Back in 1994, advertising execs in the UK were given what must have seemed like a career-ending brief: create a campaign for fence-protecting woodstain. The campaign that emerged not only transformed the fortunes of one woodstain brand, it also entered our everyday parlance for straight-talking, easy-to-understand products and services: ‘It does exactly what it says on the tin’.

So, what does social investment have to do with a woodstain ad? Well, while 2013 has been a big year for impact investing, my overarching question is this: would our investors, our investees, or the taxpaying public say of us ‘we do what it says on the tin’? This year has seen lots of new funds announced, many of them focused on broad social impact (like Impact Ventures UK or Bridges Social Impact Bond Fund), but we are also seeing increasingly issue-specific funds (like the Real Lettings Fund for the homeless, or the It’s All About Me adoption social impact bond). Big Society Capital is now a forceful stimulus in new fund creation, increasingly calling for social investment activity in certain areas of social need or public service delivery. But beyond Big Society Capital, is there really more investment capital available in the UK?

Other funders are dipping their toes a little deeper into the water, including some foundations, some local pension funds and some big financial institutions, such as the European Investment Fund. But without a flow of independent capital matching in scale and commitment to the field, the market as a whole will remain fragile. Perhaps the forthcoming social investment tax relief will help to rebalance the investor side of the market.

On the frontline, it’s clear that there are very substantial questions from the traditional non-profit sector about if, how and when social investment is for them. Dawn Austwick, chief executive of the Big Lottery Fund, recently called for voluntary organisations not to be ‘scared off’ social investment. Despite encouragement and money being available, there remains a lot of confusion in the charity sector about what social investment is and what it can do. Yet a rather different type of investee has gained prominence in 2013: the start-ups we see emerging from new accelerator programmes like Bethnal Green Ventures or Wayra UnLtd. These ventures are led by entrepreneurs who want to deliver a positive change for society and see a market opportunity to do so. They don’t necessarily label themselves as social entrepreneurs or social businesses, and are increasingly unlikely to register as a CIC or charity. Capital from investors who share their values and motivations appeals, and social impact investment offers what they want. And amidst the excitement and challenge in actually making investments happen, the UK’s fledgling social investment industry has become its latest proud export.

2013 has seen London play host to the G8 Social Investment Forum, the IIPC conference and the recent GIIN conference. But are we in danger of creating a policy bubble, of telling the world the UK has fixed the fence before the woodstain has dried? What will happen in 2014? I think next year will be when we learn if impact investment really does do what is says on the tin.

• New funds, including my own at Nesta Impact Investments, will need to show what they are delivering with the money. It’s time that we are all open about who we invest in and show what this market is capable of.

• We need a grown-up conversation about the divergent viewpoints in the field: about who this money is for, and for what outcomes. Is social investment about access to finance for non-profit charities and CICs, or is it about deploying capital for impact, wherever that can be best achieved? Real examples of investments will help to clarify this and help organisations decide if this is something for them or not.

• While there has been much more focus on impact measurement and evidence this year, too often it’s been in the safe space of standardisation of metrics. In 2014 we need to focus on evidencing what works, and what is meaningful to service users and customers.
• Policy will become politics as we head towards the 2015 election, affecting both social impact investment market development, but also, more importantly, the areas of social need and public service markets that investors are targeting. Expect robust debates on the structure of the education market, the NHS market and the energy market. This ‘political risk’ should serve as a healthy reminder that impact investment doesn’t exist for its own sake, as a thing to be exported in isolation. Rather, it’s a tool to help organisations to tackle the major challenges faced by real people and communities every day.

Let’s hope that this time next year investors, frontline organisations, politicians and perhaps even people in the street have some great examples of social impact investment. We want people to say we do ‘exactly what it says on the tin’.

Joe Ludlow is director of impact investment at Nesta Impact Investments