Allia Impact Manager Fariha Anwar reflects on the findings of The Impact Business Tipping Point and a panel discussion she chaired at the launch of Business for Impact, exploring what needs to change if the UK’s growing mission-led business sector is to reach its full potential.
Last month, we launched The Impact Business Tipping Point – a data-driven census of the UK’s mission-led business landscape. The report identified over 150,000 mission-led businesses, turning over £37 billion and supporting 1.12 million jobs.
But alongside the scale and contribution of these businesses, the data also revealed structural barriers that are holding them back.
At the launch of Business for Impact, I chaired a panel exploring those barriers and, importantly, what we can do about them. I was joined by Martin Clark, then CEO of Allia Impact, Katie Hill, former Global Co-Chair of B Lab, and Matt Smith, Vice President at the Global Entrepreneurship Network.
The conversation surfaced several themes that are worth reflecting on.
More mission-led businesses than we can count
Martin Clark opened by noting that the report’s figures are likely an undercount. Because our methodology requires companies to have filed at least one balance sheet, mission-led businesses incorporated in the last two years are mostly absent from the data. The true number is almost certainly higher.
He attributed the growth to two factors. First, younger generations are more passionate about social and environmental issues than ever before – they want to build businesses that reflect their values. Second, the introduction of the CIC legal form made it significantly easier to start a mission-led organisation.
But with the UK Shared Prosperity Fund winding down, new sources of support are needed. That is one reason Allia launched Business for Impact – to provide longer-term backing for impact startups, particularly during the fragile founding window.
On support ecosystems, Martin remarked that place-based initiatives are likely to be the future, with the North-East, South-West and Wales already becoming clusters for impact activity.
The question is how to strengthen them. Place-based initiatives, he said, should be thoughtfully designed – not left to market forces alone.
Legal structures: a trade-off that doesn’t need to exist
Matt Smith turned to the legal structures available to mission-led businesses.
His view was that the current system forces founders to choose between mission lock and access to growth capital. The CIC was a great innovation, he said, but it was introduced many years ago. The UK now needs more advanced hybrid models – and can look to other countries for inspiration.
Matt also highlighted a blind spot when it comes to R&D (research and development) funding awarded to startups.
Impact-First businesses often innovate in service delivery – new care models, better teaching approaches and community programmes – but are largely excluded from conventional R&D funding, which favours patents and spinouts.
He suggested that government and grant-makers should consider creating a new category of “practice-based innovation” funding.
The valley of death – and what to do about it
Katie Hill brought a social investment perspective to the conversation.
She noted that the report’s finding on the “valley of death”, where deal volume collapses from 51% at Seed stage to just 8.4% at Growth – reflects a deeper problem: both investors and enterprises struggle to find the right match.
Investors struggle to find the right enterprises to back; enterprises struggle to find aligned investors. Private equity, she said, remains the dominant instrument even in impact investing, which is not always the best fit for social enterprises.
She also pointed to procurement as an underused lever. Katie highlighted that the UK government spends around £400 billion on procurement, yet social businesses account for less than 1% of contracts. Introducing an impact lens across government procurement, she suggested, could reduce enterprises’ reliance on grants and provide more stable, patient capital.
Article 172 of the Companies Act, which requires directors to consider social and environmental matters, could also be a useful tool here to help address cashflow challenges for mission-led enterprises.
If you could change one thing…
Towards the end of the discussion, I asked each panellist one question: if you could change one thing – policy, investor behaviour or corporate practice – to accelerate the survival and growth of mission-led ventures, what would it be?
Katie called for a shift in procurement, arguing that social businesses should have a more prominent place in the £400 billion government supply chain.
Matt argued for a deeper look at regional ecosystems – understanding how local authorities relate to mission-led organisations and how they can act as catalysts for growth.
Martin emphasised the power of corporate mentoring. Some corporates are already doing this, but more could use their finance, market and operational expertise to guide young entrepreneurs.
Where we go from here
For me, the panel discussion reinforced what we found in the report: mission-led businesses are already more than pulling their weight.
They are growing faster, surviving longer and delivering value in regions that commercial investment often overlooks. But the system is not yet set up to help them thrive.
Legal structures, R&D funding and procurement all need reform. Place-based strategies need nurturing. And corporates have a role to play – not just as funders, but as mentors and partners.
The good news is that the evidence is now on the table.
The question is whether we are ready to act on it.