Sven Stenvers On Social Enterprise And Impact Investment In Western Australia

Sven Stenvers has over 20 years experience building early-stage businesses across inter-generational growth sectors including impact finance, clean energy, tech and broadband (dot-com booms mk1 and mk2), with privately held, ASX-listed, and multinational companies.

Passionate about systems change finance and entrepreneurship, he co-founded Impact Seed in 2015 with a firm belief in local and circular economic models as the way forward for all investment and businesses. He believes regenerative finance where social, environmental, cultural and financial benefits are inextricably linked.

Sven was key to the development of Australia's first place based impact investment fund - the $20M WA Impact Fund, is a founding board member of the WA Social Enterprise Council (WASEC), the Impact Investment Alliance of WA (IIWA) a Panel Judge for the Macquarie Kickstarter Program and Individual Outstanding Achievement Award winner at the 2020 Australian Impact Investment Awards. He is also a Director/Advisor for a number of social enterprises.

Sven discusses his insights into the Western Australian social enterprise sector, the Australian impact investing landscape and gaps that exist to help accelerate business for good.

Highlights from the interview (listen to the podcast for full details)

[Tom Allen] - To start off, could you please share a bit about your background and what led to your passion in social enterprise and impact investing?

[Sven Stenvers] - That's probably a 15-year backstory of not being in the impact investment and social enterprise space. Kylie, my co-founder, coined a while back that we are “corporate refugees”, so that has pretty much stuck as the easy answer. Corporate and early-stage growth businesses is where I spent most of my life, so it's been an emergence of identifying what I did and didn't want. There's been a lot of personal ups and downs as well. I guess in a nutshell I was involved in a lot of mergers and acquisitions. Coming through start-ups that corporatised and doing mergers and acquisitions is often about reducing costs while adding profit to their bottom line, which affects people's livelihoods and mental health. This speaks to my political worldview as well, but I wasn’t really being comfortable making money that way. My politics were a little bit different to how I was making my money. It's about offshoring, delocalisation, poor service and more profit, and that's not really where I wanted to be. I lost a loved one in the late two thousand, so around 2008 I went into managing one of the first solar start-ups in Western Australia. That was the first time I had an inkling this space of profit for purpose might be where I wanted to land. Coming out of that business, I met my co-founder Kylie, who was running a social enterprise in Cambodia. That really interested me, because she was going deeper on impact. I was also looking at the start-up space (because that's where I spent my time previously) and start-ups for good.

In Western Australia, people often say that we're like two or three hours and twenty or thirty years behind everywhere else, which is maybe a bit unfair because there's a lot of good happening here as well. But at the time there were a lot of accelerator programs in WA that were actively against social enterprise and drilling founders on either being a charity or business.

These accelerators were more about focus on scaling, exiting, profits and unicorn culture. It wasn't about communities or the environment unless it was a by-product of making profit.

Impact investment and social enterprise really looked like the way forward in 2014, and it was definitely a market gap here in WA, because it was poorly understood and not really supported as well. That gap in the market was our start, but it was a terrible business model at the time, to set up a market builder.

As a co-founder of Impact Seed, tell us a bit more about your projects and why you exist as an organisation?

If you accept the premise that there's a gap in the market which needs to be filled, we're in the business of filling that gap. Impact Seed is really about systems change across finance and entrepreneurship. ‘Impact investment’ is a really broad remit across so many sectors, and you don't come in as an expert on any of them. It's been quite a humbling experience to work with all those areas of the economy, where people are trying to create social, cultural, and environmental impacts. We're involved in everything from Aboriginal regional economic development, NFP led social enterprises and regenerative agriculture projects. More and more lately, this concept of circular economic social enterprises has emerged. I think it really comes down to (especially in 2022 with this preponderance and mushrooming of ESG) what is your impact?

Impact measurement, strategy and management. That's the linchpin of anything calling itself an impact investment Fund or social enterprise.

