Venture Capital Investing Boom Neglects Startups Tackling Poverty

Monday, August 17, 2015

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.

John Waibochi, 45, CEO of Virtual City, poses for a portrait at SAP in Palo Alto, Calif., on Thursday, July 23, 2015. Virtual City is a Kenya based company using mobile technology to improve how small farmers sell their harvests and how much they get paid. Waibochi is visiting the valley for two weeks as part of a fellowship funded by Acumen, a social impact investor and SAP. (John Green/Bay Area News Group) ( JOHN GREEN )

“Silicon Valley has a lot of money,” said Peter Scott, founder and CEO of BURN, which sells clean-burning stoves to Kenyan families and helps them finance the purchase. “We thought money would just flow to us. But it’s not. I’m worried that I can’t raise more capital.”

Source: San Jose Mercury News (link opens in a new window)

business development, impact investing, poverty alleviation, venture capital