Nov 21, 2018
Hello, listeners, and happy Thanksgiving to those of you in America! Welcome back to Tech Forward. This week, I'm rebroadcasting an early episode for newer listeners. Earlier this year, I spoke with Allie Burns, Managing Director at Village Capital. This global venture capital firm wants to build bridges for entrepreneurs looking to create an inclusive and sustainable world. Having worked with Revolution, the Case Foundation, AOL, Atlas Venture and more, Allie honed over the years a passion for working with young and emerging technologies. We discussed Village Capital’s unique model and goal to broaden access to capital worldwide, and to close the wealth gap for founders from underrepresented backgrounds.
Village Capital is on a mission to reinvent the venture capital system in such a way as to truly back the entrepreneurs of the future. “The work we do is united by the principle of getting more capital to more people in more places, to solve the significant challenges in environmental stability and economic inequality.” Seeing as how 75% of venture capital goes to only 3 US states, and most of that to white men, there’s room for significant improvement. Village Capital deliberately sources and recruits entrepreneurs outside of the dominant geographies, both within the US and worldwide at their offices in Mexico City, Nairobi, and India.
Village Capital operates with a community based support model, where cohorts of 10-12 entrepreneurs share information and constructive criticism with each other. The peer evaluation method is an attempt to flip the current power dynamic: at the end of the 3 month program, the cohort selects which among them will receive investment from Village Capital’s own fund. The model also connects these entrepreneurs with mentors in order to build a common language on both sides of the table. “If entrepreneurs can think like investors and speak to them in a way they’re more receptive to, we’ll have better matchmaking between investors and entrepreneurs.” In fact, many entrepreneurs return to the program as mentors down the line! In this way, the community built within these cohorts at Village Capital is meant to last well beyond the duration of the program.
In their work internationally, they’ve found that only 10% of investment goes to emerging markets, and of that small percentage, the distribution echoes a lot of what we see in the US. “In 2015-2016, 72% of all startup investment in East Africa went to only 3 companies, and 90% went to companies founded by non-local founders.” Companies in emerging markets also have unique problems, such as gaps in the value chain, that make these businesses more challenging to finance. “Traditional venture capital doesn’t know what to do with these types of businesses.”
In order to measure near term success, Village Capital has partnered with Emory University to compare companies who participated in the program against a control group of companies who didn’t. “We want to know, are the companies we’ve supported able to access capital and grow their businesses in a more accelerated way?” The answer, so far, is positive: companies who went through the program are raising more than 2.5 times the capital, creating 70% more jobs, and generating 25% more revenue.
Big thanks to Allie for joining me on the show this week, and to all of you out there listening. See you next week with a brand new episode!