June 10, 2015
STREAT is well known across Melbourne for its local cafés staffed by young people from some of our most disadvantaged communities. Its newest investment is Cromwell Manor, a 150-year-old building located in the heart of inner city Collingwood. CEO Rebecca Scott talks to us about how this flagship structure will at last bring STREAT to full financial sustainability.
For five years, STREAT’s social enterprise model has intensively trained disadvantaged young people over 6-9 months to help them get ‘job ready’. The trainees already face a number of issues, most commonly drug and alcohol abuse and mental health. Across STREAT’s five existing locations, they may work in a number of different roles to explore their skills and interests, and to see what role suits them the best.
The heritage-listed structure will remain, while the $6.3 million Cromwell Manor building project adds a youth hospitality training academy, training café and artisan bakery, as well as a coffee roaster. This vastly increases STREAT’s capability: it grows the number of young people they help each year to 250, it allows trainees to experience more diverse types of training, and most importantly, scales their business model to full financial independence.
The investment first came about with the twin energies of NAB and SVA (Social Ventures Australia, a long-term supporter of STREAT), as well as the individual contribution of private philanthropist Geoff Harris. “The interest of these major investors not only made our project happen, but also opened up the offer to smaller investors to be involved as well,” says CEO Rebecca.
NAB’s background in supporting microfinance plus their strong overlay of corporate social responsibility made an ideal setting for their support of social enterprises. “They started to see that the access to capital was an ongoing problem. NAB saw a lot of good ideas and solid business models stuck at a certain point of growth, because mainstream scaling wasn’t possible because of a lack of capital. So about 12 months ago and they made the decision to be the social enterprise bank of choice.
“In a way they built a new financial product. They knew their entry into the marketplace would signal to a whole lot of people that very solid due diligence had been done. NAB doesn’t make investment decisions lightly. If they’re going to put down millions of dollars worth of debt, it really gets scrutinized.”
Geoff Harris was also instrumental in the purchase of Cromwell Manor. After reading about STREAT in a magazine he offered to take on the debt of $2.5 million for the purchase of the property. “He didn’t just give us the property, he is giving us the use of the property for 50 years for no cost. As a young organization we don’t have lots of money in the bank, and we don’t have assets. As well as NAB and SVA, his personal investment has been absolutely crucial.”
Their impact investment model is a mechanism that opens up other organisations to put a toe in the water and build their first investment portfolio. Rebecca cites philanthropic foundations and ‘mum and dad investors’ as the kind of keen backers who need reassurance from larger organisations like NAB.
“That really excited us because the model allowed us to take a lot of people on the journey with us. We wanted an actual investment vehicle so they could get returns longer term.”
As to the future of STREAT’s newest venture, the location looks ideally suited to their mission of sustainable support and training for young people.
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“Collingwood is absolutely perfect for us because there is a phenomenal amount of poverty on the doorstep,” says Rebecca. “And a lot of cashed up professionals in inner-city houses who all need great food and coffee!”