Case Study: Dismantle Capital Raise
In the ongoing battle against youth disadvantage, social enterprises like Dismantle have emerged as a beacon of hope. Based in Perth, Dismantle empowers young people to reach their full potential through innovative services and programs like ReNew Property Maintenance (ReNew), a social enterprise that creates job opportunities and skills training for young people from marginalised backgrounds. In this case study, we take a closer look at the growth and journey of Dismantle and ReNew and how they have raised blended finance to scale their positive social impact and drastically change lives.
Founded in 2010, Dismantle aims to empower at-risk young people through skills-based learning, supportive mentoring and employment pathways. In 2019, Dismantle started a new social enterprise, ReNew Property Maintenance (ReNew). ReNew provides young people with paid employment opportunities, taking advantage of local demand for maintenance services to provide young people with a program of vocational training and paid work experience, ensuring a longer transition and mentorship period on the way to the workforce.
In just four short years, ReNew has grown its idea into a portfolio that counts Charter Hall, Spotless and the City of Mosman Park as clients, generating over 80 award-wage jobs for disadvantaged young people each year. To date, over 75% of ReNew's youth employees have successfully transitioned to further employment, education or training.
“Most of the young people we work with come to us without the basics, on paper they are not good candidates for a typical employer. But it’s hard to focus on school, work, or bigger aspirations when you’re in survival mode. We are frequently finding our young people in crisis accommodation or just making sure they’ve got lunch," said Pat Ryan, CEO at Dismantle.
To execute on Renew’s growth plan and maximise impact, the organisation identified the need to raise capital. After participating in Social Impact Hub’s Scaling Impact Accelerator, the team embarked on impact investment readiness journey and coordinated a multi-stage blended capital raise with the support of an Impact Investment Readiness Growth Grant provided by the Department of Social Services. "It's quite hard to get grants for social enterprise trade, and so we looked to impact investment and have been lucky enough to work with Social Impact Hub to get our investment projections and everything in order to take to potential investors," said Ryan.
Raising Capital
Dismantle initially raised $200,000 in low cost debt from Spinifex Trust, to relieve cashflow pressure given the long payment terms associated with typical jobs. Dismantle had a pre-existing relationship with Spinifex Trust as a philanthropic funder. Sophie Chamberlain, Director of Spinifex Trust, had initially met Dismantle through Impact100 WA, where Dismantle won $100,000 in 2018 to establish ReNew.
"We knew this was an opportunity to make a powerful difference," said Chamberlain. "These smaller social enterprises produce outstanding outcomes but need financial backing to give them lift-off. We'll get our money back along with both the interest and strong social benefits.”
In addition to a $300,000 grant from Westpac Foundation, an existing grant partner, ReNew successfully raised $250,000 in low-cost debt from five Perth-based foundations and $500,000 of philanthropy from Paul Ramsay Foundation. ReNew also secured $340,000 of equipment finance for a fleet of nine vehicles, tools and equipment. The capital will enable ReNew to scale in response to its existing pipeline of demand for its services, tender for and execute on contracts currently beyond its reach, and employ an additional five work crews (50 young people).
Challenges & Learnings
The journey of raising capital for ReNew has been instrumental in driving the company's growth and achievements. Along the way, the enterprise encountered various challenges, including talent acquisition and cash flow management.
The competitive labour market made it difficult for ReNew to recruit team leaders at a pace that aligned with their growing demands. Additionally, managing cash flow proved challenging due to some customers' non-negotiable payment terms, causing delays in receiving payments. Consequently, ReNew had to diligently monitor cash flow to adapt to these payment cycles and maintain seamless business operations.
Despite the challenges faced, ReNew has been able to secure significant capital and achieve key milestones along its capital raising journey. These accomplishments position the enterprise for continued growth, enabling it to expand its operations, enhance its impact, and provide more opportunities for young people in need.
For social enterprises embarking on capital raising journeys, there are several key lessons that can be drawn from ReNew's experience. First, it is crucial to focus on strengthening internal capacity by investing in systems, processes, and talent for effective growth management and investor relationships. One way ReNew did this was by leveraging external resources such as grant funding that enabled them to engage with capacity building services for tailored assistance and expert advice. Additionally, the Renew team recognised the importance of developing an engaging narrative that clearly conveys a social enterprise's social and financial objectives while emphasising its unique value proposition and potential impact to attract mission-aligned investors.
ReNew's success also boiled down to its leaderships ability to foster strong investor relationships through meaningful conversations, transparent updates, and timely communication, building trust and confidence with accurate financial reporting and well-defined impact metrics.
Looking Ahead
ReNew's impact-led investment marks a positive step forward for Western Australia’s social enterprise sector. "The amount of capital that can be unlocked for social and environmental outcomes with arrangements like we’ve just made with Spinifex is enormous in this state. Funding impact doesn’t have to come as a one-way donation. We hope we can be a lighthouse for similar investments across the state and catch up to the rich and diverse ecosystem of impact investment that has been developing and succeeding in the eastern states for over a decade," said Ryan.
ReNew is also taking part in a landmark $3.8M trial with White Box Enterprises, exploring the effectiveness of jobs-focused social enterprises in delivering long-term employment outcomes for people living with a disability. As part of the first Payment By Outcomes (PBO) trial that involves social enterprises and impact investors, ReNew will receive outcomes-based payments when participating employees maintain employment after 6, 12 and 18 months, with additional payments if the candidate has successfully transitioned onto further employment. "As the only organisation from WA taking part in the scheme we're also proud to pioneer this in our state and represent the emerging social enterprise sector at a national level," said Ryan.
"It’s really simple," said Ryan. "The most significant barrier to getting a job, is having basic work-readiness skills, which you learn in your first job. Our young people have been denied this opportunity for a myriad of reasons all linked to disadvantage, so getting into the workforce with us, means they’re far better equipped and likely to go onto further employment, breaking the cycle of entrenched disadvantage. ReNew is not about turning young people into gardeners, it’s about empowering them to find a horizon to work towards and equipping them to do it.”
The inspiring story of Dismantle and ReNew serves as a beacon of hope and a reminder of the transformative power of social entrepreneurship with the backing of investment. Through their commitment to helping young people gain employment opportunities and agile fundraising approaches to fuel growth, they are well positioned to scale the lasting change they are creating in the lives of many disadvantaged youth. With more initiatives like ReNew, we could potentially see a future where everyone has access to equal opportunity for success regardless of background or circumstances.