propositions that are not addressed by any of the above propositions as long as the propositions meet the Power to Change eligibility criteria for funding.