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

Thursday, October 25, 2018

Upaya Social Ventures announced a $2M campaign to double their investment reach within five years; $1 million of this amount supports operating expense with the balance an innovative pool of recoverable grants. The unusual fundraising vehicle will fund Upaya’s investments over the next five years in social enterprises creating jobs for the poorest of the poor.

This new initiative expands on a financial innovation in the nonprofit sector – the “recoverable grant” – by pooling grants to fuel a diverse portfolio of impact-driven investments that allows the donor to possibly recover their philanthropic contribution along with a sliver of upside.

“Upaya is excited to provide an option to philanthropists to fuel our investments in a way that can return their donations if our investments do well.” Upaya CEO Kate Cochran said. “We think this kind of structure aligns all of our interests with the ultimate success of the entrepreneurs and their jobholders.”

The $1M for operating expenses has been committed by the Allen Blue and Kira Snyder Fund at Fidelity Charitable. Those funds will be used for sourcing, selecting and supporting the investments. Allen Blue is the VP of Product Management and Co-Founder at LinkedIn; he also sponsored Upaya’s first accelerator program in 2017.

Half of the recoverable grant pool has been raised with a leading pledge of $500,000 from The Delta Fund. Upaya aims to raise remaining recoverable grants by the end of 2018.

“What is exciting about this recoverable grant pool,” said Upaya Co-Founder Sachi Shenoy in a piece written for Giving Compass, “… is that we are building on traditional philanthropy, creating additional innovative tools to help plug gaps in market-based economies, and benefit those who may otherwise be left behind.”

Upaya recently identified its latest company for investment after wrapping up its 2018 Accelerator Program focused on the agribusiness industry in India. The company, Laymen Agro, has been presented with a term sheet and could be the first investee to come out of the recoverable grant pool.

Laymen Agro is a dairy company that brings village-fresh products from the rural Tamil Nadu region in India to urban kitchens while ensuring the lion’s share of the consumer’s expenditures goes back to the rural economy. The company shares Upaya’s mission to create dignified jobs, or drastically improve incomes and livelihoods, for people living in extreme poverty.

“Upaya has always been about creating dignified livelihoods for the poor,” Says Kate Cochran, CEO of Upaya. “It is impossible to tackle that challenge without getting involved in agriculture, an industry that 90 million households in India depend on, but the vast majority cannot earn a stable income from. We are excited to partner with some of the brightest and most socially minded entrepreneurs in the country to help ensure that farming families keep more of their profit.”

Eleven companies participated in the Accelerator Program, which consisted of three workshops over a six-month period from May to October 2018. The Accelerator Program is designed to equip the entrepreneurs with the right tools to grow their businesses and connect them with professional resources and provide exposure to potential investors. Having honed its approach over seven years and 14 investments, Upaya is planning to expand its reach. The pool of recoverable grants will enable Upaya to double its average annual number of investments, improving the returns from its portfolio through diversification.

Photo courtesy of Dean Hochman.