Good Day for Impact Investing
Part of what drew me towards entrepreneurship was the idea the business can be used as a tool for positive social change. The industry of impact investing and social entrepreneurship seeks a double bottom line — profit while also having a strong social/environmental impact. In 2006 the space barely even existed. The nascent interest in blending for-profit with for-purpose began with just a few entrepreneurs but has begun to invade academic research projects nearly 10 years later (I spoke with Professor Bala Mulloth at UVA just a few weeks ago regarding the academic spotlight starting to shine on impact investing).
I love the double bottom line mentality, especially when a business serves Base of the Pyramid (BoP) consumers. Loosely defined, BoP consumers earn just a few dollars per day but represent a $5 trillion market opportunity (as always, market size estimates are inaccurate and fairly worthless other than to say that this is a BIG market). To succeed in these markets takes innovative business models, new sales methods, and lean operations. Difficult certainly but not impossible in my opinion.
An array of impact investment funds have sprung up to fund entrepreneurs tackling impact-oriented problems with for-profit business solutions, from Accion to Vox Capital. However, I think the catalyst for true growth of investment in the space will be the involvement of more traditional private capital providers (the Sequoia’s and NEA’s of the world) and larger rounds that will bring these companies to the forefront of VC.
Which leads us to today’s announcement from d.light and the company’s $22.5M capital raise from KawiSafi Ventures Fund and Energy Access Ventures. Granted, both of these funds are focused on energy access in developing countries so they already have a component of impact imbued in their DNA. But the $22.5M number had me fist-pumping this morning. For investors to show that much confidence in a business model that services the poorest regions of the world should be reassuring to any entrepreneur or investor diving into impact investing. I hope to see many more deals of this nature over the next couple years as investors blend profit-seeking with social missions.
*d.light sells solar-powered lanterns and lights in rural communities in Sub-Saharan Africa. Congratulations on the raise y’all and keep up the great work!