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The Collision of

Venture Capital and Philanthropy

​Three principles we’re applying in the Integrated Fund

Philanthropy is having a creativity heyday. Various forces and trends have helped push the industry to blur what used to be separate lines of business and social good. Enter impact investing, social entrepreneurship, crowd funding, and so on.

One of the words that gets bandied around to describe this new approach is venture philanthropy. It borrows from the ethos of venture capitalists (VCs)—investment managers that are willing to experiment and take risks on early-stage entrepreneurs.

Given that Geneva Global was founded by investment managers, we often bring that type of thinking in the way that we help clients solve complex international development problems around the world.

So it’s not surprising that a new initiative we’re managing, the Integrated Fund, borrows from some key VC principles.

Principle 1: Dig deep to figure out the right solution

First, VCs invest in companies that have figured out their customers’ needs and, in response, provide a compelling solution.  In our case, our clients are donors seeking to improve the lives of people living in difficult places. Solving poverty and eliminating marginalization are the problems our clients have tasked us to solve.

From 15 years of working in international development, what have we found to be the solution? Turns out, there are three interrelated issues that need to be concurrently addressed.

First, individuals and their family members need to be healthy. Second, they need to have educational opportunities. Third, they need work that generates enough income to support their family.

I’ve overly simplified for brevity’s sake, but those are the essential three ingredients needed to improve someone’s situation in life. That’s why these integrated sectors are at the heart of the Integrated Fund’s approach.

Principle 2: Find a niche for maximum impact

Second, a savvy VC firm requires its portfolio company to have a laser-like focus. An early-stage company has too few resources to be successful everywhere, so they need to focus and know a market intimately in order to capitalize on that opportunity.  Similarly, we looked at where our clients would have the greatest impact for this initiative.

As we researched several geographies, Gulu, Uganda emerged as the best “market” in which clients could have an incredible opportunity to do good. Coincidentally, Uganda’s rising status is also echoed in the recent “Landscape for Impact Investing in East Africa” report from the Global Impact Investing Network.

As we dug in to intimately learn the context of Gulu, we realized that its unique situation called for some nuance. For example, one of the pressing health issues is mental health, so we’re finding outstanding organizations addressing those needs. Additionally, agriculture presents a huge opportunity for job creation—so much so that we have a dedicated focus on agriculture-related businesses.

Principle 3: Provide a variety of support to ensure success

Lastly, a VC makes available a variety of tools and resources to ensure the success of its portfolio companies. Sure, they provide funding, but they also provide mentors, help in filling key employee gaps, organizing learning events, and doing whatever else it takes to make its companies successful. With that same line of thinking, we are using a variety of financial and nonfinancial methods to help the organizations we’ve selected be successful.

For example, we’re using blended capital. In some cases, providing a loan makes sense. In other cases, giving a start-up business a grant might be the best course of action.

The idea is to provide whatever is needed to unleash the potential of these organizations so they can do the most good in Gulu.

We also typically convene the organizations together to learn and coordinate with each other as a way to improve their own effectiveness—a form of collective impact. And this also benefits our clients, because we’ve created a more coordinated intervention that gets better results.

The work of international development and good development isn’t easy—I’ve heard many people contend that it’s even harder than launching a business or running a large company.

The Integrated Fund is partly an experiment to see if everything we’ve learned—collectively as a company and individually from our staff’s experience—can really transform lives and an entire community in a sustainable manner.

That type of experimentation and risk taking is what venture philanthropy is all about.