Paul Belknap, Director, Impact Investing, Author at Miller Center for Social Entrepreneurship

Paul Belknap, Director, Impact Investing

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Paul Belknap, Director, Impact Investing - December 21, 2023

Announcing Five New Miller Center Capital Investments

Miller Center Capital has been busy this year and we’re excited to share news of five new investments that align with the core principles of our fund:

Catalyzing additional investments by going first,
Connecting to bridge the language gaps between entrepreneurs and investors, and
Innovating by creating funding structures that fit companies’ needs.

Each investment in these five Miller Center alumni social enterprises also drives real and growing impact.

Awaaz.de

Awaaz.De digitizes microfinance to make financial services more affordable, comprehensive, and user-friendly for last-mile customers in India. Offering scalable borrower engagement services to microfinance institutions, Awaaz.de aids communications with customers through mobile messaging and voice interaction to overcome language, literacy, and connectivity barriers.

Recent advances in AI hold the promise of assisting borrowers to engage and make sound financial decisions through personalized service at scale. However, creating natural, real-time spoken interfaces for low tech-savvy users in diverse languages over basic phones poses significant challenges. Recognizing the potential, Miller Center Capital stepped in with a strategic loan to facilitate Awaaz.De’s investment in technology development. The initiative aims to build out and fine-tune models addressing key borrower pain points and identify use cases where they prefer interacting with an infinitely patient, knowledgeable, and always available assistant. Miller Center anticipates catalyzing significant additional investment in this company by taking the lead.

According to CEO Neil Patel, “Awaaz.De believes AI is the next deeply transformative and disruptive computing technology for humans. It’s the first probabilistic computer. Like mobile before it, Awaaz.De’s vision is to harness this technology to bring its significant potential to benefit last-mile communities all around the world. With Miller Center’s support, we are excited to continue this journey in playing a leading role in making technology more inclusive.”

Deevabits Green Energy

Deevabits Green Energy increases energy access for remote households in Kenya by distributing and financing off-grid solar technology through “Village Solar Entrepreneurs” — women and youth independent distributors. The company’s pay-as-you-go model helps households transition to clean energy and ultimately reduce their energy bills. CEO David Wanjau shared, “At the core of our business, we prioritize reaching rural customers through last-mile distribution and empowering female entrepreneurs.” What’s more, by replacing kerosene with solar lamps, Deevabits is helping mitigate indoor air pollution, a leading cause of death in Africa.

Miller Center Capital extended a crucial loan to address the company’s working capital requirements. Leveraging our established relationship with Deevabits, we quickly addressed an urgent and unforeseen funding gap, underlining our commitment to agile and effective financial support. According to David, “Miller Center Capital’s timely bridge loan was a pivotal moment for Deevabits Green Energy. Faced with delayed equity and funding in early 2023, we encountered significant inventory access challenges, directly impacting our sales and investor confidence. Miller Center’s intervention not only sustained our operations during this critical period but also served as a key catalyst in attracting additional investments. This investment was more than financial assistance; it was a vote of confidence in our mission,enabling us to continue empowering rural households in Kenya with clean energy solutions.”

VITALITE Malawi

Solar distribution company VITALITE Malawi also secured a loan from Miller Center Capital. The company believes access to clean and sustainable energy is key to unlocking a brighter and more prosperous future for all Malawians. By providing innovative energy solutions that empower individuals and communities, VITALITE is transforming lives and fostering economic growth.

Malawi is experiencing substantial foreign exchange shortages, causing reluctance among many lenders to make loans to smaller companies. Our loan introduces an innovative structure with repayment as a percentage of revenue, which minimizes the effects of currency fluctuations on the company’s cash flow. Notably, VITALITE successfully attracted another lender to match our terms, resulting in a collaborative influx of additional capital and fortifying their financial standing.

Joshua McFarland, Managing Director of VITALITE shared, “The impact of the Miller Center’s investment has been pivotal for VITALITE Malawi’s success. It not only attracted additional capital but also enabled us to stay dedicated to delivering top-notch products and services, all while maintaining a robust cash flow. Miller Center’s support is a driving force behind our mission to bring energy access to communities here in Malawi.”

Someone Somewhere

Someone Somewhere works with 300+ artisans in seven of Mexico’s poorest states to apply traditional handcrafts on clothing and accessories to create quality, on-trend products. Committed to providing regular and fair job opportunities while promoting the conservation of millenary traditions through enduring goods, the company has already generated 1.5 million hours of work in vulnerable communities. What’s more, Someone Somewhere recently became Climate Neutral Certified for the second year in a row.

Our loan to Someone Somewhere is an example of a noteworthy trend we’ve observed in our transactions thus far. Miller Center Capital led this transaction by investing $50k and leading the diligence process. Subsequently, we syndicated an additional $850k, to connect them with capital the company wouldn’t have otherwise had access to. This substantial injection of capital will help Someone Somewhere amplify its impact significantly by moving more of its value chain in-house, marking a strategic leap forward. According to co-founder and CEO Antonio Nuño, “Miller Center’s funding had a massive domino effect. Their confidence in us made other funders join a significantly larger loan vehicle, which is also helping us prove we can access impact debt to fund our working capital needs. This is crucial for our current equity fundraising process, as investors now have a lot of confidence in our capacity to keep growing at the pace of the global demand for sustainable products.”

Warc Africa

Social enterprise Warc Africa offers an array of agricultural services and consulting to farmers in Northern Ghana. Serving over 8,000 farmers through its community-based, women-led trading hubs, Warc focuses on improving incomes, transforming rural livelihoods, and turning farmers into climate heroes through regenerative agriculture. Its commitment to purchasing grain at predictable rates and flexible quantities has garnered trust among farmers.

