Village Capital 3.0: Democratizing Entrepreneurship

Abstract

Venture capital (VC) financing of social entrepreneurs in emerging markets is challenging, mainly because of excessive due diligence costs per unit of investment capital deployed and long harvesting periods. The desire to provide early-stage firms across the globe with access to finance led the two principal members of Village Capital (VilCap) to an innovative fund structure, due diligence, and screening mechanisms that allowed the firm to democratize start-up access to capital. With the new financial structures in place, VilCap deployed 62 start-ups and $6 million in capital with only 2% attrition rate in its portfolio. Six years after its inception, VilCap's two principals are critically assessing the infrastructure necessary to effectively raise and deploy a new and much larger fund. This case is taught at the Darden School of Business in an Impact Investing class, and has been used effectively in a course module covering VC in impact-investing spaces and venture philanthropy. Excerpt UVA-F-1741 Jan. 26, 2017 Village Capital 3.0: Democratizing Entrepreneurship …empowering entrepreneurs and investors to create value together. —Ross Baird, executive director of Village Capital It was one of those rare cool days in the middle of the hot 2015 Washington, D.C., summer that invited everybody to leave the office and enjoy the vibrant streets of the national capital. Ross Baird and Victoria Fram were sitting at one of the numerous Georgetown cafes discussing the future of Village Capital (VilCap), the early-stage venture capital firm they were building together. VilCap had been conceived in 2009 as a company that helped young social entrepreneurs to develop their ventures and become investable. By 2015, it had become much more than that.