After 100 early-stage deals, Village Capital takes aim at later and larger investments

ImpactAlpha Editor

Dennis Price

Village Capital set out nearly a decade ago to make entrepreneurship available to all types of founders.

The firm put a few twists on the traditional venture capital model: It would invest earlier, in startups solving big economic and environmental problems and those mostly outside of the traditional startup hubs of California, New York and Massachusetts.

Perhaps most distinctly, it would let the entrepreneurs in its accelerator program, rather than investors, select which firms would receive an investment.

Village Capital, co-founded by Ross Baird and Victoria Fram, raised about $20 million through three vehicles from top impact investors including Steve and Jean Case, Mitch Kapor and Freada Kapor Klein, Jim Sorenson and Bob Pattillo, as well as the U.S. Global Development Lab’s PACE Initiative and two-dozen other investors.

The model has largely delivered the goods. Nearly 10 years on, the venture firm has backed more than 100 early-stage firms in sustainable agriculture, health, education, financial services, education and energy around the world. A quarter of the companies are led by a founder of color (compared to an industry average of 2%). Almost half are female-led (vs. 15% for all venture investments). And more than eight in 10 of them are located outside of conventional startup hubs of California, New York and Massachusetts (vs. an industry average of 25%).

The companies have raised more $240 million in additional capital, while serving nearly 13 million people and creating 11,700 jobs. The firm has written off 10 investments and exited 14; nearly 80 of the companies are still active.

Now, the venture firm is aiming to take its model up on the capital continuum. Fram, managing director of Village Capital’s $17.7 million VilCap Investments seed fund, says the firm is planning to raise a later stage fund, likely with a U.S. focus.

“We think Village Capital can play the same type of leadership role we’ve played in the early stage market,” says Fram.

“We still see high potential for our portfolio companies,” she says. “But the growth-stage market is not liquid enough that everyone that deserves a follow-on round gets one.”

Atlanta-based Rimidi, for example, has a tech solution for chronic disease management. Fram says the company struggled to raise a Series A until it caught the attention of pharmaceutical company Eli Lilly. VilCap Investments had backed founder Lucienne Marie Ide in 2014; Eli Lilly finally led the firm’s $6.58 million Series A this summer as a strategic investment.

“If it wasn’t in Atlanta, or didn’t have a female founder, or wasn’t solving an entrenched problem, perhaps it would have raised earlier,” says Fram. “It’s a success story, but it took longer than it should have.”

Steve Case’s billionaire-backed Rise of the Rest fund, and multi-city bus tour, has helped gin up enthusiasm for startup investing ‘between the coasts.’ New ‘opportunity zone’ tax incentives have spurred interest in investments in low-income neighborhoods.

Fram says the level of enthusiasm hasn’t been matched by the flow of capital. “The problem isn’t solved.”