Former political adviser and management consultant turned impact investor Lisa Barclay tells Michael Skapinker how Nesta is building a virtuous circle of investment in UK startups.
In the early 2000s, when Lisa Barclay was working for Bridges Ventures, a pioneering UK fund manager that aimed to achieve social and environmental goals as well as financial returns, people couldn’t work out what she was talking about.
“We would go on marketing trips around the country to talk to corporate finance advisors, lawyers, and accountants to try to drum up deal flow and find businesses that we could invest in,” Barclay recalls. “In so many conversations, they would look at us as though we were quite peculiar. You know: are you a charity? They couldn’t really reconcile how you could possibly make commercial investments at the same time as doing some social or environmental good. It was a complete anathema.”
Today, talk about environment, social, and governance (ESG) – and how to do well financially by doing good – is everywhere. But Barclay, who is now executive director responsible for impact investments at Nesta, a British innovation organization, says impact investing is different from ESG, which is often about eliminating negatives, such as pollution, or avoiding entanglement with tobacco or gambling. Impact investors seek out both a financial return and a measurable social or environmental impact. “It’s a dual purpose, double bottom line,” she says.
Nesta began in 1998 as the UK government-supported National Endowment for Science, Technology, and the Arts under the chairmanship of David Puttnam, producer of hit films such as Chariots of Fire, Midnight Express, and The Killing Fields. It supported innovation in government and backed developments such as a solar-powered fridge. In 2012, Nesta left the government’s embrace to become an independent charity that aims to “design, test, and scale new solutions to society’s biggest problems”.
Before joining Nesta, Barclay’s career, after a Cambridge degree, included a stint as a researcher for Gordon Brown and other then-opposition Labour politicians. She went on to work as a management consultant and co-founded a tech startup, followed by an MBA at London Business School. Bridges Ventures, her next stop, was co-founded by Sir Ronald Cohen, doyen of the UK venture capital industry, an adviser to both Brown and Tony Blair, and a pioneer of socially impactful investing. After Bridges, she spent more than eight years at Social Finance, a non-profit promoting change on issues from children’s services to homelessness, also co-founded by Cohen, before moving to Nesta to run its impact investing team in 2019.
From equity in education to climate change
Nesta’s impact investment arm sits within the wider organization’s work, which includes research, training, leadership mentoring, and bringing innovative people together. The impact arm, which has investments in around 30 companies, focuses on organizations that fulfill one of Nesta’s three core missions: a fairer start (narrowing the gap between rich and poor while growing up), a healthy life (increasing people’s average number of healthy years and reducing health inequalities), and helping to decarbonize the UK’s economy and making it more productive.
