July 17, 2017

Interview with Sam Salisbury, Investment Principal of Ignite Social Enterprise

Interview with Sam Salisbury, Investment Principal of Ignite Social Enterprise, part of the EVPA Corporate Initative


What is the story behind the creation of Ignite?

In 2012, we had a group of senior managers at Centrica on what we called a general managers’ program. They were given a simple challenge: how could we have a big impact on society, that would create a more innovative culture within Centrica and expose us to new ideas from the outside world? At that time, we had a poor reputation in the world, we were pumping money into corporate responsibility and not seeing great results from that and we were suffering from lack of innovation in our company. From that program we were steered in the right direction, and the idea of Ignite was born.

Could you tell us more about Ignite?

Ignite is an impact investment fund with a focus on energy. There are 14 UK-based companies that we have invested with, and about 35 in total that we have provided support to. Average term for investments is somewhere between 4 and 7 years. However, we do a lot more than just investing. What's really important to us is getting support from the people in Centrica to help the enterprises we are invested in grow. We give them mentorship to help these companies create business plans and become investment ready. The job of the mentors is to help with their business planning, but also to really reach into our business and identify the challenges facing the social entrepreneur, to find experts that can help, and do that matchmaking service on their behalf.

Are the enterprises you invest in systematically linked to the core business of Centrica?

They are all somehow related to energy. When we make an investment, what I am looking for is: "can we help this enterprise to be successful?” But also: “Is there something interesting about this company for us strategically?” They don't always have both. For example, we have in our portofolio a couple of biomass companies, but creating biomass fuels isn't really core to Centrica strategy. They are energy related and we think there's a lot of help we can give these businesses. In our portfolio there are actually three or four that I think are really spot-on in terms of Centrica strategy, but there are also quite a lot that we think we can help and that are in areas that are of interest to us. That is an important part of the overall Ignite strategy which is driven by a few benefits that we like to bring to Centrica.

The first one is about people. I talked about how we try and get people out of Centrica and into the start ups. We see that as an opportunity to develop the talent in our business and to make people more entrepreneurial, to learn new ways of working, to exercise new skills and get excited again about working for Centrica. The second part of our strategy at Centrica is around innovation. The third part is around social impact, which enables us to tell great stories. Storytelling is a really powerful tool for us to engage employees to help them understand the customer focused journey that Centrica is on as a company.

How are you approaching the societal impact side? What makes it societal enough to you?

What makes it a societal enough for us is constantly changing and being recalibrated. We tend to look at it on a portfolio level. Imagine in your mind a matrix: a square divided into four boxes, and on the X axis on the bottom of the box you have social impacts, and on the Y axis you have financial return. The ideal investment is in the top right corner where you have great financial return and great social impact.

In practice, what we find when we assess the impact and we assess the financial potential, is that you can almost draw a line from the top left corner to the bottom right corner, so you get some things with great financial returns and low impact and you get some things with great social return with little very little commercial returns, and there's a bunch of stuff in the middle. We just want to make sure we are balancing it out. So if we see something we really like that has a great environmental benefit and great commercial potential, that probably sits in the top left box: high commercial / low social. And that means that the next investment I want to bring to my committee probably sits on the bottom right corner — mediocre commercial return, but really great social impact. We are agnostic to the legal structure we invest in, but we build in requirements for social impact into my investment agreement. That’s a default and if they’re not met, we can pull our money back. It allows us, at least for the life of our investments, to be able to have some confidence that social impact is delivered.

Does another corporate venturing fund exist within Centrica ?

Just starting in January of this year, we've announced what's called Centrica Innovations. This new fund has a mandate to help enterprises both outside and inside the company (using entrepreneurial approaches to develop our own ideas). That's a £100 million fund and we’re going to build on what we learnt from Ignite both in terms of processes but also on the importance of social impact.

We have committed for this year to run Ignite alongside the new fund. We're trying to behave like the entrepreneurs we support. Trying to predict the future on how everything is going to turn out is incredibly difficult, so I have a vision which in the long run Ignite and the new fund will integrate. It will only be once we can show that Centrica Innovations has a good method for delivering social impact that we will feel comfortable allowing Ignite to fully merge into it. I sit on the leadership team of the new fund and part of my mission is to make sure that we keep social impact as an important aspect of what we do. Social impact funds mean different things to different people.

And I'm certain that what we're going to do with Centrica Innovations will not pass the sniff test of what is an impact fund for many people in the space. I have a different view. I believe quite strongly that the lines between a social entrepreneur and an entrepreneur are blurring very quickly. More and more entrepreneurs see growing commercial enterprises as a way to make a mark on the world so I don't really distinguish between the two so long as we're being selective. Certainly within the Centrica Innovations realm I see us investing in companies that will have a big social impact. 

What is the biggest challenge you're facing?

It's constantly challenging, and I know there are loads of areas we need to improve. The absolute best companies for us to support are the ones where Centrica can either help get clients or become a customer. So, can we buy the products and services from this enterprise? Can we introduce them directly to our customers, can we go to our supply chain and get customers for the enterprise? Getting customers is a huge problem that faces entrepreneurs, and we can help them because we have that access. But it's incredibly hard for us to do well. I have one entrepreneur who has been testing his technology with one of our business units and it's been going on for nearly two years. He keeps getting led on a little bit further and it's really frustrating.

The reason for that is that it's very hard for us to work with small businesses. If you think about the current frameworks for partnering or buying services, they are geared toward managing risk. If you think about the people who are attracted to work with big corporates, they tend to be risk-averse. When they see these young entrepreneurs, the social enterprises, it's just safer to go to wherever you bought it before or not to take risks on recommending this product or service to a colleague or to a supplier.

Do you think that other companies should follow your path in setting up an impact fund? What would you advise them? 

Yes, I think they should! I use every chance I can to tell them about how much support beyond money you can give as a corporate and how eager employees are to get involved. We can't create enough opportunities for all the employees that come forward. I think that's a huge benefit and I think companies should figure out how they can engage in helping social entrepreneurs to grow using their corporate expertise. I would also tell them that we have one model and it's a model that works for us. They need to figure out what model is going to work in their own context. I think a large part of our journey over the past few years has been about figuring that out: what works well in our company and what doesn't. The last thing I tell them is if somebody wants to come and see what our investment papers looks like, learn about how we manage our portfolio, or anything else that would help somebody get started, we're there. At Ignite, we are trying to be an open book and that's a big reason why we joined EVPA Corporate Initiative.

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