Impact investing firm VilCap Investments has reached a final close on $17.7 million for its debut fund.
VilCap Investment is the for-profit vehicle of Village Capital, a non-profit group which connects and trains entrepreneurs in agriculture, education, energy, financial inclusion and health.
Its Fund I will invest in ten or more seed-stage start-ups, including at least one focused on the food and agribusiness sector. It has a five-year investment period, with a pool for follow-on investments through the life of the fund, as well as options for up to three one-year extensions.
The fund was launched in 2014, and its investor base comprises 29 LPs, made up of high net worth individuals, institutions, family offices and foundations. Former America Online chief executive Steve Case is cornerstone investor. Other investors include Lotus founder Mitch Kapor, Sorenson Companies founder Jim Sorenson, the impact investing-focused Lemelson Foundation and Access Ventures, and Texas-based investment advisor Chilton Capital Management.
It charges 2 percent management fees and expenses, subsidised by the USAID’s Global Development Lab, and 20 percent carry.
The fund’s model draws on Village Capital’s programmes, which bring together roughly a dozen companies focused on solving a specific need. The best companies, ranked by the workshop participants, receive investment from the fund.
“The commitment Village Capital makes is to run at least one programme a year focused on challenges within food and agriculture in the US. But we also run programmes in other parts of the world,” Witney Muse, VilCap Investment sector manager for agriculture, told Agri Investor.
Outside the US, VilCap expects to launch programmes in Latin America and India, said Muse.
Portfolio companies include EFK Capital, which produces fertilisers and fuels from a Kenyan plant, and iUNU, which makes energy efficient lights for indoor farming.
“We’ve found there’s really a value in bringing together entrepreneurs in agriculture, food-tech and other entrepreneurs that maybe don’t have experience in agricultural production,” said Muse. “Those entrepreneurs that are strictly involved in agricultural production gain exposure to elements beyond the farm gate that impact their business.”
A focus on the urgent needs not only helps create the greatest possible social benefit, but also drives strong returns, said Muse:
“Village Capital has made about 62 investments since 2009, and we’re running over a 90 percent survival rate compared with a typical venture fund that would have a 90 percent failure rate. That’s due to the fact that we’re finding entrepreneurs working on real world challenges.”