London-based ‘social impact’ accelerator, Bethnal Green Ventures, which backs pre-seed startups with ideas for using tech to tackle social and/or environmental problems, has taken £1.3 million in funding from three social tech and innovation funders: Big Society Capital, Nominet Trust and Nesta.
BVG says it’s intention with the new raise, its third, is to support social impact startups through more of their first steps — ideally up to seed stage in future, not just helping teams accelerate early stage ‘tech for good’ ideas.
At this point BVG has invested a total of £1.4M in 86 startups since first opening for applications back in March 2012. Of those, it says 56 companies are still active, with its portfolio having collectively raised more than £23M in further funding, and the businesses having an estimated 6.5 million people using their products and services.
The fund’s current model combines a twice-yearly, 12-week accelerator program in which chosen startups receive a £20,000 investment (in exchange for 6% equity), along with mentoring and access to co-working space in London.
Last year it also expanded to be able to offer a further £50k to startups in the cohort. But it’s evidently hoping to go a stage further still — aiming to create a seed fund to support more companies to the next stage.
It says the funding it’s taking now will be used to develop the planned “later stage impact investment products”, as well as for expanding its operations and building further partnerships — presumably to help it raise the capital for the hoped for seed fund.
A BVG spokeswoman confirmed it will also have “more capacity” to do investments up to £50k in its cohort startups, “usually in the form of a convertible note”. She said the plan is to do 20 accelerator stage investments this year, plus 10 to 12 follow on investments.
Commenting on the raise in a statement, BGV CEO Paul Miller, added: “We’ve proved our accelerator model works, but it’s not enough on its own. Startups require ongoing support and funding to scale up their operations, this is especially true for startups focused on social impact. Last year we expanded our offer by being able to invest up to £50,000 in great teams after the accelerator stage. This year we’re planning a fund to be able to back alumni and other tech for good ventures with next stage capital. This will help to plug a notable hole in seed-stage impact investment available to startups in the tech for good space.”
BVG’s spokeswoman said that when it comes to the social impact funding space it’s “often” the lead investor role that’s missing. “Angels are great and really plugging a gap but someone needs to set the terms, and we feel we can do that, especially in our role as an impact investor,” she told us.
In terms of which ‘tech for good’ early stage startups face the biggest funding gap challenge, she said it’s a problem across the board but also noted it can be more of an issue for those with “large slow moving customers” — such as local authorities or the UK’s National health Service — or else those with “vulnerable users requiring a responsible approach to growth”.
The fund’s broad themes within its ‘social impact’ mission remain health, education, sustainability and democracy. But the spokeswoman said it’s also working with a few partners to target some specific areas.
“For example we’re looking at startups targeting the gig economy and ways to improve prospects for low paid workers. We’re also interested in solutions for young people facing multiple disadvantages,” she added.
One BVG portfolio company we covered recently is Fairphone: a European smartphone startup that’s created a modular phone design aimed at encouraging users to hold onto the same device for longer — thereby reducing the environmental impact associated with owning a smartphone.
Another, DrDoctor, is a hospital booking system which BVG says it used by more than 4 million NHS patients in the UK.
U.S. startup factory Y Combinator has also, in recent years, placed more of an emphasis on supporting startups aiming to have a wide social and economic impact.