10 Things I’ve Learned Managing a Tech Fund

Over the last eight months at Development Innovations, we’ve funded almost a million dollars in technology grants through our Catalyst Fund. We have groups working on all types of problems, from a crowdfunding platform with SMS to open source child care systems, and a mobile podcasting studio for monks working to save the environment. Our partners are working to use technology to help solve difficult development challenges. And we are trying to understand what works and more importantly, why something doesn’t work.

I’ve spent the last eight months pouring over concept notes, proposals, and hearing project pitches. I’ve worked hands-on with all of our grantees to help understand how to use technology and what resources are needed.

Coming from the tech/startup world into international development has been a major change and learning experience for me. Especially when it comes to managing a fund that is over a million dollars. When you have a technology fund this large (and I realize that by donor standards we have a very small fund), in a country as small as Cambodia you attract all types of organizations, businesses, NGOs, social enterprises, government, and even individuals.

Today I wanted to share a few things I’ve learned managing this type of technology fund.

You’re Investing in People

Just like in startup funding, you’re investing in the people running the project just as much as the technology they are pitching you on. Are they passionate about this project? What have they done before this? What does their project team look like? Does it have balance between technical and non-technical staff?

I take time to get to know as much about the potential team as possible. I want to know what else they’ve done, where they are from, and why they are interesting in working on their problem. I’m always curious why someone feels compelled to work on certain issues and spending time to understand your potential team is important.

Plan for Failure

No one can have a 100% success rate in any industry, but the development industry seems to be obsessed with success stories and sustainability. Not everything in your portfolio will be successful. In fact if you’re running an innovation lab or fund, and truley trying to launch new technologies, your success rate will be lower than you feel comfortable with.

But project failure is a good thing and we need to celebrate it more. It helps us refine our work, to test and try again. Maybe technology isn’t the best solution to the problem your grantee is working on. And that’s ok! Focus on learning, growing, and adapting. Let’s get away from the obsession of success.

Passion Wins Over Talent

I meet with a lot of Executive Directors and Project Managers to coach them on technology innovation. As we go through the grant process, I am always looking for the groups that have the passion to do the work. When asked what you do if you don’t get funding from us, the groups that respond: “We’d keep working on it and find a way to make it work.” Those are the people I want to work with. When someone cares about their work so much that they are willing to find away forward, with or without you, it’s usually a good bet.

I’ll take passion for the work 100x over someone with talent but is just chasing money.

The Technology Doesn’t Matter

The technology is a tool to help make people’s work easier or more efficient. But I could care less what you’re building your system on, or how you’re building it. I know this is counter to what a lot of people are saying. But my startup methodology is to do things that don’t scale and get it in the hands of users.

The technology will always be changing, what’s hot today will be old tomorrow. What matters is how you design, test and refine your solution with your users. Get the technology in the hands of people it’s designed to help and get feedback.

Partnerships are Important

Another great way to see if a project is on to something interesting is your ability to draw private sector partnerships to the project. I find corporations are a great measuring stick to see if a solution could have mass appeal to a market. Spend time shopping the solutions you are working on with potential private partners. Telecoms are best, they have the budgets and most of the technology solutions your grantees are working on need their support. Software companies can be good as long as they are willing to put in some cash, not product.

Speaking of cash, make sure your private partner deals are putting some form of cash into the project. In-kind time and resources can be helpful, but nothing shows dedication like having skin in the game.

Negotiate Hard, But Fair

When I first started doing this I was frustrated at the dollar amounts attached to proposals. If you announce your grant fund call with a maximum grant amount of $150,000, magically all proposals come back with a cost of a $150,000. Now I haven’t found a perfect solution to this but you’ll need to focus on your negotiation skills in order to help your grantees get their costs in-line with reality.

Most NGOs have no idea how much the technology costs. Or the time it takes to build new technology. Make sure the budget is fair and reasonable for your projects. Leverage open source technologies and social media as ways to help lower technology costs if possible.

And be willing to walk away from the deal if you can’t agree on a number. Forcing someone to work on a project that they feel is under budgeted will just end up in disaster.

Include a Marketing Budget

Make sure for any project you fund that you either have a marketing budget set aside to help them promote their work, or build in funding into the grant. Other than building the technology, lack of marketing is one of the main reason I see projects fail.

Put money aside for marketing, encourage the hiring of marketing professionals, and give them the resources to communicate about the work they are doing. No one changed the world without telling anyone.

Have Legal Resources Available

I’ve found that donors and NGOs are not ready for legal complexities that come with developing software. Who owns the code? Which open source license is appropriate for their solution? Trademarks or patents? The list of legal issues your grantees can get into is massive. Hire good legal teams to help your grantees navigate this complicated world.

I’d love to see more of our grant funds focus on the legalities of technology innovation. For our next phase I want to push to make sure we have legal advice on-call for our grantees to use.

Kill the Rolling Call

For almost a year we had a rolling call for applications. At the start of the call we had a lot of interest, but over time interest dropped and applications just trickled in. It wasn’t until we put an end date to our grant fund that we got bombarded by applications.

Do yourself a favor, put our very specific, short calls for applications. You’ll get a much better response.

Balance Your Portfolio

No matter what, remember you’re building a portfolio of investments. And just like any fund manager it’s your job to make sure you have a balance of investments to best optimize your return. Hedge your high risk investments with projects that are proven or have a higher chance for success.

If you invest in just high-risk activities, you’re going to end up with a lot of work on your side. From pushing grantees to hit deliverable dates, to be willing to step in and manage the project for them. And I’m not paid enough to be a project manager for 20 projects. So unless you want that massive headache, make sure you hedge your bet on these high-risk activities.