What a year! In 2015, Village Capital supported 200 entrepreneurs through our programs, investing in 19 companies. Fifteen days into this leap year, I want to share a recap of what we learned in 2015 — and provide some insight into where we are going in the year ahead.
January: Peer selection works, globally
When we launched our second-ever “Edupreneurs” program in Africa in late 2014 with the Omidyar Network and the Pearson Affordable Learning Fund, we didn’t know that we would be investing in a pioneering educational entertainment channel starring a hippo and a giraffe teaching kids to “tumia ubongo” (use your brain).
But that’s exactly what happened. We recruited entrepreneurs that are improving educational outcomes across Africa, including a low-cost preschool and a vocational education approach that teaches students to code, and Ubongo Kids was one of the peer-selected winners of our program. The interactive channel would have been an unlikely investment for traditional venture capital, but it is turning out to be an important addition to the educational landscape.
Learn how “edupreneurs” are transforming Africa here.
February: A market for financial inclusion in Mexico
Mexico has one of the largest underbanked populations in the region, so it’s no surprise that entrepreneurs are looking to solve that problem. In February we launched our first-ever program in Mexico, focused on financial inclusion. Along with Accion Venture Lab, the MasterCard Center for Inclusive Growth, and Pomona Impact, we supported entrepreneurs across Latin America focused on increasing access to financial services for low-wealth populations.
Entrepreneurs involved in Village Capital’s first-ever Mexico program, centered around financial inclusion
Accion’s Jackie Hyland wrote a great blog post about the experience that was one of NextBillion’s most-read posts of the year. Jackie wrote, “As early-stage investors, we were able to get more visibility into the process before the sleek final pitch deck.”
March: Filling in the “health-wealth gap”
When it comes to healthcare, your zip code often matters just as much as your genetic code.
Healthcare is still the single biggest expense for many low-income Americans, and the largest cause of bankruptcy in the US. In March we completed a program to support entrepreneurs working to close this “health-wealth” gap, in partnership with the Texas Medical Center in Houston, the Sorenson Global Impact Investing Center, and the Omidyar Network. Watch this video to learn why the world’s largest medical center was excited to work with us to support innovative entrepreneurs.
One of the two peer-selected investments that we made at the end of the program was 1DocWay, which uses telepsychiatry to expand mental health. We were thrilled in October when 1DocWay was acquired by Genoa Pharmaceuticals, allowing its services to expand to patients across the US.
April: Celebrating five years of growth
April marked Village Capital’s five-year anniversary. We celebrated the moment during our Education 2015 program, which was run in partnership with Citi Community Development.
Over the past five years, we’ve supported over 500 entrepreneurs, and our team has grown from a small founding band to nearly 40. You can read what we’ve learned over the last five years here, or watch our video to see how peer selection re-invents venture capital, delivering better results for entrepreneurs and investors.
May: The rise of the “Rise of the Rest”
Talent is universal. But 75% of startup investment in the US goes to just three states — CA, MA, and NY. This past spring, Village Capital once again joined our partners at Revolution for the “Rise of the Rest” bus tour, launched by AOL founder Steve Case. Over the past two years, our bus — yes, there was literally a bus — has traveled the country to highlight startups and ecosystem leaders in over a dozen often-overlooked cities.
The “Rise of the Rest” bus takes up a large parking spot in Atlanta (Source: Huffington Post)
In May the bus visited five cities across the South. We visitedRichmond, Raleigh-Durham,Charleston, Atlanta, and New Orleans, and each stop reinforced my conviction that not every city needs to be the “next Silicon Valley”. Instead, cities around the world should focus on building on their existing strengths and assets to create lasting entrepreneurial ecosystems.
June: Financial inclusion for farmers and small business owners alike
Albert Einstein reportedly said, “If I had an hour to solve a problem, I’d spend 55 minutes thinking about the actual problem, and five minutes on the solution.” We are excited about FinTech’s ability to solve problems across sectors, and we launched programs in Africa and the US this year that focused on demonstrated potential solutions.
Over 80% of people in Sub-Saharan Africa lack access to formal banks or semiformal microfinance institutions. This problem is most persistent for the many smallholder farmers who make up the backbone of Africa’s economy. In June we partnered with the MasterCard Foundation, the DOEN Foundation, and Duncan Goldie-Scot to launch a program in East Africa to promote alternative financial services for smallholder farmers — merging our financial and agricultural sectors to great effect.
Meanwhile, one out of three people in the United States lack access to formal financial services. Small businesses are also often overlooked — 21 of the 26 million companies in the US are sole proprietorships, and many owners have uncertain economic futures. June marked the launch of our US-based FinTech program with the eBay Foundation, the Kapor Center for Social Impact, and Experian, focused on increasing access to financial services and technologies for underserved individuals and small businesses.
July: A new kind of venture fund
In July we were thrilled to announce the close of $13.2 million in commitment to VilCap Investments, a new investment vehicle that aims to make investments in 75 peer-selected companies globally over the life of the fund.
Since 2009 we have invested more than $3.4 million through peer review, and our entrepreneurs have validated this thesis by creating 7,000 jobs and raising $50 million in follow-on capital. With this new fund, we are ready to keep growing, and to get bigger and better.
