The impact investment field has experienced new exciting developments. The UNICEF Innovation Fund, which has already picked five portfolio companies, is calling for expression of interest. It targets to finance up to 40 tech startups more within the next year. Globally, corporate impact investing is estimated to reach $2.4 billion every year.
UNICEF makes venture capital investments in emerging market startups
The UNICEF Innovation Fund, the impact investment vehicle of the development assistance programme (with a venture capital approach), has funded five companies in emerging countries and looks to invest in as many as 40 more in 2017.
The fund aims to finance solutions for issues like transportation, identity, wearable technology, finance, and personal data. It is also calling for applications for the next round of investments, with a deadline dated 1 January 2017.
The current portfolio include Saycel, a Nicaragua-based startup providing communications solutions for poor rural communities; Bangladesh’ tech-based healthcare service mPower; South Africa’s 9Needs, which uses blockchain and identity technology to manage early childhood development services; Innovations for Poverty Alleviation Lab, a Pakistan university project that helps with maternal and newborn health; and Cambodian Chatterbox, a tool set to increase literacy.
Cynthia McCaffrey, director of the UNICEF Office of Innovation, said: “The Fund allows us to prototype technology solutions, as well as expand our networks of open source collaborators to improve children’s lives.”
The UNICEF Innovation Fund was launched in May 2015 along with the UNICEF’s Global Innovation Centre. The duo bagged a total funding of $9 million.
“The UNICEF Innovation Fund is a new way of doing business at the UN, combining the approach of Silicon Valley venture funds with the needs of UNICEF programme countries,” added McCaffrey.
One third of global cos make impact invests, totalling $2.4b
Large companies spend some $2.4 billion annually on impact investment globally, according to the first ever report on corporate impact investing conducted by the Committee Encouraging Corporate Philanthropy (CECP) and Prudential Financial.
On average, one third of large companies are active in impact investing every year, the report stated.
“Median total giving for companies active with impact investing was more than those not active in impact investing by a substantial margin of $25.7 million to $15.0 million,” the Investing with Purpose report said.
While most of the investors come from the financial services industry, major businesses across a variety of other sectors such as manufacturing, consumer essentials and technology are also actively funding in this field, the report added.
In addition to direct investments and self-managed funds, corporate investors also make impact financing through third-party fund, strategic alliances, accelerators and corporate foundations, the report showed.
The CECP expects that impact investing will grow with a broader reach throughout the global market. Other institutions also support its anticipation, like JPMorgan Chase, which predicted the impact investing area will be extended from $60 billion currently to $2 trillion by 2025.
“Impact investing is the cutting-edge tool for companies looking to achieve financial, environmental, and societal goals – all at the same time. We expect more leaders in corporations to leverage their companies’ resources and competitive advantages through impact investing,” commented Daryl Brewster, CEO of the CECP.
Lata Reddy, vice president at Prudential Financial and president of The Prudential Foundation, added: “Across the globe, companies are recognizing they can do more with their financial capital than just generate returns. Through impact investing, companies can address societal challenges and tap into innovations that will increase a company’s access to new markets, talent pools and distribution channels.”
Prudential itself has invested more than $2 billion in ventures and projects with social impact. The company said it will double the size of its impact investments portfolio by 2020.