This document discusses financing models for social enterprises. It notes a strategic financing gap for early stage social enterprises that are too large for philanthropists but too small and risky for institutional investors. It introduces FASE, a financial intermediary in Germany that builds bridges between social entrepreneurs and investors. FASE has provided over 4 million Euros to 12 social enterprises through various hybrid financing models that blend grants and impact investments. These models allow financing of social enterprises both with and without profitability. The document also summarizes two international examples where FASE helped social enterprises in Austria obtain financing. It concludes with policy recommendations to further develop markets for social enterprise finance.

1. Eine Initiative von
FINANCING AGENCY FOR
SOCIAL ENTREPRENEURSHIP:
CREATING COLLABORATIVE HYBRID FINANCING
MODELS FOR SOCIAL ENTERPRISES
Presentation for the OECDWorkshop, Brussels
Ellinor Schweyer, Co-Founder of FASE GmbH
Munich, February 2016 1

2. 2
$500bn
market size 2014 (GIIN, 2010)
The market (challenge): capital (not) meeting investees
€50m
currently committed in
impact investing funds in D
why?
Investors are waiting at the end
of the pipeline -> early-stage
financing gap
350
Ashoka Fellows in EU
about 1/3 “investable”
150
Ashoka Support Network
members in EU, about 1/3
willing to invest
10-15
Deals in Germany/yr.
€500k-1m
possible deal range for typical
impact investing fund
€1bn
currently committed in
impact investing funds in EU
(EVPA, 2012)
1700
social entrepreneurs in D
(CSI Heidelberg, 2013)

3. 3
The mission: closing the ‘strategic financing gap’ with
hybrid growth capital
-100 %
(grant)
Strategic financing gap
- Early stage financing -
„Too large for philanthropists,
too small (and risky) for
institutional social investors“
Hybrid financing
Combination
of philanthropic capital
and impact „first“ investments
Experimentation Scaling
Early-stage growth Later-stage growth
Market
rate
return
Start-up
< 50TEUR
 Equity
 Donations
50 - 250TEUR > 250TEUR > 1 Mio. EUR
 Multiple
financing options

4. 4
The FASE solution: building a bridge between
social entrepreneurs and investors
 FASE was established as the leading financial
intermediary in Germany, supporting social enterprises
with outstanding impact in attracting growth capital.
 FASE has fuelled an open pipeline of leading,
investment-ready social enterprises that are poised for
growth: 12 deals closed so far, EUR 4 mn injected.
 FASE created an active network of more than 250
philanthropic and impact-oriented investors, incl. the
first social business angel club (‚AshokaAngels‘).
 The EU supports FASE with grants to pilot hybrid
financing models during 2014/2015.
 FASE is setting-up an early-stage co-investment fund
to co-invest in social enterprises in Germany/Austria
together with lead-investors ( EUR 5,5 mn fund volume)
Major achievements so far: Closed financings to date:

5. 5
Hybrid finance models allow to finance both social enter-
prises with and without break-even to scale their impact
 Use “classical” financial instru-
ments for impact investments
 Equity
 Mezzanine (quasi equity)
 Subordinated loan
 Build hybrid model with for-profit
and non-profit entity
 Non-Profit:Grants
 For-Profit: Equity, mezzanine,
subordinated loan
 Use innovative financing tools to
internalize external effects
 Pay-for-success mechanism
(e.g., social impact bond)
Social enterprises with break-even
Financing
strategy
Social enterprises without break-even

6. 6
FASE has developed and tested 7 state-of-the-art
financing models
Tailored financing models (part of a hybrid
deal structure)
•Mezzanine capital with revenue participation and social impact incentive
•Mezzanine capital with profit participation and social impact incentive
•Easy-to-use investment scheme (simplification of mezzanine capital)
Hybrid cooperation models
• Equity donation combined with impact investment
• Crowd investment combined with impact investment
Innovative hybrid financing vehicles
• Non profit financing vehicles
• Early Stage Co-Investment Fund

7. 7
Two international financing cases who have closed their
financing needs with FASE
 Gregor’s new venture, disAbility
performance austria (dpa), is the link
between commerce and people with
disability.The entrepreneurial and social
goal is to help companies identifying the
potential in disabled people.
 Social impact: dpa is the first inter-
mediary between companies and
disabled people with the aim to identi-
fy and use new potential and use it.
 Investment need: For the start-up
phase in Austria EUR 330k are needed.
Gregor Demblin
Disability Performance
Austria
Contract with one institutional
investor signed (Model 1)
 Robert has created a unique social
online-network connecting schools with
external partners, who offer various
external offers to enrich the schooling
curriculum.
 Social impact: the online market place
is free of charge for schools and
connects them with companies,
cultural institutions, experts and
sporting clubs (for example via a
virtual pin board) to enhance the
learning of students.
 Investment need: Setup costs of EUR
450k are needed until break-even.
RobertGreve
SchulePlus
Contracts with business angel and two
institutional investors signed (Model 1)
Key Findings:
proBono Legal advice has
helped to find the right
financial instrument
The clear methodology of
the transaction process
have been transferred
from Germany to Austria
A local ownership in
Austria will be
established in 2016

8.  Capacity building SEs: provide more public funding should be made available to help
more Social Entreprises become investment ready.
 Capacity building Ecosystem: provide public funding to intermediaries like FASE
support SEs in raising growth capital.
 Direct financing on a deal-by-deal basis: provide grants or guarantees to leverage
private capital and to enable hybrid deals between -100% and market rate return
 Indirect financing via hybrid investment vehicles: provide guarantees or first loss
capital to leverage private capital into SE, eg. Co-investment fund
 Regulatory framework: establish a supportive regulatory framework to support social
finance structure eg.Tax incentives, legal structures.
8
Key policy recommendations to develop
early-market for social enterprise finance

9. 9
We are looking forward to your feedback!
Ellinor Schweyer
Managing Director
Finanzierungsagentur für Social EntrepreneurshipGmbH
Prinzregentenplatz 10
81675 München
Mobil: +49 – 179-5007913
Fax: +49 - 3212 - 14 02 672
E-Mail: eschweyer@fa-se.de
www.fa-se.de