3.2.5 Investment Propositions
The Community Shares Booster Programme is also a research programme. One of our aims is to improve the number of new community businesses being formed and their success rate. We also want to encourage wider institutional support, with a view to build a more robust capital market to support community businesses. We are committed to ‘learning while doing’ so any community business receiving support is expected to also commit to sharing their experience and provide feedback. This has helped us focus on the following innovative forms of investment.
You will need to explore and develop at least one of these investment propositions to be considered for investment from the Booster.
Incentivising local investment: We are seeking applicants who would be interested in using match funding to incentivise local membership and investment. We want to engage with community businesses to understand the best scale for different business models and/or sectors. For example. under this proposition Booster funding may only match investments made by members living within a defined geographic area.
Supporting competitive acquisitions: In exceptional circumstances, Booster could support Pathway One development grant applications to acquire a business or property where the society is engaged in a competitive bidding process. The development grant could be used to cover some of the at-risk development costs of making the bid in advance of a community share offer. Booster could match fund institutional investors up to a maximum of £100,000, which must be subsequently matched by a community share offer.
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.
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.
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.
Opening-up new sectors, regions or communities: Community share offers are under-represented in some trade sectors (such as sports, transport, education, care, libraries) and in some regions (East Midlands, West Midlands, North East, East of England). There is also under-representation among sections of the population, including ethnic minority backgrounds and young people.
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 community business.
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 their corporate form to a society as part of a business growth, or capital restructuring, succession planning and community ownership strategy.
Pioneer share offers: We will consider applications from newly established societies that plan to launch a share offer to raise money to cover pre-trading development costs leading up to a subsequent time-bound community share offer. Applicant societies will be required to obtain the Community Shares Standard Mark for their pioneer offer.
Other investment propositions: Exceptionally we will consider innovative investment propositions that are not listed here as long as they meet the Power to Change eligibility for funding. Contact the Community Shares Unit ([email protected]) to discuss before applying.