Through a combination of capital, expertise and our network, we strengthen our portfolio companies’ opportunities for success. We work in active partnerships with the companies, with clear social ambitions.
Unicus solely employees IT consultants with Asperger’s syndrome. Photo: Oda Hveem
Impact-Linked Financing
Ferd SE provides capital to enable companies to increase their social results, and we tailor our financing to the company’s current phase of development and its needs.
We are not a traditional venture investor and do not normally take an ownership interest in early phase companies. Instead, we use a range of different financing instruments, which we adapt to each company’s situation. As an impact investor, we link our provision of capital and/or the terms of our financing with the company’s achievement of positive social results. This is called impact-linked financing.
The instruments we use for early-phase companies include:
- grants for a limited time period
- convertible loans, which are loans that can be converted to equity
- The Ferd SE Impact Investing Agreement, which is a variant of a normal simple agreement for future equity (SAFE), and gives the investor the right to subscribe for shares in the company
- other innovative instruments that combine elements of grants, loans and/or equity
For more mature scale-up companies, an equity interest is often appropriate, in addition to convertible loans and other hybrid instruments.
During the investment process, we agree with the company on a shared plan for its social and financial results, growth and other business management elements. This plan, which we call our ownership agenda, also sets out how our capital is to be spent.
We also often invest together with other investors that are committed to achieving the same social objectives as us. It is important for us that our capital is exclusively used for social impact.
We also provide capital by financing private-public collaborations and social impact bonds. More information on this is available here (ink to social impact bonds)
Expertise and Network
Each of the companies in our portfolio works with a dedicated team of 1-2 business developers, who follow the company over time. Our team has specialist expertise in a number of areas, such as financial management, governance, and Impact Measurement and Management. Our business developers contribute numerous hours each year to being discussion partners, running workshops and attending meetings with their companies. They also connect their companies with resources in our network in areas such as strategy, sales, communications, ICT, legal affairs and HR/recruitment – working in accordance with a shared plan.
In addition to providing direct business development support, we also take care to ensure that the companies have strong and capable boards of directors who share the company’s social ambitions, and can be useful discussion partners for their founders. We work closely with the boards of all the companies in our active portfolio. At companies in which we have an ownership interest, we exercise active ownership through the board of directors.
We also facilitate the sharing of experiences across the companies and seek to create synergies across our portfolio. We expect the companies in our portfolio to attend events organised for our social entrepreneurs.
Measuring, Managing and Optimizing Social Impact
We work actively with our companies using a method known as Impact Management and Measurement. This means that our portfolio companies are expected to measure their social results and to organize their activities so that they make decisions that optimize their social impact. This method is the key to developing sustainable business models for companies that have a social purpose.
More information on Impact Measurement and Management is available here.
Alumni
Once a company’s time in our portfolio has come to an end, it becomes an ‘alumni’ company. This means that our business developers continue to be available subject to capacity, but the aim is for the companies to be robust enough financially and organisationally to scale their own activities independently.
Find out more about our previous investments here.
Our Theory of Change
As an investor, Ferd SE has many years of experience of working closely with social entrepreneurs, and our main objective is for more companies to be able to stand on their own two feet and scale their social impact. We have developed our own Theory of Change and associated indicators and methods for measuring change. Based on these results, we as a team constantly optimize how we work with our portfolio companies. We measure the results of our efforts, as well as social impact at the company level. Through our ownership agenda and the ambitions we share with each of the companies, we monitor whether our shared efforts are creating the expected social impact. Measures and changes are implemented if we see that this is not the case.