August: Emerging ecosystems in Africa
Africa is on the move! In early August we wrapped up a whirlwind trip through Africa, in partnership with the Case Foundation. In late July we visited Nairobi’s iHub to host a $100,000 pitch competition with the Case Foundation and the Sorenson Global Impact Investing Center, the DOEN Foundation, and MODE. We also spotlighted emerging entrepreneurs in Lagos and Accra. Read here to see how entrepreneurial ecosystems are growing in Kenya, Ghana and Nigeria.
September: Disrupting the venture capital industry?
We’re always hearing rumors about the next “disruptive trend” that can overturn entire industries. Ironically, the venture capital industry has begun to resemble a market that is itself in need of disruption.
The second “Rise of the Rest” bus trip reminded us of that. This time we traveled up the mid-Atlantic and Northeast — meeting entrepreneurs and ecosystem leaders in Baltimore, Philadelphia, Buffalo, Manchester, NH andPortland, ME. The trip inspired me to write a post for TechCrunch about why we are at the beginning of a venture capital revolution — and how investors who are willing to search off the traditional CA/NY/MA circuit can gain a competitive advantage.
As perhaps our most exciting example, we saw communities across the US mobilize to help entrepreneurs solve an emerging global crisis in water. We launched a water program in Albuquerque, in partnership with the Ewing Marion Kauffman Foundation, the Tecovas Foundation and the community of Albuquerque (watch our video to learn why Albuquerque is a hotbed of entrepreneurship, especially around water and energy). Entrepreneurs then engaged with the Ft. Collins, CO community in partnership with the New Belgium Family Foundation and helped make the mainstream energy industry in Houston more renewable, in partnership with Chilton Capital Management.
October: Hardware and software: two different ballgames
October saw a convergence of the old and the new, including our first opportunity to run a program exclusively focused on hardware.
In the fall, we launched our third annual agriculture program in the US. Around the same time, we kicked off our first financial inclusion program in India, and, with support from The Lemelson Foundation, our first-ever program focused on entrepreneurs developing hardware to improve the lives of the underserved. Check out our post, “The Four Ps of Impact Inventing”(that’s “inventor”, not “investor”), for guiding principles for anyone who wants to support hardware companies.
Meanwhile, at SOCAP15 we joined with the Shell Foundation and Potencia Ventures to explore the many challenges around human capital. After surveying hundreds of our entrepreneurs, we previewed a white paper that revealed several things: 1) Hiring is the single biggest challenge for growing entrepreneurs, yet almost no companies dedicate strategic resources to it; and 2) The way we hire is filled with implicit bias and has no predictive power to how employees will perform. The “CV+ interview” approach is — or should be — dead.
November: Inclusion = Success
If entrepreneurship is going to change the world, then it has to include everyone. In November we released initial data from a study of Village Capital graduates, showing that across the board, women entrepreneurs are underfunded by 50% but still outperform male-led firms by at least 20% in terms of revenue growth. We are proud that even though just 5% of venture funding traditionally goes to women, 38% of Village Capital’s peer-selected companies are women-led.
Read more about the findings to learn why making a first investment in a woman-led company may be enough to close nearly the entire fundraising gap.
In November we also focused on the impact our entrepreneurs can have as inclusive employers. In Oakland we partnered with Kapor Capital and Google for Entrepreneurs to host “People Ops Reinvented,” a pitch competition for startups working to revamp the old-school human resources industry and mitigate bias in hiring. Companies such as Painless1099 are creating workforce benefits for the new 1099 economy, and companies such as Blendoor are eliminating the biased, ineffective “CV + interview” in order to create fairer, better hiring processes.
Finally, during our Fall health program, our entrepreneurs gleaned valuable information about building a company culture from our partners at the Hitachi Foundation as part of the SOURCE Initiative. While many entrepreneurs think they might be too early-stage or too cash-strapped to think about, let alone implement, company culture, the Hitachi Foundation’s speakers emphasized that building an inclusive culture was paramount and would positively influence their growth.
December: VilCap Communities – The Next Chapter
Just before Christmas we announced the launch of an exciting new pillar of the Village Capital platform: VilCap Communities. VilCap Communities will enable investors and ecosystem leaders to democratize entrepreneurship everywhere using our peer-review model.
We’ll be announcing our pilot group of Global Pioneer Communities on February 16th in Amsterdam, and our US Pioneer Communities on March 18th in Salt Lake City. Through each of these initiatives, we will help facilitate the creation of entrepreneurial ecosystems in cities around the globe, all by playing to different communities’ strengths — whether that’s health, advanced manufacturing, financial inclusion, or something entirely different.
We have already received over 70 applications to our Global program from 32 countries. The deadline to apply for VilCap US Pioneer Communities is January 22; apply here, or e-mail [email protected] for more information about the application or either launch event.
Fifteen days through January, 2016
I’m beyond excited for what 2016 has to offer for Village Capital, and fifteen days in, the year is already off to the races. I’m especially excited that we have an extra day this year — because we’ve all got a lot to do and great companies to build. I look forward to seeing you down the road in 2016!