Hanna Ebeling On Financing Impact-Led Enterprises Across Various Growth Phases
Hanna Ebeling is CEO at Sefa, working with purpose-driven organisations on capital solutions and capability support to suit their needs, and helping these organisations build organisational resilience and access finance from a range of impact investors.
From traditional banking with HSBC to venture philanthropy in the Philippines, Hanna brings a global practice lens to Sefa. Her passions include blended finance in partnership with foundations, community-led enterprises, and ground-breaking housing models.
She is on the board of disability service provider Woodville Alliance and social enterprise Vanguard Laundry, and as a member of government and sector reference groups contributes to improving collaboration between government, the private sector and philanthropy.
Hanna discusses why effective partnerships supporting social enterprises must extend beyond just providing start-up capital and how the needs of impact led organisations evolve throughout their development.
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 for supporting social enterprises?
[Hanna Ebeling] - I studied economics at university and always wanted to make the world a better place since when I was young. But I got side-tracked and moved into more the corporate tool set with HSBC. It was maybe because I didn't know what the for-purpose sector was about; at that point it was very nascent. The idea of working for a large multinational development organisation felt a little bit too ‘red tape’ for me; I am very entrepreneurial and hands on. Whilst I was working at HSBC, sometimes you encounter these light bulb moments. For me this was when I came across JP Morgan's classic report Impact Investing - An Emerging Asset Class. This combination was perfect, because I like numbers but have also got a heart for social good. From there, my journey started when I decided to quit the corporate world and move into impact investing in the Philippines. I came to Australia about 10 years ago and joined Sefa a couple of years after it was set up.
Recently Sefa celebrated a major anniversary, can you tell us more about that?
It was exciting. We had a joint 20th birthday party, so 12 years of Sefa and eight years of Sefa Partnerships, which is the sister charity working alongside us. It’s just a great testament to see the original initiative that kickstarted Sefa, SEDIF, the Social Enterprise Development Investment Funds program of the Commonwealth still going strong after 20 years. Plus, it was good to have an in-person event after COVID caused us to miss our 10-year anniversary.
Tell us a little bit more about the work you're doing at Sefa and how you're supporting organisations and purpose driven business leaders?
When we started 12 years ago as part of the SEDIF program, we were primarily offering one pillar of work, which is capital.
We are now providing alternative finance mechanisms and innovative capital solutions for a range of for-purpose organisations. These are loans between two hundred thousand to two million dollars, effectively trying to bridge the capital needs between philanthropy and mainstream banks.
That is our origin, but it has been interesting because like many for purpose organisations, we had to work on our own business model. A big learning from the early years in terms of lending on its own was that the capital pillar will not bring us to sustainability as a social enterprise ourselves. That was the underlying reason, but the driving reason was also around our impact narrative. We did a lot of effectively adjacent capability building and investment readiness support as part of our due diligence and getting those capture solutions off the ground. It was a lost opportunity at that point when we were only able to work with organisations who wanted to access our type of capital. When I became CEO about four years ago, with the support of a refreshed board and strategy, we decided to build a second pillar within Sefa, which is our entire capability building pillar, the engagement team. We are now offering a range of capability building support around broader organisational resilience spanning areas such as impact measurement, governance, partnerships, commercial acumen, and capital appetite around investment readiness. Effectively, Sefa is the one stop shop for purpose-driven organisations. We consider capital plus capability to sum up to increased capacity for purpose-driven organisations so that they can unlock more social impact.
Where do you see key opportunities and gaps to better support and finance social enterprises seeking assistance?
We've always been very vocal about how we didn't necessarily get it right at the beginning with our capital offerings. We've continued to evolve and (hopefully) make it more fit for purpose. Most importantly, we are now more demand led, as a lot of impact investors are putting the supply they've got available into the market, which doesn't necessarily meet the needs of social enterprises. We initially started lending out a lot of property back loans, a more traditional mainstream lending activity. But after the last four years, I can proudly say almost half our book is no longer property backed. We've entered the sphere of working capital, where organisations can access funding to deliver on contracted revenue, whether that's through social procurement or other business models. The latest trend we've seen over the last two years is earlier stage enterprises requiring what we have coined growth capital. We've recently had the board approve a $2 million allocation from our balance sheet to lend into these earlier stage opportunities, which might be just before that sustainable break-even point. We've seen the need to help organisations invest in stabilising and improving their business, and Sefa is well placed to play in that space.
What we need to do is get better at structuring the right transactions, listening deeply to the needs of community and the enterprise sector, and then hopefully sharing those learnings with other impact investors. Through this we can demystify how risky and difficult impact investing is.
