One of the first investments that billionaire Paul Allen's investment arm Vulcan Capital has made since his death is in a fund that will invest in social entrepreneurs in places like Africa and South America.
On Tuesday, Capria Fund announced that Vulcan Capital was the largest investor in a $100 million fund that will make impact investments -- which aim to produce both financial and social or environmental returns -- in the emerging markets.
Allen, the Microsoft cofounder who died from complications of non-Hodgkin's lymphoma at age 65 in October, had informally agreed to invest in the fund through his Vulcan Capital at the beginning of the year. "We made a handshake agreement with them back in January. We were just getting ready to formalize paperwork with them at the time he died," says Will Poole, cofounder of Capria and a Microsoft alum. The deal still went through.
Other billionaires who are investing in the fund include Microsoft cofounder Bill Gates, eBay founder Pierre Omidyar (through his Omidyar Network) and SAS cofounder John Sall (through his personal foundation). Capria has also attracted an investment from the foundation of Jim Sorenson, the son of late billionaire James Sorenson. The fund is only open to accredited investors and requires a minimum investment of $1 million.
While impact investing is in vogue, there is a short supply of experienced, hands-on fund managers, particularly in areas with the greatest needs, such as sub-Saharan Africa. These fund managers sit in the middle of countless entrepreneurs who lack access to capital and investors who have an interest, but few ways, to back them.
Capria, which is based in Seattle, has run an accelerator program to train novice fund managers since 2015. The boot camp gives fund managers a crash course in impact investing, covering everything from term sheets, accounting and mezzanine debt structures to dealing with corruption to defining and marketing their brands. They also gain golden contacts and a commitment for up to $500,000 in seed capital.
Capria will now seek to invest a larger amount in graduates of its accelerator program, ranging from $1 million to $4 million, with the funds from Allen and others. The first recipients of such funding are Adobe Capital out of Mexico and Chile's Fen Ventures. These and other funds invest in social entrepreneurs who are seeking to improve areas like healthcare, education and affordable housing.
Capria has cultivated a pipeline of promising fund managers to invest in. Its highly-selective accelerator program has received applications from over 600 people hailing from 85 countries. Just 16 fund management teams have been selected for, and successfully completed, the program. While it's taking them a lot longer to raise capital than anyone thought, none of them have shut their doors.
"This is the happy problem we have. We had originally forecast that a third of fund managers wouldn't achieve a first close. Right now, 100% of them have a reasonable expectation of achieving a first close between this year and next year," says Poole.
Capria's fund of funds was first announced by former president Barack Obama in 2016 at the Global Entrepreneurship Summit in San Francisco.
