Social enterprise incubator White Box Enterprises has secured $12 million from impact investors and philanthropists to develop startups helping disadvantaged people in regional communities.
The raise has been a two-year labour of love for White Box CEO, Luke Terry, who set a $13 million goal. Most of the capital, 75%, came from 13 impact investors, including former JB Hi-Fi CEO Richard Uechtritz and the Ian and Shirley Norman Foundation, which contributed $1.6 million, alongside a $750,000 federal government grant and Bryan Family Foundation.
Terry said he knew his target was significant for a social enterprise startup based in Brisbane and now looking to cross the border into northern NSW.
“Raising capital in this market is incredibly challenging. Raising impact-first capital is even harder. Impact investors are still hesitant to invest in social enterprises despite the returns these businesses offer,” he said.
““We have been fortunate enough to have the support of some incredible philanthropists and impact investors who can see the value of social enterprise in this regional community. We’ve recently opened it up to friends and family to invest small amounts, with returns of 8-12%.”
Small investors can tip in as little as $25,000.
In its four-year existence, White Box Enterprises has helped create more than 400 new jobs, incubated four social enterprises, raised $21 million in blended finance for job creation projects and are currently partnering with the federal government to deliver Australia’s first Payment By Outcomes trial for jobs-focused social enterprises.
The first project to emerge from the new funding is a non-profit commercial laundry, designed to create jobs for people who can struggle to find work due to issues such as mental illness or homelessness, will open over the Christmas period in Bangalow, a village in Byron Bay’s hinterland
Beacon Laundry is the second social enterprise laundry Terry incubated. His first, Vanguard Laundry, in Toowoomba, 125km west of the Queensland capital, caught the eye of Uechtritz, who cold-called Terry to float the idea of building a similar social business in the Northern NSW.
“When I first learned about Vanguard Laundry, I thought about the possibilities in the Northern Rivers. It seemed like something the local community could really benefit from,” Uechtritz, who moved to Byron in 2017, said.
“The impact this social enterprise has on individuals struggling with mental health is remarkable. Having the opportunity to work at the laundry is literally changing their lives,”
Aside from rising property prices making it difficult for people to find housing in coastal towns like Byron, the Northern Rivers region has been hit with a dozen natural disasters over the last five years, spanning drought, bushfires and the record 2022 floods that devastated the regional capital, Lismore.
Setting up the laundry in the Bangalow’s industrial estate has cost more than $4 million in acquisition costs, and the remainder f the capital raised to cover fit out and other operational costs.
While a $12 million kick off cost seems high, Terry argues the long-term value is there.
“Commercial laundries aren’t cheap to set up, but we’ve done our research and know there is a market for this in the Northern Rivers, with most hotels currently sending their linen two hours down the road to Coffs Harbour or up to Logan in Queensland,” he said.
“Beacon not only offers a local, more energy efficient option, its primary purpose is to create local jobs for people who are shut out from mainstream work. That’s the goal of all jobs-focused social enterprises.”
Around 40 people are set to start working at Beacon when it launches in January.
Terry is already focussed on landing his next round of capital, seeking to build a $5 million loan fund to address a gap in the financial market in offering low-cost loans for social enterprise business growth. Westpac Foundation and the Victorian government have pledged support.
“Access to capital is one of the biggest barriers to growth for social enterprise. The challenges we’ve experienced in our capital raise for Beacon are common across the sector,” Terry said.
“Imagine you’re a small business and you need $100K to grow your business. Right now it’s near impossible for social enterprises to get this sort of loan because their impact model isn’t recognised and they lack the assets to secure the finance.
“If more investors were willing to consider impact-first investment, we could create more businesses like Beacon Laundry in every local community across Australia.”