That's become a focus of ours, to raise the bar to elevate these impact ventures from ESG and impact green washing, which is where all of the noise and confusion is created. We've worked with groups like Wide Open Agriculture and the Noongar Land Enterprise Group on developing their impact strategies. We've worked with funds as well on developing their impact platforms to move past SDG and ESG greenwashing. We also go really deep on the social enterprise capacity building side of work. In the last six months, we've been really privileged to work with an alliance of 10 traditional owner groups in the Pilbara. That's not a space we intended to go into, but we were invited into that which is really humbling. We learn and get much more than we probably give back. It's just a wonderful space to operate in. These groups are looking at land use across their native title determinations to develop businesses on country built on a social enterprise model. This includes areas like tourism, carbon, native seeds and Aboriginal products.

A couple of months ago, after a two-year long conversation with the Paul Ramsey Foundation, we had one of the first multi-year grants that lets us address social enterprise development work we've done pro bono for many years now. This included both social entrepreneurs coming to us with an idea or actively working in a business and that need help with growth. That's been an unfunded and important part of developing the social enterprise ecosystem here, because without support for social entrepreneurs, they're really fighting an uphill battle.

After the launch of the Western Australian Social Enterprise Council (WASEC), what progress has been made and how is it supporting its members?

In June of 2020, WASEC was pretty much being born out of the fire and uncertainty of COVID-19. It really complicated things, but it was a good opportunity. At the time, I think the Australian Social Enterprise National Alliance (ASENA) was also forming, so we contributed to that process as well. It actually took 12 months for us to have our first in-person launch event last year. WASEC still runs as an unfunded, volunteer-driven council. There's a couple of initiatives underway we've looked into. The Social Enterprise World Forum activation I'm really hoping will support the recruitment of an executive officer role over the next month or two. We've been advocating with government through WASEC for policy and funding for the sector. We've worked with ASENA to establish a federal policy framework in the lead up to the federal election, so there's been a lot of engagement with local candidates ahead of the election. There's been some pretty good responses there, so it's really been an advocacy piece over the last 12 months. Then moving forward, we've got an event series coming up that's linked to the Social Enterprise World Forum over July and August.

What are you currently observing in the social enterprise sector of Western Australia?

WASEC has spoken with a lot of state and federal politicians that don't really grasp what social enterprise is and how it can contribute to what we all want in the economy by creating public value through business models. Patrick Gorman, who's the federal member for Perth, gave the keynote and was probably one of the few members at a state or federal level that was able to clearly understand and articulate how social enterprises are supporting and creating this new economy.

If you put social enterprise in the context of start-ups and small business, small businesses have a really high three-year failure rate. Start-ups work on a 95% failure rate, and yet there's millions of dollars of taxpayers' money going into them under the banner of innovation, technology, jobs and growth. Tying that back to WASEC, the largest chunk of social enterprise members here in WA are businesses that are less than three years old. They're up against the odds and they need the same catalytic support as the technology innovation ecosystem gets through innovation funding.

Government really needs to understand the importance of catalysing the sector, because we're trying to create economic value, but we're trying to make sure that's on the same footing as social, environmental, and cultural impacts.

If you really want to talk about sustainable business and creating outcomes that governments should be accountable for, social enterprise is a key part of that.

Where do you see opportunities for impact investment to better support purpose-led businesses?

There's a lot more tension now around the growth of impact investment. In 2022, I think fund managers are seeing a new label to stick on their product, and they just stick this impact label on it and then nothing changes. A lot of what's been done in Australian impact investment over the last decade has been in renewable energy and property, which is low-hanging fruit. People aren’t really trying hard to deepen their impact. I think we can do a lot better through having effective impact standards. What are impact standards? It's more than an SDG colour bar, weak program logic and an investment memorandum. It's really about using finance to shift the power balance from growth and guaranteed above-market rate returns towards something that resembles systems change; balancing those returns with impact. If we could ever do blended finance and this vaunted concessionary rate impact investment at scale, the change that's possible is enormous.

