In 2001 we created an industrial scale socio-environmental wood reclamation, recycling and reuse enterprise through which individuals from the margins of society could find new purpose, employment and vocational training.
Impending EU environmental legislation to re-categorising wood waste as an ‘active waste’ rather than an ‘inert waste’, meant that the UK’s 13 million tonnes of wood construction and packaging waste which was going to landfill, had to be re-used – or attract an increasingly heavy landfill disposal fee.
Alongside this, research told us that 14% of employers struggled to recruit in the areas of traditional skills.
Our 47,000sq ft industrial complex, set out to meet both these challenges. On it, 82% of the region’s industrial wood waste was received and processed, contracted by companies such as Gundon, Biffa and Thames Waste Management. A 200,000 throughput tonnage was surpassed by Q4 2003.
We developed a range of outputs, from bio fuel for Slough Power Station, to horse bedding and home kindling, with on-site retail of reclaimed timber available through a warehouse.
The enterprise’s rapid growth meant additional substantial financing to enable up-scaling of production. A second regional industrial site was on offer and a southern England roll-out was within the five-year plan.
Half the investment required was raised from social venture funds including ICOF and Charity Bank, as the potential of Social Enterprise began to be recognised. Their terms included the need for an increased investment from City Social Venture Capitalists (SVCs). An ‘investment assault course’ had to be negotiated by the project with this being seen as a ‘litmus test’, being closely observed by the Bank of England – who praised the business model.
However, a key criteria of the SVC investment was that social employment and training elements had to be stripped out for 5 years. This was unacceptable to the vision of the venture.
The breakdown of these investment negotiations drew front page headlines. The August 2003 cover of Social Enterprise Magazine – along with other trade magazines and papers – carried the headline “Finance Sector Fails the test”.
Ian Taylor, Investment Manager at ICOF admitted that, “The CDFI sector must admit we have failed.”
The situation raised wider, important questions around the ability of Venture Capitalists to advance in this area, questions being named by Andrew Robinson, Head of Community Development Banking at Nat West / RBS: “This has raised questions as to whether social venture capital would ever be equipped to offer investment to social enterprises”.