Impact Investment and The Arts

Still on a high from the Culture Business Conference last week. There were so many substantive discussions in and out of the conference sessions on a range of topics. Of course, financial sustainability was the main topic but the theme that we seemed to circle back to time and again was the necessity of rethinking business models. One standout session was the presentation by Georgie McClean and Jayne Lovelock on debt financing. The Arts is a high risk venture at the best of times and debt financing has not been much of a thing in the SME sector in part as a result. (Plenty other reasons but that, I would say, is the main one.) And courtesy of the polycrisis, well, everybody's risk profile just shifted right. So what can make debt financing viable in such a difficult environment? And why consider that in the first place? One obvious reason, so obvious it barely needs mentioning, is that there is not enough government arts funding to go around. Yes, we all love the Revive cultural policy but there is not that much more money out there. So diversifying your financing sources is a baseline necessity. But debt financing requires investors who will seek a return. How do you guarantee a return? And this is the tricky bit, how can you identify those cultural assets your sector or organisation has and accurately understand how they function in a market? Challenging. But so interesting. Especially when it implies new innovative pathways in rethinking your business model. And not least because in doing so you have to have a better understanding of value. If there is one thing I have seen in the Arts more times than I have had hot dinners, it is that we consistently underestimate our value.