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Childcare Investment Readiness Fund – ClearlySo is an approved provider

ClearlySo is an approved provider for the Childcare Investment Readiness Fund. The Childcare Investment Readiness Fund is a £500,000 pilot fund, managed by the SIB Group on behalf of Department for Education. It aims to “support early years and childcare social enterprises looking to expand their presence in the early years market”.

The Fund will provide grants between £25,000 and £50,000 to early years and childcare social enterprises looking to raise investment to facilitate growth. This will allow them to purchase support from ClearlySo, such as deal structuring and financial modelling, to them get ready for investment and positioning them to  appeal to investors.

Deadline for submitting an application is noon on Friday July 17th. 

If you are interested in applying for a grant to purchase investment readiness support and would like to work with ClearlySo, please do get in touch with Hannah Sheath: Hannah.sheath@clearlyso.com.

Why should Childcare providers be interested?

The introduction of the early years pupil premium, along with the Childcare Investment Readiness fund, is the latest in a series of government interventions designed to pump money into the Early Years sector.

Thirty-three percent of nurseries plan to expand within the next 12 months in order to cope with increasing demand. The main barrier to expansion is getting the right type of capital at an affordable price – and that is why this investment-readiness fund is so important. It allows businesses (and charities) to access support and advice without incurring heavy costs, making sure they are ready to speak to investors and fully prepared for expansion.

There are currently c.14,000 day nurseries in UK, with the majority of these being stand-alone nurseries. There is an increasing trend of medium to larger providers acquiring smaller nurseries to increase efficiency, creating an increasing group of larger players benefitting from economies of scale. This provides significant opportunity for nurseries with investment capital behind them to acquire standalone nurseries or small chains help them to scale rapidly.

The government entitlement of 15 hours a week free early years education for three- and four-year-olds and the 40% most disadvantaged two-year-olds only covers on average around 80% of costs. When this doubles to 30 hours of free education from September 2017 (although piloting from September 2016), providers will need further capital to cover the funding gap. For many, this will mean expanding or acquire other providers in order to benefit from economies of scale.

Impact investors have already recognised the benefits of investing in early years education. Recent investments include the ClearlySo-brokered Big Issue Invest and Bridges Ventures investment of £1.25m into London Early Years Foundation to help them acquire ten new nurseries and the FSE and HSBC investment into 4Children .

What makes an organisation eligible?

Applicants must have a proven track record and the potential to expand their services into new locations. They can be established providers of early years care, charities, or even those considering themselves social enterprises who would like to expand their business portfolios.

What investment readiness support would ClearlySo offer?

Our team of experts come from both entrepreneurial and investment backgrounds, and will help your organisation articulate why you need investment, calculate how much investment you need and the structure, create documents and resources to help you pitch. They will introduce you to investors who are aligned with your mission and objectives. Last year, we helped nursery provider London Early Years Foundation become investment ready through the Investment Contract and Readiness Fund (ICRF)   and then raised £1.25m for them from two institutional impact investors.

From writing a business plan to crafting a financial model, helping you with your pitch deck or coaching you on pitching to investors, our team are there to help you understand what you need to prepare before you go out to raise investment, and help you convince investors once you get there. This may also mean supporting you to think through skill gaps in your team, structuring the investment deal and brokering introductions. If the investment is eligible for social investment tax relief (SITR), we will help you navigate that with your investors too.

Because we work exclusively with charities and businesses focused on social impact, we will always ensure impact outcomes are valued alongside financial outcomes. When creating your investment proposition, we will help you think about impact reporting as well as financial reporting, and make sure you get the investment deal that grows your organisation’s impact – sustainably.

How is ClearlySo’s advisory work paid for?

If you are successful in your application to The Childcare Investment Readiness fund, the grant they provide will pay for our services. This means you will have access to our team of experts and the investment readiness work you need, paid for by the fund   – for up to £50k.

How would ClearlySo raise investment for an organisation?

We have a network of over 600 high-net-worth individuals and 750 institutional investors – all of whom want to use their capital to create impact. We call these impact investors because they are committed to social impact as well as financial return.

Once we have worked out the structure of the deal, we will introduce you to investors who will be able to provide suitable finance. There are many different types of investors in the early years space including impact focused funds, educational focused foundations, social and mainstream banks and private equity.

We will help you narrow down a list of the right, values-aligned investors. Once we know who you would like to approach, we will pitch the investment to them, set up meetings with you and support you through the investment process. We will finalise the terms of the deal, including working with your lawyers, and ensure that you are happy with the repayment terms.

If you are successful in raising investment through our investor network, we will charge a small success fee on the capital raised.

What track record does ClearlySo have?

Since 2013, clients with which we have worked have raised over £60m in impact investment. This has included many clients in the voluntary and community sector, such as a charity raising £1.25m in debt finance, who accessed our investment readiness support through the ICRF, and a self-styled social enterprise helping young people into work who raised investment from an impact fund.

We have worked with nine charities, community sector organisations and impact focused businesses to win ICRF applications; with our advice four of these have already successfully raised £8.8m capital.

Through the ICRF grant, ClearlySo assisted London Early Years Foundation (LEYF) in determining the size and structure of the capital raise, reviewing and challenging the business plan and financial model, identifying investors and writing a teaser for potential investors. ClearlySo played a key part in completing the first phase of investment, which was a £1.25m loan provided from Big Issue Invest and Bridges Ventures in May 2014. ClearlySo managed the process and advised LEYF on every point of the transaction including negotiating on terms and conditions.

As we have helped over 40 organisations raise impact investment, including charities, CICs and those considering themselves social enterprises, our team are experienced in helping find the right capital to allow organisations to scale their social impact. Our clients can be hundred-year-old charities or recent startups, but they all have genuine traction in delivering social change.

For further information, you can see The Childcare Investment Readiness Fund website, where you will find ClearlySo listed as an approved provider.

We also have resources and a glossary for more commonly-used terms, and would be delighted to hear from you if you are interested in applying. Please do let us know if you would like to discuss working together to help secure your organisation a place on the programme – contact Hannah Sheath: Hannah.sheath@clearlyso.com