The amounts are small, but the leverage could be huge. The Capria Accelerator Fund announced the first three impact fund managers in which it has invested both capital and know-how.
Managers of the three funds, from Uganda, Guatemala and Zimbabwe, last week completed a four-week intensive bootcamp in Capria’s hometown of Seattle. They each will receive up to $500,000 in capital from Capria to accelerate fundraising and dealmaking in their own impact investment funds.
[blockquote author=”Will Poole, Capria Accelerator” pull=”pullleft”]We are confident that they will be able to source and support the best entrepreneurs in their markets and show financial returns as well as social impact in challenging developing economies over the next few years.[/blockquote]
The theory is that the new fund managers’ subsequent fundraising will expand capital for growth opportunities in business that provide essential services such health, housing, education and clean energy in emerging markets. Innovation in such fields, combined with the rising incomes of a global consumer class, is creating dramatic growth opportunities.
The three funds are:
- iungo capital, which provides “missing middle” finance of between $100,000 and $500,000 to small and growing agri-processing and light manufacturing businesses in Uganda and its neighbors.
- Pomona Impact, which has been investing a $1 million pilot fund, is raising its first full-fledged fund to invest in agriculture, health, education, clean energy and housing in Central America.
- Vakayi SME Fund, which finances Zimbabwean entrepreneurs with profitable, cash generative operations that can be scaled up to provide essential services to deliver meaningful impact.
Capria has invested in the general partnerships of the three management companies, and has staked them to capital to “warehouse” portfolio investments even before the close their fundraising.
“Capria has equipped us with the tools, means and networks that will provide traction,” Patrick Makanza, founder of Vakayi Capital, said in Capria’s release.
Capria itself is effectively the second fund for Will Poole and Dave Richards, former tech executives who also manage the Unitus Seed Fund. Unitus Seed raised $23 million from investors such as Vinod Khosla and Bill Gates. (“See “Why Bill Gates Is Backing Impact Entrepreneurs in India”).
Gates is also an investor in the Capria Accelerator Fund, which is raising up to $10 million over five years. (See “Capria Accelerator to Seed First-Time Fund Managers” and “Bill Gates Doubles Down to Scale Up Financing for New Impact Fund Managers”).
The month-long “intensive” lived up to its name, Poole said, with the new fund managers hammering out their investment theses, due diligence processes and term sheets. “It was three intense experiences running in parallel for a month. Like a decathlete, multitasking fund managers need the most training in their weakest areas, he said. “It was fantastic see the cohort connect with each other and start to learn from each other.”
The preparation was evident in the managers’ presentations at Capria’s recent forum. The pitch for iungo, for example, made clear the fund was looking for “high margin/high growth business that already have secure cash flows, are potential market leaders, and operate in value-add sectors.”
The deadline for applications for Capria’s second cohort in Seattle this fall is April 30th.
Poole expects the fund managers to raise about $20 million each. Multiplying that by the additional capital raised by each fund’s portfolio companies, as well as the management team’s expected second funds, he calculates Capria’s first $5 million in investment may catalyze $500 million in value and touch five million lives.