Bidding and Winning: A Thrilling Success for an ICRF Application
I was thrilled to bits when Rod Schwartz of ClearlySo rang to ask if I'd be interested in putting a bid together to the Investment Contract Readiness Fund (ICRF) for REDS10. It was just the kind of project I knew I'd enjoy; as close to my values and passion for social enterprises tackling employability and jobs as you can get! As it turned out I worked up a really stunning bid with input from the key parties, it got submitted in July and following a little to-ing and fro-ing and minor re-budgeting, it was approved, making history as one of the first businesses to make it over the ICRF starting line.
I'd met Tom Storey and Paul Ruddick, the co-founding directors of REDS10, several times when I was CEO of Social Firms UK and had come away each time intrigued about what had spurred them into this field and inspired about what this innovative social enterprise was doing with regard to getting long term unemployed people into jobs. They didn't really fit the mould of typical start up in either operation or approach, and we had challenging debates about whether it was even a 'social enterprise'.
I confess to taking a while to break through the mental pain barrier of understanding what the business actually did and how it worked. Outlining the model clearly and simply is one of the challenges we have to deal with through the course of the ICRF. Writing the bid certainly got rid of that 'blind spot' for me once and for all. It's unorthodox yet really clever and, more importantly for our times, completely viable.
And this is where the people come in - Tom and Paul put £150k of their own money into getting REDS10 off the ground and added a further £200k from the government equity investment long term loan scheme which will be repaid in full by March 2013.
There's a lot to be said when the founders of a business have put such significant amounts of their own money in - sort of gives you the reassurance that these two are going to do everything in their power to make this thing work! It also explains why being a private share company is so appropriate for REDS10 as their own money is integral to this business (I hear a gasp in the audience and a cry of "how can they be a social enterprise then?" - yes, I know, been there, had the debate, got the T-shirt etc.!)
Fortunately, the ICRF is pretty broad in its interpretation of the criteria for applicant organisations and REDS10 met those through its social mission. If the aim of the ICRF is to raise capital investment then it needs to be a structure that is amenable and open to such investment, as well as having the ability to deliver a financial return in the first place, so I think the decision to keep it broad was a wise one for that purpose alone.
REDS10 Trading Ltd (http://www.reds10.com/sustainable/, Twitter @reds10ltd) started trading in May 2010 as a social enterprise supporting disadvantaged, young and unemployed people into jobs on local construction sites whilst helping local authorities, developers and contractors meet their local labour and apprenticeship targets. It offers a win-win solution for all parties. Its revenues come from private sector contractors in return for apprentices placed with them and REDS10 has built up an excellent reputation for supplying quality staff to more than 70 companies.
The REDS10 start-up was costly due to the 'train then place' model, with no income until the point at which the apprentices are placed with the contractors; this explains why the pump priming finance was needed and also why the social enterprise made an operating loss in its first year of trading up to September 2011. Not a dissimilar approach to the increasingly used Payment By Results, really. The service costs nothing to local authorities or developers. A margin is earned on the hourly rate of candidates placed with contractors; this income comprises the majority of REDS10 revenue and comes entirely from the private sector. The rest is made up from employability-related contracts and grants. It's a unique approach to solving a common problem and, as more apprentices complete their training and are placed with contractors, so the financial and social returns increase.
REDS10 is on the cusp of making a significant financial as well as social return on investment; indeed the whole purpose of the ICRF is to get REDS10 to the point where they can attract their target of £1m in capital investment so they can spread their work further.
With intensive, knowledgeable and professional support input from ClearlySo and Strategic Resource and Intentionality CIC, the plan to realise £1m of capital investment into REDS10 should be well underway by July 2013, when the ICRF project finishes. Writing the bid was one thing; now I'm privileged to be co-ordinating and managing the project over the next nine months. In doing so, I'm helping one of our youngest, most dynamic and exciting social enterprises really scale up their model that cracks the nut of employment and jobs for disadvantaged people in a way that has not been seen before in this country. The lives of many will be changed and it feels good to be part of that!
Sally Reynolds OBE
Freelance social enterprise adviser/consultant
& ClearlySo Associate