What advice would you be giving to early-stage purpose driven founders who are on a mission to create impact?
My advice I would put under the umbrella of hustling slowly and surrounding yourself with a couple of strategically aligned partners. Ideally, these are also partners from philanthropy. Look at where you've got alignment with government and start having conversations early with impact investors. What’s critical for you as a business is to outline the pathway of different stages.
Do not rush into things or say the sole measure of success is for you is to take on repayable impact investment capital. We've seen a lot of success with organisations investing into this notion of stabilising, and I know it doesn't sound as exciting as growth or acceleration. However, there is power in putting your house in order and honing in on your impact strategy.
What's the reason you are here? Do you have solid governance? Do you have the right business processes and data to make informed decisions?
Once you've got those foundations, you can set your eyes onto the next milestones across that roadmap. You can have capability progress in terms of what you need to solidly put in place. You can then overlay that with capital. We're seeing capital and capability talk to each other in parallel, or sometimes sequentially as each social enterprise or purpose driven organisation moves along their individual pathways.
Most importantly, you need to take the time to speak with funders in advance and maintain key partnerships.
Especially when it comes to funding relationships, being prepared and working to the timelines of partners (whether that's philanthropy or impact investors), is important. Start having earlier conversations and developing a plan with a little bit of flexibility, because there's always something surprising happening along the journey.
Where do you see key opportunities to grow this business for good movement and take it mainstream?
The ecosystem I've seen (based on my personal view) has truly developed in the last 10 years. Now we're coming to the nexus of using common language. For example, there has been some work around agreeing on those developmental stages of social enterprise. What are certain indicators for each of these developmental stages? For example, this could be capability building needs we see more often in the earlier stages or stand-up phase. What are the capital needs and different types of support that are appropriate? As an enterprise moves from ideation to start-up/stand up, all the way to becoming sustainable, Sefa helps them strengthen across capability and later on also capital needs.
With peak bodies such as SECNA, QSEC and Social Enterprise Australia, it feels like we're interacting more. We're doing a lot of work around common language. We've also reinvigorated our partnership with Social Traders. There is certification required when tapping into social procurement, and then our ability to support with investment readiness and capital to deliver those contracts. A lot of that supporting infrastructure from a practitioner lens has grown, and this is representing the demand from business for good. It feels like government is listening to the practitioner side because we've organised ourselves a little bit better. It's also interesting to see certain funders, especially on the foundation philanthropy side, come together around the WISE or Work Integrated Social Enterprise grants program. That was a collaboration of a couple of big foundations, but then also FGII, the Foundations Group for Impact Investing are doing great work. It feels like we are becoming a cohesive force for good as opposed to being fragmented.
What inspiring projects or initiatives have you come across recently creating a positive social change?
I'm always passionate about so many clients. One client that has made an impression on Sefa who we've been working with for almost two years now is Covidence. It's interesting, as it is a charity using a SaaS (Software as a Service) platform. This venture is quite tech based, and it’s solving the issue of providing the most current current information that is credible and available at the right time for the right stakeholders to make informed decisions. They are using AI and machine learning that goes through the sheer amount of ever-increasing data. This includes solid systematic academic reviews around not only health care, but also environmental and other science fields.
They are distilling a lot of best practices and rigorous outcomes of studies to make that available for evidence-based decision making among government, business, and journalism. It’s effectively information for good, and we've seen similar initiatives around social enterprise harnessing technology to scale impact.
Covidence is doing that in a broad, applicable way. When I earlier referred to increased demand around growth capital, we are seeing so many more venture types and exciting initiatives spring up, e.g. whether that’s around mental health support through a digital platform. It's great to see the for-purpose sector truly embrace technology as part of the ‘for good movement’ also.
To finish off, what books or resources would you recommend to our audience?
What I've found most insightful over the years is a couple of my favourite articles. One of my all-time favourites is What's Your End Game as a for purpose organisation, which was featured in the Stanford Social Innovation Review. Just recently this week, we came across lessons from an impact first investor, where Ceniarth out of the UK provided 10 lessons they have wanted to share from their past 10 years. It reminds me a little bit of the five impact myths we busted earlier this year. As far as another article, Zebras Fix What Unicorns Break blog in the for purpose space is fantastic. I encourage listeners to subscribe not only to Impact Boom, but other sources like Pioneers Post and ImpactAlpha. There is always great thought leadership and truth telling out there that I call ‘book nuggets’, which add to, uplift, and build shared knowledge while bringing a lot of ideas back into Australia.