The company has been growing rapidly this year, and to sustain its momentum, Warc identified a crucial need to build silos to enable them to create greater efficiencies in the supply chain, creating more value for farmers and to continue delivering the quality grain their customers have come to expect. Despite expecting to close significant funding in early 2024, the investment would come too late to construct the silos in time for the next harvest season. Recognizing the urgency, Miller Center Capital moved quickly to provide a loan to finance the construction, accelerating Warc Africa’s impact and strengthening its fundraising position for this and future rounds. CEO Christopher Zaw stated, “While investment timeframes don’t always match with the agricultural calendar, Miller Center Capital was able to provide the funds at speed in the midst of our larger fundraise. This allowed us to kick off our silo pilot, which we are looking to build on post-closure of our other investments”

Looking Forward to 2024

We’re excited about the impact these investments will unlock. We’re also actively evaluating more investment opportunities in various stages of the pipeline. Looking ahead, Miller Center Capital is actively fundraising to expand our reach in 2024. Donors interested in making a significant and sustainable impact through their contributions are invited to reach out to pbelknap@scu.edu for more information or to get involved with Miller Center Capital.

As Miller Center Capital expands in 2024, we’ll continue Catalyzing, Connecting, and Innovating to get social entrepreneurs the capital they need to advance innovative and sustainable solutions to some of the world’s most pressing challenges. We’re looking forward to a year filled with tangible impact, forging climate resilience and furthering women’s economic power with some of the best and brightest social entrepreneurs on the planet.

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Paul Belknap, Director, Impact Investing - December 12, 2022

Funding Gap Session at SOCAP Draws Standing-Room-Only Crowd and Lively Discussions

From the back of a crowded conference room in San Francisco’s Yerba Buena Center for the Arts, you could feel an excited buzz as Miller Center’s Brigit Helms began sharing the story of Grassland Cameroon to a standing-room-only audience of over 300 people.

The story is familiar. A social entrepreneur builds a sustainable and impactful business that is lifting people out of poverty. The entrepreneur goes out in search of capital with the goal of scaling this impact, only to find that investors are not interested. Some say she is too small, too early, too risky, or lacks the potential for a big home-run exit.

It is the story of an impact “zebra,” a term originally coined by Zebras Unite for an enterprise that creates sustainable impact as it scales steadily, rather than the mythical unicorn most impact investors are chasing. Unfortunately, it is also the story of the valley of death in the impact investing ecosystem that systemically neglects these zebras.

But if the story is so familiar, why are 300 people crowded into a room to hear about it? We think it’s because more people are growing frustrated with the results of current approaches, and are increasingly motivated to collaborate to find answers.

The energy continued to build as the participants rotated through lively discussions at the various world cafe stations. At these stations, facilitated conversations explored the challenges and opportunities for impact zebras and fund managers and the use of blended capital to crowd more resources into the space. As the discussions continued, common and well-trodden themes emerged. The facilitators highlighted themes and open questions as the session wrapped up.

Finding New Language and Sharing Lessons Learned

Jay Nwachu, president of Ignite Capital, facilitated the “Gaps for Zebras” station – taking the entrepreneurs’ perspective – and summed up the discussions:

There’s a big disconnect between what investors think zebras are doing and what zebras are actually doing. Code-switching language to suit investors may be contradictory to what will truly drive impact, creating misaligned expectations around issues such as returns or scalability. We may need new language to bridge the gap.
Instruments: So many! Too many? But still not the right instruments. Where are we learning about what works and doesn’t work? And where are we sharing the stories of what works and doesn’t?

Reconciling Time Horizons and Acknowledging Idiosyncrasies

Ted Levinson, founder and CEO of Beneficial Returns, facilitated the “Fund Formation and Raising Capital” station, sharing:

Time horizons are vital in filling the gap. Investors expect to see capital back within ten years, but zebras take longer to show impact because they are building and educating markets. So how do we square these concepts of how long is long enough around fund formation? A potential solution: Have a fund that begins with investors with a longer horizon and higher risk appetite. Newer investors with a lower risk/return profile can join at different time intervals, potentially providing liquidity to early investors.
We need to acknowledge that we have idiosyncratic funders and social entrepreneurs, which is one cause of turmoil, fragmentations, and inefficiencies. Acknowledging this won’t solve the problem, but it’s an important starting point.

Mainstreaming and Correcting Misconceptions about Blended Capital

Anastasiya Litvinova, director of Capital Advisory Services at Palladium Impact Capital, facilitated the “Mobilizing More Capital and the Role of Blended Finance” station and summarized:

The most important role of blended finance is risk reduction, such as first loss coverage. But mitigating risk often means needing a first mover to take on that risk. The barrier to being a first mover is the complexity of blended finance. It is also really expensive, which limits experimentation at smaller scales. We need to simplify these structures to create viable and more repeatable solutions.
Much of the narrative around blended finance focuses on concessionary returns, but this creates a gap because many investors expect mainstream financial returns. We need to refocus the narrative on de-risking while maintaining mainstream returns. This requires more patience but can still be healthy in the long run.

Although this session didn’t identify ways to close all the resource gaps or expose any radically new solutions, we heard from countless people that they came away more optimistic and energized about ultimately finding a way forward. Why? The fact that we had an overflowing room of people excited to engage in dialogue on these topics is a massive shift from the twenty-five finance nerds who would have shown up for the session five years ago. As momentum builds, and more and more smart and passionate people with a broader array of lived experiences collaborate to solve these problems, we will find the answers. We’re glad we could catalyze some of the connections and conversations that will transform the valley of death into a verdant valley with all the nourishment that impact zebras need to gallop ahead at full speed.

Watch the session video here:

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Photos:

Brigit Helms shares story of impact zebras

Facilitators Ted Levinson, Jay Nwachu, and Anastasiya Litvinova recap world cafe discussions