As the name implies, it is difficult for startups to navigate Death Valley. This is especially difficult to fund when the period after launch and before the actual traction is achieved. It is more difficult for social enterprises and, of course, those run by women.
What can help a lot is the participation of a foreign investor willing to provide catalytic capital, which reduces the risk for others and encourages them to join the financing.
As it happens, startups are the ones that typically participate in the Accelerator programs run by the Miller Center for Social Entrepreneurship. That’s why it recently formed the Miller Center Invest, which aims to raise 500 million in capital catalysts for five-year alumni. “We can go and impress investors and say, we have an amazing pipeline to offer you – and we’re going to go first,” said Brigitte Helms, executive director of the Miller Center.
Ultimately, it is hoped that these investments will get the Miller Center grades in the form of a power struggle through the Death Valley and become stronger on the other hand, ready to move to the next stage and raise institutional capital. Alumni spend 50% of their time raising funds and only increasing their required amount by 50%, according to Alex Pan, director of impact investing at the Miller Center.
About 1,300 startups have participated in the Miller Center’s programs, which focus on initiatives aimed at advancing climate resilience and / or women’s economic empowerment. About 50 to 100 new initiatives go through the Miller Center program each year. Some participate in multiple programs over time
One such initiative is Grassland Cameroon, a grain handling company formed in 2015 that works with smallholder farmers to increase their yields and reduce post-harvest waste. Founder Manco Angwafo joined various Miller Center programs starting in 2018.
Innovation and growth funds
Helms points to various features that he thinks should attract investors. For one thing, startups considered for investment are potential high-growth initiatives from its alumni network, so the Miller Center has a particularly deep understanding of their business. “We know these initiatives inside and out,” he said For the other, students at Santa Clara University’s Livy Business School-Miller Center, located at Santa Clara University – will participate in the appropriate work, further reducing costs.
One central insight that informs the approach is that most social enterprises, and of course those who participate in the Miller Center’s programs, do not fit the traditional Silicon Valley investment model. “These companies don’t usually have index growth or exit VC-based initiatives,” Pan said.
With that in mind, there are two funds, one for post-revenue startups and the other for early growth companies. The former, called the Innovation Fund, will use convertible loans, loan guarantees and subordinate loans to invest $ 50,000 to $ 200,000. The other, the Growth Fund, will provide স্ট 200,000 to $ 2 million in short-term loans for startups that require working capital or lack access to unsecured loans.
Process: Miller will identify high potential alumni. Subsequently, student-led teams under the supervision of Miller Center consultants and staff will conduct preliminary screenings of potential investments. The fund managers will then present the deal to an investment committee and, subsequently, conduct legal and due diligence, as well as assemble the term sheets. Then, working with the Miller Center, they will syndicate the deal and bring in other investors. Eventually, they will trigger the investment and arrange for payments.
A five year plan
Anchor investors include Sobrato Philanthropis and the Miller Family Foundation. Sobrato Philanthropis has funded preliminary research and exploration work and has pledged $ 5 million in pending funding for the Growth Fund.
The effort is part of a five-year plan to increase the Miller Center’s focus on alumni who have graduated in the last three financial years, especially those with the highest growth potential. According to Helms, the Miller Center expects to close the fund in the summer and then start investing.
Jeff Miller, who pledged $ 25 million to the Miller Center with his wife Karen seven years ago and was president and CEO of JAMM Ventures, recalls his experience of trying to raise investment money almost 30 years ago and facing the reluctance of investors for the first time. Moved Although he gained a lot of interest from venture capitalists, no one will go ahead and sign the dotted line. Eventually, one agreed to open a floodgate and invest. “A week later, I was oversubscribed,” he says.