If you could identify one key opportunity for the Australian social enterprise sector, what is it and what do you believe is needed to build on this momentum we're seeing?

This is probably the most exciting year in the sector we've seen so far. We've got seven state and territory peak bodies like WASEC, the national body ASENA, the Social Enterprise Network Strategy (SENS) and the Social Enterprise World Forum happening.

I think that bringing different actors into the ecosystem and using them as catalysts will unlock funding and social procurement not only from government but businesses as well.

Then, we can bring foundations along to help social enterprise scale. I think that there's more of an opportunity now than there ever was. I think this combination of support for social enterprise is always what we've needed. Through all of what's happening in those initiatives this year, we might end up with change and growth in the sector nationally that we haven't seen before.

What inspiring projects or initiatives have you come across recently that are creating positive social change?

There's some amazing social enterprises and impact ventures operating in regional WA, and the region’s do not often get elevated enough. I just ran a call out because we've got one of the global leaders in regenerative farming, Diane and Ian Haggerty. They have their Natural Intelligence Farming project in the Northern wheat belt, which is really showing what can be done to regenerate landscapes and community in one of the driest parts of the wheat belt. If you can do it in the wheat belt, which is suffering a population decline and loss of community, you can do it anywhere. Up north, we've got the Ganalili Centre in the Pilbara, which is run by the Yindjibarndi people. They transformed an old hotel into a world-class cultural interpretation centre with an art gallery and cafe blended in on a social enterprise model. It's creating employment opportunities for local people. In the Southwest we've got Noongar Land Enterprise Group, which is a project we talk about a lot for their social enterprise tree farm which creates employment for at risk youth. These three projects are just on the starting line of their potential to grow and replicate. Probably one of my favourite enterprises is Loop Upcycling. We've given it a lot of support and investment over the last 12 months.

They're a circular economy social enterprise that's working to address textile waste, as there's 800,000 tons of textile waste that go to landfill each year. We don't have a textile manufacturing industry in Australia because we've offshored it to shops in other parts of the world.

We've got this cheap fast fashion industry in Australia at the moment, and it's creating a lot of waste which corporates are big contributors to. They've got corporate uniforms that can't always go to landfill because they've got branding on them, and people can be a corporate or government employee. These uniforms tend to be shredded, but what else can they do? Through their impact and community programs, they look to reduce their footprint and make an impact, and LOOP gives them that opportunity. For a fee, it LOOP takes ‘this years’ corporate work wear, works with community groups to create support and jobs for people that wouldn't otherwise have one and then up cycle that work wear into duffle bags, satchels and even teddy bears. They work with Virgin Airlines, There was there was an initiative around The Branson which Richard Branson actually put his name behind. They are a nice local example of deep impact across social and environmental outcomes.

To finish off, what books and resources would you recommend to our audience?

I'm not a novel reader, I like learning about the spaces I'm passionate about. Over the past six months, I've read Less Is More by Jason Hinkle. That's an interesting system thinking piece about jobs, growth and GDP being our only measures of success and affecting systems change. It talks about this contentious area of de-growth, but to start with, we need to accept the premise that GDP does not give you a healthy economy. Throwing Rocks At The Google Bus is a Douglas Rushkoff book. He's also got a number of other books. This one was well ahead of its time and unpacks what we know about platform monopolies like Facebook and Google, the damage they can do with a profit focus, the way we consume media, the erosion of democracy and how we ended up with people like Donald Trump.

My last recommendation is a lot closer to home, and it's called Title Fight by Paul Cleary. That documents the decade long legal battle by the Yindjibarndi people in the Pilbara with the Fortescue Minerals Group around their native title determination, preserving their cultural heritage and mining royalties. I thought it was interesting to reflect on the fact that ‘Twiggy’ calls his royalty piece 'mining welfare', because you can't accept the premise of native title and mining royalties being welfare at once. All three of these books are “the system's broken" books and are about playing a part in fixing it?