NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Wednesday, September 18, 2019

​​​​​​​Open Road Alliance (Open Road), the market-leading organization dedicated to keeping impact on track by helping social entrepreneurs bridge short-term financing gaps, today announced the launch of the Open Road Impact Fund (Impact Fund). The Impact Fund will provide short-term bridge loans to social impact organizations that run into unexpected obstacles on their path to scale, thereby ensuring that these businesses survive and thrive.

Open Road is raising $40 million from family offices, foundations, high-net-worth individuals and impact-first investors for the Open Road Impact Fund, which will provide loans ranging from $100,000 to $1 million to social impact organizations located primarily in Africa, U.S., Latin America, and South Asia.

The Impact Fund builds on Open Road’s established reputation as the market-maker in bridge financing and trusted partner to social entrepreneurs. To-date, Open Road’s first loan fund, Open Road Ventures, launched in 2017 with proprietary capital, has invested more than $19.5 million across 65 deals with a low 0.3% default rate. All of the investments made by Open Road Ventures are high-impact investments; for each dollar invested, Open Road Ventures returns $9 in impact. This 9x leverage had resulted in $186 million of additional impact across its portfolio.

The Impact Fund, Open Road’s first fund open to outside investors, will build on the organization’s strong track record of providing high-impact bridge financing to help social enterprises and nonprofit organizations scale. Over the first five years of operation, Open Road estimates that the Impact Fund will disburse $100 million in short-term loans across 200 organizations, keeping up to $1 billion of impact on track, all the while providing investors with a financial return.

Maya Winkelstein, Executive Director at Open Road Alliance, said: “Open Road Alliance is dedicated to helping the impact marketplace grow and scale by stepping in to bridge funding gaps for social entrepreneurs. These entrepreneurs have strong business fundamentals but often run into unexpected financing roadblocks that pose serious business risks to the enterprise. Open Road relieves these stresses to keep the impact on track, offering the fast, flexible and affordable credit their businesses need to move forward and grow.

“We are highly specialized experts at what we do and have proven this model with our first fund – both the market need for this type of financing as well as our ability to successfully identify those organizations with the highest likelihood of repayment. Now with the Impact Fund, family offices, high-net-worth individuals, foundations, and other institutions will be able to participate in accessing investments that provide both a financial return and generate high impact.”

Judith Rodin, Advisory Board Member of the Open Road Impact Fund and former President of the Rockefeller Foundation, said: “Open Road Alliance steps in at critical financial junctures in the lifecycle of social organizations and provides the kind of bridge financing that has been ignored by traditional finance and philanthropies which either aren’t set up to do this type of work or don’t have the sector expertise to serve these types of borrowers. Open Road is an invaluable partner to philanthropic and other impact organizations and I believe that the Impact Fund provides investors an attractive opportunity to participate in high-impact investments with a financial return.

“Open Road’s risk analysis and scoring differs from a traditional bank, incorporating indicators beyond financial and management capability. Specifically, Open Road considers additional factors such as the strength of social capital and the predictability of the specific future funder.”

Caroline Bressan, Director of Social Investments at Open Road, added: “We’ve proven the model, but it only works if you know how to do the risk assessment that is specific to the market of bridge financing. Core to Open Road’s repayment success is our customer service credo and focus on impact, which aligns our repayment with the goals of our borrowers. We source most of our pipeline directly from other impact investing organizations, creating a trusted network of referral partners.

“We have shown that we can do this quickly and with a high degree of success.”

Photo courtesy of GotCredit.