How investable is education?

| No responses | Posted by: Daria Kuznetsova | Theme: Social Innovation & Investment, Youth & Education

Big Society Capital and Impetus- PEF recently launched a report by The Young Foundation on the role of social investment in raising attainment of pupils from poorer backgrounds. To take the discussion forward, we brought together intermediaries, institutional investors, foundations and policy makers at a roundtable.

Up for discussion were the three areas of opportunity for social investment put forward by the report:

  1.  Social enterprises providing services direct to schools, in particular targeting the pupil premium budget.
  2. Social enterprises becoming providers of post-16 education services to meet demand for new places created by the increase in the school leaving age.
  3. Social enterprises delivering payment by results contracts commissioned by Department for Education or the Department for Work and Pensions.

We focused on whether there was investible demand in the first i.e. social enterprises providing services to schools.

Photo courtesy of Big Society Capital.

Photo courtesy of Big Society Capital.

A growing market
There was broad agreement about a growing market for social enterprises in education. Schools are looking to purchase interventions that support their day to day to work and the pupil premium has given them with a pot of money to do so. The kind of interventions they’re looking for are usually about building the confidence of disadvantaged pupils and thereby improving their life chances.

Social enterprises have historically delivered such services, developed an evidence base to demonstrate their effectiveness and are good at tailoring their approach to the school’s needs. For example, Enabling Enterprise is a social enterprise that works with students to develop enterprise skills such as teamwork and leadership alongside the academic curriculum.

Early stage ventures
Selling into schools is a relatively new market and similar to other sectors, the level of demand for social investment is uncertain and often dominated by early stage opportunities. Social investors in attendance agreed that a large proportion of social enterprises in education are at an earlier stage of business growth than is perhaps appropriate for social investment.

This is backed up by a recent SEUK survey revealing that start-ups are more likely to be in education than more established social enterprises. Additionally, business models of social ventures in education are often reliant on passionate people working to make a change in pupil’s lives. The viability of such business models is often dependent on accessing diverse sources of income and/or scaling the model.

Support to scale up
To do just that, social enterprises in education will need some support. In particular, they will need help in marketing their interventions. The push towards academisation has meant that instead of marketing to a few hundred local authorities, organisations now need to sell to 20,000 head teachers holding the budgets of schools across the country. This is quite a daunting task and social enterprises often do not have the resources to develop and implement an effective marketing strategy needed to be successful.

The challenge of marketing is not insurmountable. We’re beginning to see social enterprises collaborating with private sector partners or academy chains to make use of their school databases. Furthermore the use of endorsements through teacher networks such as Challenge Partners is becoming increasingly common in the current education landscape. Lastly, there is an opportunity for government to support the sector. DfE could develop approved supplier lists which schools can use to identify trusted interventions to purchase with their pupil premium money.

Looking forward
Going forward, a mix of capital will be needed to support social enterprises: grant funding to build an evidence base for their interventions; a mix of grant and repayable capital to invest in marketing and sales; and investment for building business infrastructure and further developing the service offering. Investors and grant makers are already beginning to work closely together to coordinate the various pots of capital available. These collaborations will need to continue and strengthen.

The roundtable shows the growing interest of various investors (both foundations and institutional investors) in the field of education. This autumn, Big Society Capital looks forward to continuing these conversations. In doing so, we hope to develop with solutions that support the social sector in making a difference in the lives of some of the most disadvantaged young people in our society.

Read the original post on the Big Society Capital Blog.

Read our report “Social Investment in Education.”

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