Bertrand Beghin - Cambridge Rare Disease Summit 2015
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Bertrand Beghin, Co-CEO of Numbers 4 Good, spoke in the 'Alternative funding strategies' panel at the Cambridge Rare Disease Summit 2015.
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Bertrand Beghin - Cambridge Rare Disease Summit 2015
- 1. Social Investment & Social Impact Bonds Bertrand Beghin
- 2. Who are Numbers4Good? Our vision To bridge the worlds of finance and social and environmental impact. Our work We create financial solutions, and advise organisation, tackling social and environmental challenges. Our activities N4G is a reputed provider of finance and investment readiness support, e.g. for Big Potential programmes and has structured Social Impact Bonds 2
- 3. Numbers4Good overview 3 12 team members with decades of experience in investment, business strategy, social enterprise and policy. 30 clients across the country ranging from small charities to housing associations and multinationals. £3.9m investment raised, an additional £5.4m committed, two social impact bonds launched and running a £1.2m health-tech accelerator. Three years ‘organic’ growth so far…
- 4. What we’ll cover… • What is social investment? • What are social impact bonds? • How do they work? • Considerations for a rare diseases SIB • About Numbers4Good • Q&A
- 5. What is social investment? “Using investment to consciously tackle society’s challenges – and to make a financial return.”
- 6. Investment is one form of funding for social enterprises and charities Social Enterprise / Charity 6 Philanthropy Investors Customers Funding Source Funding Type Recipient Grants Revenue Repayable finance* (*) Note: Includes debt, equity and quasi-equity however equity products can not be deployed for charities • ‘Traditional’ investors seek a financial return • ‘Social’ investors target both a financial and a specific social or environmental return
- 7. A wide range of social investment products are available… 7 Private Capital Investors Market Access Ventures Products Frontline Distribution Wholesale bank Foundations Government Market Infrastructure Providers Social Stock Exchange | Ethex Market Intermediaries | Angel networks | Wealth / Asset Managers Social Impact Bonds | Charity Bonds | Loans Equity/Quasi-Equity Products | Retail Products Grants Social Investment Financial Intermediaries Bridges Ventures | SIB Group | Big Issue Invest | Fair Finance | Numbers4Good Social Enterprises | Co-operatives | Charities | Community Groups
- 8. …and social impact bonds are at the riskier end of the spectrum 8 Debt Equity Quasi - equity
- 9. Social investment timeline 9 (*) Source: UK National Advisory Board to the Social Impact Investment Taskforce ‘Building a Social Impact Investment Market The UK Experience’
- 10. What is a social impact bond? Social impact bonds (SIBs) are a form of payment by results contract designed to improve public service delivery They improve the social outcomes of publicly funded services by making funding conditional on achieving results Investors pay for the project at the start, and then receive repayments based on the results achieved by the project No success = no repayment
- 11. SIBs in operation 11 2010 1st SIB launch Working with ex- offenders to keep them from returning to prison Showed to reduce reoffending by 8.4% _________________ ____ 2015 30 are in operation across the UK Tackling issues like homelessness, youth unemployment, family breakdown Commissioned by local and central government 100s more in development across the country Source: Emma Tompkins
- 12. Social impact bonds have grown rapidly in recent years 0 5 10 15 20 25 2010 2012 2015 Cumulative outstanding UK SIBs SIBs by social sector Source: Brookings report
- 13. Approach for findacure 13 Universe of rare diseases Isolate 10 diseases with criteria on next page Raise investment, commission project Undertake proof of concept clinical trials No of successful outcomes x commissioner payments = investor return Virtuous circle for future development
- 14. Delicate balancing act to select a rare disease portfolio for SIB 14 Probability of successful outcomes Sufficient beneficiaries to impact Very rare disease Ease of repurposing Challenging disease for repurposing Strength of existing studies lower cost Few studies – higher cost Potentially fundable using lower risk capital? Unlikely to generate sufficient outcome payments
- 15. SIB structures vary but here’s what the Findacure SIB may look like 15 NHS England Investor (s) Partnership vehicle Find a Cure Payment By Result 100% ownership via equity injection (or equity-debt capital mix) Fixed terms (*) (*) Could build financial incentives for outperformance Intervention Service / Relation Contractual relationship Flow of Funds Outcomes 1 2 3 1 2 Capital passed to service provider 3 Outcomes payments made 4 Equity return (and interest and capital loan repayment) 4