As early as 2008, Pillar Nonprofit Network was involved in social enterprise movement providing coaching to new businesses. Building on this commitment, in 2011, we partnered with Sarnia-Lambton, and Ottawa-Carleton, United Way London & Middlesex and the Ivey School of Business on a three-year project to look at how to support the development of social enterprise in our communities.
During this project, our attention turned to developing financing options that would promote local self-sufficiency for social enterprise and early conversations about developing social finance solutions for London began. The opportunity was clear: to engage local investors through investments that had a local impact, providing the access to capital needed by local social enterprises.
2013 – Social Finance London forms
Inspired by the unique investing approaches of community organizations such as Goodwill with their microloan program, and a global movement to create opportunities to invest for both a financial return and community impact, Pillar Nonprofit Network started to explore social finance frameworks more formally in 2013. At this time, there was a growing interest in social finance in London and Pillar organized a gathering at Grosvenor Lodge to explore how various community organizations could work together to champion social finance work in our city.
After this initial meeting, Pillar joined forces with Libro Credit Union, Sisters of St. Joseph, London Community Foundation and United Way Elgin & Middlesex to form Social Finance London. Together, they dreamed of having a fund that would allow social enterprises to apply for loans. An early project of Social Finance London was to complete an environmental scan that revealed there was $40 billion in investable assets in traditional markets in London and surrounding area that had the potential to be leveraged for social finance.
2014 – Building awareness about social finance
Following the formation of Social Finance London, an important part of work for the team was hosting presentations and events to other organizations to help them understand social finance and consider impact investing. Through sharing best practices, the team was able to help others doing similar work and to raise the profile of social finance across London and the province. Around this time, the Ontario government started to take greater notice of the growth of social finance in the province and increased funding for related initiatives.
2015 – Launched VERGE Capital and the VERGE Startup Fund
In 2015, Social Finance London received funding from the Ontario government and the Ursuline Sisters of Chatham to launch a $500k Startup Fund for local social enterprises, and the newly rebranded VERGE Capital was born. The Startup Fund provides loans to local early-stage enterprises with both a solid business case and a strong community impact model, and is made possible through the support of Libro Credit Union. To date the VERGE Startup Fund has loaned over $725,000 in local capital to support 16 social enterprises in Southwestern Ontario. These community change makers are building impactful organizations to create a vibrant, engaged and inclusive community across Southwestern Ontario.
2015 – Community Bond launches
Together with VERGE Capital, Pillar launched London’s first community bond in 2015 to raise the remaining $1 million dollars required for the opening of Innovation Works. A community bond is an interest-bearing loan that can be issued by nonprofits or charities, allows contributors to align their investments to their values, and is supported by a business model that can repay the loan. The 47 investors in the community bond provided debt financing for renovations and needed capital for Innovation Works, and in turn, earned three percent interest per year for five years. This innovative investment approach spoke to who we are as an organization and provided a unique forum to engage investors that had never been seen in London before. The creation of this bond has enabled the VERGE team to help other communities follow the model.
2017 – From London to Southwestern Ontario
In conversations with our community collaborators, we realized that expanding our scope to Southwestern Ontario presented two important opportunities. First, it allowed us to ensure a strong pipeline of investment ready nonprofits and social enterprises. Secondly, it was a way to support other communities that didn’t have a social finance intermediary. At the same time, we also received funding from the Ontario government to scale our social enterprise model across the region through the ONE Network through our Social Enterprise Southwest program. This created relationships across the region to support our next phase of growth.
2018 – Breakthrough Fund launches
In 2018, VERGE Capital partnered with SVX to launch the VERGE Breakthrough Fund, a $2.26 million impact investing fund that provides loans to growing social and environmental enterprises in Southwestern Ontario. This fund is southwestern Ontario’s first impact investing fund and done of the first initiatives of its kind in Canada focusing on local investment for local impact. The VERGE Breakthrough Fund has made it possible for 20 regional investors to leverage their investment portfolio to create positive community impact right in our backyard by investing in affordable housing, community real estate, and established social enterprises. Startup costs and first loss capital was provided by the Government of Ontario with continued support from Libro Credit Union, London Community Foundation, and the Sisters of St. Joseph.
Educating the community about the possibilities of social finance and impact investing has been an important part of VERGE Capital’s mission since the early days. By promoting social finance and impact investing, the team provides investors a new window into how they can leverage their money to do good. Members of the VERGE team have presented on the topic on local, national and international stages and remain committed to increasing knowledge of social finance models.
VERGE team members will continue to partner with local educational institutions to guest lecture students and engage them in experiential learning opportunities whenever possible and also educate community organizations on how they can engage in impact investing. On an ongoing basis, the team will continue to procure grants and investments to sustain and grow our two loan funds. We are now in the process of exploring scaling current models and innovating new ones to provide access to capital for a new generation of social innovators. Our long term goal is to grow our earned revenue in order to sustain the work of VERGE.