Equity For Good
27th August 2018
Since we launched Toast in 2016, things have been moving incredibly quickly. After our prime-time launch on Jamie Oliver and Jimmy Doherty’s Friday Night Feast, we amassed a huge amount of media coverage, helping to get word out to people all over the world. We listed in Waitrose and Tesco in the summer of 2017, helping to make our award-winning beer available to people nationwide. And we’ve been fortunate to receive generous helpings of goodwill by companies supportive of our commitment to pour all our profits into charity.
In early 2018, we assessed our journey and decided we were ready to make a step change to magnify the positive impact of the business. We needed to invest in people, offering more paid employment to build the capacity and expertise of the team, and in marketing to increase awareness of our story.
To significantly scale any start-up, capital is required for investment. This often means equity investment, taking on shareholders who gain an ownership stake in the business. The social enterprise sector is no different and a thriving global social impact investment market has grown with £billions being invested into mission-driven businesses.
As we researched the investment market, we had a realisation. Purpose-driven businesses focus on their commercial products or services, and the processes through which they add value, sometimes encompassing the full value chain. However, there’s another product that all these businesses create: money in the form of capital growth. When investors sell their shares at a profit, there is little scrutiny on where this value goes. If dissipated into the economy, at least some of it will do harm to the environment and to society, and counteract the positive actions of the social enterprise that created the value.
In recent decades, there have been incredibly positive developments about how businesses treat their employees (think ‘Investor in People’), how a business transparently manages its supply chain (think ‘fair trade’) or what a business chooses to do with its profits (think ‘1% for the planet’). Additionally, B Corp provides a holistic certification that a business has met minimum standards regarding its relationship with workers, customers, suppliers, the community and the environment. We are proud to be a certified B Corp.
And so, our founders set about creating an innovative social impact investment model: Equity For Good.
Equity For Good (“EfG”) is rooted in a legally-binding pledge made by investors. They agree to reinvest a proportion of their net capital gains in another social enterprise or social impact investment fund. Alternatively, they can make a gift to a not-for-profit or registered charity. For Toast, we set the proportion of net capital gains at 100% so that all value created by Toast will continue to do good.
The EFG investment model allows businesses and investors to stand out as mission-driven and to publicly demarcate how the shareholder value created will grow and perpetuate good in the economy. This provides transparency for social enterprise stakeholders and reassurance for its customers and other stakeholders.
The investment model has been successfully proven by Toast. We closed our first investment round in March 2018, raising £1.4m from 29 investors. Despite initial scepticism from the broader investment community, we discovered a huge appetite for authentic and transparent investment opportunities for those investors familiar with impact investing. As a result, our team has grown from four to fifteen in the UK, and from one to five in the US. And we’re hugely excited for the next stage of the journey.
So what next for Equity For Good? The EfG founders, Tristram, Rob and Louisa, will be promoting the concept to get the EfG pledge widely adopted and support the growing community of social enterprises who use it. They will be engaging with social enterprise networks such as Social Enterprise UK, Ashoka and B Corp to encourage their members to adopt this investment model.
To find out more email EquityForGood@toastbrewing.com
Tristram is an award-winning campaigner on food waste. He authored Waste: Uncovering the Global Food Scandal 2009 and Bloodless Revolution 2007, and is an Ashoka Fellow, a National Geographic Emerging Explorer, a WEF Young Global Leader and a Champion 12.3 for the Sustainable Development Goals. He also founded the charity Feedback.
Rob is Chief Toaster (CEO) at Toast. Previously he led Ashoka in the UK, founded READ International in 2004, co-founded Generation Change in 2012, co-founded Undivided in 2016, and co-authored On the Up, a book about social entrepreneurs in Africa, with his wife Nikki.
Louisa is co-founder and Chief Operating Officer at Toast. She’s a chartered management accountant and began her career at the Financial Conduct Authority. After gaining a Masters in Environmental Decision Making, she worked as a carbon footprinting consultant at the Carbon Trust. She later qualified in Digital Marketing before setting up Toast.