Creating social impact through entrepreneurship  

LSV offers credit, financial guarantees and equity investments (and in some cases development grants) to entrepreneurial initiatives (often in the shape of start ups) that we belive can stimulate societal development through social innovation. LSV primarily supports initiatives that are related to the areas of mental health, education and integration. Our current portfolio contains the  following companies:

In order to add value where it makes a difference, we choose our investments according to the following criteria:   

– Scalability: LSV is looking for business models with a well defined target audience that that can be scaled on a national or international market through growth or franchise. 

– Sustainability: Successful applications can demonstrate realistic financial models, preferable with demonstrable break-even, and with a live a product or service that is generating revenue, thus confirming its value potential.  

– Measurable impact: The companies we invest in adress a defined social issue within a specific target audience – for which their product acts as a solution. A sucessful initiative has clear ideas and processes for how to measure demonstrable social impact for the defined target audince.  

 

LSV does not finance foundations or nonprofits through grants or donations. Any potential yield from our investments are re-invested back into LSV and our portfolio. 

Preemptive investments creates social impact

The last decade has witnessed a transformation in the use of investment logic as preemptive approaches are increasingly used to deal with the complex social challenges of today. This practice is aligned with the belief that preventive social work is more cost-effective than reactive actions and that it is better at tackling unnecessary human suffering.

When considering why a preemptive approach is not more common as a way to deal with social challenges (when we know that it is preferable) there are a couple of reasons worth mentioning including, i) an established tradition within the public and private sector to pay for inputs or activities, rather than results, ii) our political system is directed by election cycles, and therefore short term thinking when it comes to social investment, and iii) the lack of piloted innovative financial models supporting long term social investments with the social system.

However, by working with different actors in the public, private and nonprofit sector there are good possibilties to overcomes these challenges, and to create both demand and supply for long term approaches and  premptive financial models. These models, based on outcome rather than input, carries real potential to bring social impact to marginalised audiences.

LSV believes in the potential of premptive social investments and we are therefore committed to  developing a Swedish market for financial models enabling a preemptive approach to social challenge.  We do this by creating, facilitating and investing into models like Social Impact Bonds, Social Outcome Contracts and other payment-by-result models.

These models are created to overcome the structural challenges mentioned above by decreasing the risk connected to innovation and by introducing alternative investors and actors from private, public and nonprofit that together can improve the current system. By placing a defined social issue, and target audience, in focus and connect financial incentives to measurable social outcomes – the needs of the target audience are more likely to be satisfied. LSV launched its first Social Impact Bond in Sweden in 2016 together with Norrköpings municipality. Read more about our first Social Impact Bond here.

Since the first Social Impact Bond was launched in 2010 the concept has gained increasing attention. Called the “hottest idea in social service provision” by New York Times there are now more than 120 Impact Bonds in over 20 countries, with more than €500 million invested capital, tackling social challenges like integration of refugees, loneliness amongst elders, youth crime, prevention of diabetes etc.