Recently, Triodos announced it had raised  £600k for the winner of the ClearlySo Social Business of the Year award, Bristol Together CIC. We spoke to Lydia Westmore, Corporate Finance Manager of Triodos, about the deal, and what she looks for in an investable business.

What attracts you to Bristol Together CIC?

Bristol Together is an exciting example of how a sustainable commercial business model can be harnessed to create a social impact.

Paul Harrod (CEO and Founder) approached Triodos a year ago with the concept of this business, the idea of employing ex-offenders to repair and refurbish property, and recycle profits made, on sale into new properties to generate further skills training and job creation opportunities. We were confident that the project would appeal to our investor base of private high net worth individuals and charitable foundations.

What do you look for when selecting promising social investment opportunities?

We're looking for a business model combining commercial sustainability and the ability to deliver real social impact. It is crucial that a business is scalable and self-financing - not reliant on grant funding or donations. Social businesses should be able to deliver a financial return and a combination of these features drive investment from our network of investors.

Bristol Together is an excellent example of a business that can deliver both a social and financial return and as such is an ideal Triodos corporate finance client.

Who's investing?

The catalyst round of fundraising designed to prove the business model was funded by Esmee Fairbairn Foundation and the investor chair of Bristol Together, Andrew Street. We will commence the full 2012 Bond Issue early next year and seek investment from private high net worth individuals and charitable foundations. For our private investors, there will be an opportunity to take advantage of Community Investment Tax Relief (CITR) that may deliver an additional 5% return per annum in tax relief.

How does the finance work?

Investment was made through a 3% bond issue with interest payable quarterly and capital repaid at the end of a five-year term. The 2012 Bond Issue will be through the same bond instrument. This is effectively a loan to the company and will be eligible for CITR.

Is there more interest in social investment generally? Are you seeing more interest from your clients?

We have seen an increase in social investment activity over the past year. This has coincided with the Government's Spending Review and lower interest rates. There are an increased number of businesses focusing on delivering both a social and financial return, and with the ongoing low Bank of England base rate, investors no longer demand the higher, less sustainable returns they did a few years ago.

Our clients are also showing an increased interest in local investment opportunities and supporting a project with measurable, tangible social impact. Bristol Together will prepare regular packs for investors detailing case studies of individuals working onsite and it is this kind of connection with your investment that investors really embrace.

What other work is Triodos doing in social investment?

Triodos is also interested in other social businesses. Our UK corporate finance work currently focuses on companies that provide job creation in deprived areas, provide finance to those people that may be unable to access it through the usual means, and work with young people to provide education, employment and training.

Overseas we have helped companies raise capital to improve living conditions in lower middle income countries through projects that provide solar lighting, hospitals, schools and other income sources.

Another growth area focuses around payment by results through contracts with the Government which we have seen a great deal of interest in recently.

What do social enterprises need to do to make themselves more attractive for investors?

Social impact by itself is not enough - social enterprises also need to operate sustainable business models. All companies need to adapt to an environment where less funding is available and consider how their businesses can generate a financial return - the ability to be self-financing is the key differentiator.

Being able to offer investment through a simple financial instrument like a bond makes it easier to attract investment. Investors want to be able to invest simply and to know that their investment is having a positive social impact. The bond offered by Bristol Together is a simple tool to attract investment.