New Hatch accelerator to jump-start growth of 15 social enterprises

At first glance, the UK social enterprise sector is thriving. At the last count, there were 99,000 social enterprise employers in the UK, over twice the number in France. UK social enterprises contribute £60bn to the economy and employ some 2 million people. From leading brands like Divine Chocolate and Teach First, to trailblazing social enterprises like Change Please or BEAM, the sector seems to be in robust health. In many ways, the opportunities for social enterprises are better and brighter than ever. 

But look past these success stories, and a different picture emerges. Figures from Social Enterprise UK suggest it takes the average social enterprise around 15 years to get to an income of £500,000. Currently, the majority of social enterprises (65%) turn over less than £250,000, and are struggling to grow because they cannot get access to customers easily or secure patient capital that would allow them to do so. 

It takes the average social enterprise around 15 years to get to an income of £500,000

What’s stopping them?

We believe three things are missing: access to markets, access to patient capital and access to the right support. Without patient capital for example, we will never know how many truly scalable social ventures are out there, as the majority will stay small, not big enough to focus on scaling their business and unable to effectively innovate.

It can happen, though. When The Big Issue got started in the early 1990s, the company was losing £25,000 a month, until an investment of £500,000 from The Body Shop allowed the company to scale and become a national brand. 

Such an investment, and the investor’s faith that came with it, was rather rare. 

Fast forward a few decades and – with a now well-developed social investment market and a wide variety of financial products to choose from – the one thing that is still missing is the kind of patient capital available to commercial businesses, which can raise funding by selling equity. This route is often not possible for social enterprises, which have to scale by selling more products or services. That takes a long time, reflected in the time it takes to get to, say, £250,000 in turnover, which can be as long as 10 years. 

Change Please, the London-based coffee company that gives people who are facing homelessness training and jobs as baristas, began its journey in Hatch’s Incubator programme in 2015. After securing backing from The Big Issue Invest and other investors, Change Please was able to scale the business and is now becoming a major player in the fight against homelessness. Thanks to partnerships with Virgin Trains and various supermarkets, their coffee is now widely available. Most importantly, its employees are paid a London Living Wage, are being supported into housing and are off the streets.

We think there are many more success stories out there waiting to happen. So our new programme, the Hatch Impact Accelerator, has been set up to give vital support to 15 growth-stage social enterprises so they can scale their business, and their impact. 

We believe that advice from a seasoned social entrepreneur makes all the difference

This new programme is, we believe, unique. It looks to address many of the challenges we have experienced ourselves, as a growing and scaling social business. We use tried and tested support methods including workshops, mentoring and coaching; and we provide free office, training and retail space at our base in south London. Unlike many other programmes, the Hatch Impact Accelerator also offers peer-to-peer support, by matching each participant with an experienced social entrepreneur who has already grown his or her business. We believe that advice from a seasoned social entrepreneur – alongside the other professional support – makes all the difference. How did they win their first contract? How did they diversify grant funding, and how are they now generating revenues based on a B2C model? Getting answers to questions like these provides new businesses with both inspiration and real-world practical insights.

Many social entrepreneurs look to social investment as a way to grow their impact, so through the accelerator, we'll facilitate direct access to investors like Big Issue Invest. The programme also plugs its applicants into pro bono financial coaching from UBS, and legal support from Skadden LLP. Hatch has also partnered with Peabody, the housing association, to explore supply chain opportunities for these social enterprises. This is how we want to test improving access to new customers and markets, which is what's needed most urgently to help social enterprises to grow. 

The Impact Accelerator is delivered flexibly across 12 months, because we know it takes time to learn and implement new strategies, develop relationships and act on new information. Having more time ensures that expertise, connections and a community of social enterprise practitioners can come together – something that's not always possible on shorter programmes.

So, who'll be the next Change Please?

London-based social enterprises can register for the Hatch Impact Accelerator by 14th April here.