Unitus: the Seed Fund Seeking Disruptive Female Entrepreneurs!
Great news, an investment fund which explicitly states that it wants to invest in female entrepreneurs. Time to talk! The Next Women talked to Dave Richards, Founder & Managing Partner of Unitus Seed Fund.
Dave Richards is an experienced entrepreneur, executive and global early-stage investor. He has been an early investor in microfinance and other emerging market sector businesses serving BoP (low-income) populations. Dave has been involved with the Unitus Group since 2005, helping to lead efforts to select and invest in BoP entrepreneurs in many developing countries.
Previously, Dave developed multiple high-growth technology businesses at RealNetworks, Sybase and Symantec from startup to multiple hundred million dollar global enterprises. He also is a partner with Social Venture Partners Seattle and leads the Social Innovation Fast Pitch startup angel fund. We spoke to Dave about investing in India; his thoughts on microfinance; and why Unitus Seed Fund is specifically looking for female entrepreneurs to invest in.
TNW: What is your interest in investing in India?
DR: The United Group has been in India since 2000 and involved with micro finance for a decade. We have great success in that field and will continue. However, there are problems in the Indian market which you cannot solve with micro finance. We aim to really support opportunities that require scale to have an impact. For that venture funding is required.
TNW: What are your thoughts about microfinance?
DR: We have seen that micro finance works for individuals; for self-employed people. It has a positive impact on people that want to build a sustainable living for their families and there are opportunities for those individuals in terms of business relating to insurance services etc. You don’t see micro finance businesses move towards an opportunity that requires venture funding very often, but I don’t see that as a problem.
TNW: What is the opportunity in India that requires funding?
DR: We have shifted our interest, because we have been in India a long time. We know the market and we have the connections.
Our focus is on disruptive solutions for the underserved, low-income population of India, mainly in healthcare and education.
These are areas which are not and cannot be addressed by our micro finance involvement, because you need teams, scale and investment. Individuals cannot solve those grand scale problems.
TNW: What’s the role of government and non-profits?
Governmental agencies have for a long time tried to address the problems of poor education, skills and healthcare. But they have failed to scale their solutions.
Nor did non-profits. Non-profits rely too much on donors, they are constantly busy with fundraising, and thus do not possess the capacity to scale. It’s all a drop in the bucket.
We also see women entrepreneurs who want to build a business with impact, but at the same time build a for profit business which is sustainable.
TNW: What is the Unitus Seed Fund?
DR: We have multiple funds that are all invested in by investors from the US and Asia.
Unitus Seed Fund is a new investment fund based in Bangalore and Seattle. We are looking for so-called “Bottom of the Pyramid startups” that serve the underserved, low-income populations.
We believe there is a blue ocean of opportunities. We help to accelerate the growth of those early-stage startups.
We have seen an influx of Indian investors coming to this fund; successful Indian entrepreneurs who now want to invest in the next generation and believe in our mission.
As we had this focus for years, the community knows us, so we get a fair number of business proposals yearly. Last year we looked at 150 businesses, and we invested in 6 of them, so that’s 4%. We are looking for the Unitus Seed Fund to invest in 30-40 companies, but we hope that our rate is a bit higher. Let’s say that we hope to invest in 1 startup, per 10-20 companies that we look into.
TNW: You specifically want to invest in female entrepreneurs?
Yes, we do. We know of the research that concludes that investing in mixed teams where there are female co-founders have a greater success rate.
We see a number of female entrepreneurs who want to build those scalable businesses. So it’s logical.
Of course, we see also the barriers for a lot of women. Traditionally women have been encouraged to go into non-profits, and thus may be not aware of the opportunities that arise if you were to choose the for-profit route.
However, we see a reverse migration of Indians who are returning to India after being educated abroad or after they have had a successful career abroad. We see strong female entrepreneurs with a worldwide education behind them; young women between the ages of 20-30 years. They don’t feel those limitations; they have less cultural barriers. We are talking to them about their startups, for example agricultural companies with disruptive business models or technology that serves low- income families. Really fascinating.
Acceleration through our fund is achieved via seed funding, support and connections, which help those entrepreneurs refine their plans, scale up their business, and secure additional growth capital.
TNW: How is the eco-system in India?
DR: We are located in Bangalore and Seattle, so we have the knowledge of both eco-systems. In India we have plenty of successful professionals and entrepreneurs who want to mentor the next generation; they want to be involved in new challenges. They can provide the contacts to the entrepreneurs, which is the most valuable tool they can provide. It’s networking that's needed to scale those opportunities, so 95% of our mentors are local.
What remains to be seen are the exit possibilities in India. We are still figuring out as to how long our investment should stay in the company. We like to think that we can scale the companies in 3-4 years with our investment and then get more investors involved. There is no active exit environment, but we believe it will evolve in the coming years.
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