Just when many fund managers are throwing up their hands in frustration at the reluctance of affluent individuals to write checks comes a sign that it may indeed be possible to get rich folks to actually commit to impact investing.
Unitus Seed Fund, based in Seattle, announced it has closed its $20 million fund for “base of the pyramid” startups in India, raising an additional $7 million in commitments from a range of “high-net-worth individuals,” or HNWIs, in the U.S.
“It took some time to get people comfortable that they would see both a financial and a social return, particularly looking at very early stage businesses that are inherently high-risk,” said Will Poole, co-founder and managing partner of Unitus Seed Fund.
A raft of surveys have suggested that HNW and ultra-HNW individuals would be early adopters of impact investing practices because they are able to commit on their own without cumbersome committees or concerns about fiduciary responsibility over other people’s money. But many impact fund managers report that fundraising from such individuals has been time-intensive and often fruitless, with long courtships resulting in small checks or nothing at all.
Unitus cracked the nut. Many of the fund’s limited partners are first-time impact investors, including Diego Piacentini, a top executive at Amazon.com, and Microsoft executives Soma Somasegar, Bharat Shah, Anoop Gupta and Nagesh Pabbisetty. Poole is himself a former Microsoft executive; his partner at Unitus, Dave Richards, is a former executive of Real Networks, another Seattle tech company.
“I have been looking for investment opportunities that align my entrepreneurial and business passion with driving sustainable and scaled social change,” said Steve Sing, CEO of Concur Technologies Inc. in Bellevue, Washington. “Via Unitus and other impact investments, I expect to receive a competitive rate of financial return and to see millions of lives improved over the coming years.”
Indian American entrepreneurs Gururaj “Desh” Deshpande, a founder of Sycamore Networks, and Romesh Wadhwani, the founder of Aspect Development Inc., who both invested through their philanthropic foundations, are also first-time impact investors. More well-known impact investors also participated in the round, including the Lemelson Foundation, the Sorenson Impact Foundation and the Michael & Susan Dell Foundation.
Significantly, most of the fund’s limited partners agreed to let their names be disclosed publicly, as examples for other would-be investors.
Unitus has been the most active seed-stage impact investor in India over the past year, according to a report from Unitus Capital (the two entitites have common roots but no formal affiliation). In the next 18 months, it plans to double its portfolio of investments to 26 companies, in healthcare, education, agriculture, livelihoods, technology and basic necessities. The fund’s typical investment size is $250,000.
While Unitus’ U.S. fund is closed, Indian nationals and non-resident Indians have a few more months to get into Unitus’ affiliated rupee-denominated seed fund.
“If you are of Indian origin and of some wealth, you are contantly approached for donations,” Poole said. “We offer a new way for those people of Indian origin to make a difference in their country — and to make some money.”