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

Friday, August 21, 2015

By Heather Somerville

PALO ALTO — The venture capital investing boom has sent billions of dollars to startups that serve the upper crust of society with an app to deliver your laundry or order a valet to park your car, yet many VCs continue to resist investing in viable businesses bringing toilets, water and electricity to the rural poor.

For years, companies whose aim was to improve the lives of the poor or downtrodden were dismissed as charity work, not for calculating investors. These days, social-impact businesses are increasingly proving to be profitable investments, but VCs still pass on companies that offer access to the potentially huge market of developing Asian and African nations, where billions of people are poised to enter the middle class with money to spend and access to technology, according to interviews with dozens of entrepreneurs and investors.