Village capital has launched Village Capital Innovations, an arm aimed at multinational corporations. Communication from Allie Burns, MD Village Capital, says that Village Capital Innovations will help "partners work with entrepreneurs to find solutions to real-world problems."
Partners will use it to navigate new geographies and industries outside the mandate of Village Capital's Investments fund.
Founded in 2010, Village Capital “builds bridges for entrepreneurs who are creating an inclusive and sustainable world.” It operates as an accelerator, entrepreneurship program and venture capital fund.
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The company's investments fund invests in early-stage ventures in emerging markets. Giving them amounts ranging from $10,000 to $4 Million, so far. In May 2016, it raised US$17.7 million in funding for its investments Fund, VilCap Investments. Backed by 29 investors.
Yet, this is not enough to create the impact the company desires. Hence the launch of Village Capital Innovations to help corporations and align their business and social interests.
Because, going by the words of the chair and CEO of multi-trillion-dollar asset manager BlackRock, Larry Fink, the future of investment is impact-based. And success will be tied to social impact success of the business. is re-writing the rules.
Village capital Innovations plans to work with corporations, governments and other organizations. Providing them with “advice, research and hands-on guidance”.
The rise of impact investment implies corporations must align business and social impact. VilCap has so far worked with the likes of Microsoft, Unilever, PayPal, UBS, and Citi, Autodesk and others. The growing list of companies Village Capital is working with demonstrates an increasing need for the service.
Burns says that “for the past fifty years or so, most companies have separated their core financial objectives (their business pocket) from their philanthropic and charitable work (their social good pocket).” This was “driven by the belief that focusing on the latter would hinder financial performance.”
Adding that “VilCap Innovations will help us grow our impact and more broadly accelerate the shift [of multinational corporations] to one-pocket thinking.”
The Impact Investing Benchmark from Global Impact Investing Network (GIIN) shows that “venture funds that intentionally integrate social impact with financial returns in emerging markets outperform [their peers].”
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Nonetheless, as Village Capital Co-founder and CEO, Ross Baird wrote, “CEOs [still] think about quarterly returns ahead of thinking about what they can do for their community.” Making it hard to put both their business and social metrics in “one pocket”.
Which means, “the hunt for new customers and new innovations” is what is going to draw multinational corporations “toward entrepreneurs who are driving impact on the ground.” Writes Impact Alpha's Dennis Price.
Allie Burns wrote; “In January, Larry Fink, the chair and CEO of multi-trillion-dollar asset manager BlackRock, issued an ultimatum to corporate executives: if they want to receive investment from BlackRock, their businesses must have a social purpose.”
To date, BlackRock has funded two Village Capital programs around financial inclusion and financial technology in India and Mexico. Besides providing extensive mentor support to participating entrepreneurs.
Thus no doubt Village Capital's decision could have had the backing of Blackrock. Perhaps to ensure they help the companies achieve their social impact performance metrics. Plus, no doubt the number of multinationals that'll seek an expert in the field of social impact will skyrocket.
“If BlackRock does what it says it’s going to do, ” Ross Baird writes, “It will mean that a company’s impact — positive or negative — becomes a painkiller (NEED), not a vitamin (WANT).” At that point, all the multinationals will turn to Village Capital.
Microsoft, for example, turned to Village Capital when it wanted to support local entrepreneurs working to connect to the internet the world’s remaining unconnected communities.
Dennis Price says that “long before BlackRock’s letter to corporate CEOs calling for them to define their purpose, corporations were palling around with impact firms and investors looking for the “impact alpha.”
“Global consumer good company Unilever has partnered with solar energy firm d.light since 2014, purchasing solar lanterns to place in small shops that sell Unilever products, allowing the shops to remain into the evening. Acumen, the global impact investor, has helped connect firms like Dow, Unilever, SAP and GE to its portfolio companies, helping the multinationals build more inclusive and sustainable supply chains.”