There’s a lack of seed capital for early-stage social impact startups working to build out solutions for problems across the globe. And Alex Amouyel, executive director of MIT Solve, an initiative of the Massachusetts Institute of Technology, was determined to do something about it.
“There is a real pioneer gap at the early stage of social entrepreneurs. They tell us capital is their No. 1 need,” Amouyel told a group of innovators.
The solution? The $30 million Solve Innovation Fund, an independent investment vehicle and first-of-its kind philanthropic venture fund that will target investments at early-stage, for-profit companies that are pursuing social impact solutions for various global challenges. MIT will serve as an advisor.
Every year, Solve issues four global challenges to find the most promising “Solver” teams that can drive transformational change. The staff at Solve deploys its global community of private, public and nonprofit partners to collaborate with the Solver teams to help scale their social impact strategies. The 2019 challenges are the circular economy, healthy cities, early childhood development and community-driven social innovation.
In its three-year history, Solve has attracted over $12 million in funding from a variety of philanthropic partners. But as Amouyel said in her announcement, those resources are mostly in the form of grant funding. What their for-profit teams need is project finance, she said, which is sorely lacking at the scale needed for smaller startups.
“It's highly unlikely that a reasonable idea is going to change the world,” said Noubar Afeyan, founder and CEO of Flagship Pioneering and an MIT Corporation member, who committed up to $3 million as the Fund’s founding anchor donor. “You have to find a way to persist until the world considers it reasonable."
Previous winners include Nnaemeka Ikegwuonu, CEO of Cold Hubs, which is headquartered in Nigeria. The social enterprise brings energy-efficient, solar-powered refrigeration to off-grid communities, therefore enabling fishermen and farmers to preserve perishable food.
Cold Hubs says its rooftop solar panels generate enough power to run the refrigeration hubs in all weather conditions, and an energy-efficient monoblock refrigeration unit provides reliable autonomous refrigeration 24 hours a day, seven days a week. The system is necessary as an estimated 6,000 tons of fish are harvested every day in the Niger River Delta (as shown above), but currently only about 2,000 tons of it is available to be sold fresh. By renting storage space for only $1 a night, users will be able to sell their fish for a much higher price, greatly increasing their income.
Another winner is Deanna MacDonald, CEO of Bloc, headquartered in Copenhagen, Denmark. MacDonald launched Maritime Blockchain Labs, a blockchain-based solution to track the quality of marine fuels as they are passed through the supply chain. The technology gauges every player in this sector, from fuel producers to suppliers, to these fuels’ transfer at the terminal and, finally, to onboard combustion.
The startup sought to tackle a key challenge for the shipping industry: This sector accounts for 10 percent of global carbon emissions, and in turn poses ongoing health and safety risks to coastal communities. New regulations seek to control fuel quality and reduce emissions, but there has been no way to track fuel data or enforce clean fuel requirements.
Bloc’s solution provides verified traceability of the fuels being delivered to companies across the maritime industry. This in turn helps ship owners to make better informed fuel-purchasing decisions, enables authorities to monitor and regulate emissions, and allows insurance companies to pay out compliant shipping companies for engine failures due to contaminated fuel.
As Amouyel explained, any return on social impact investments will be redirected into the next class of Solver teams, so the money is multiplied in its impact and success helps fund future Solver teams, creating a pay-it-forward model.
Today, according to its website, the Solve ecosystem comprises 58,000 active platform users, hundreds of judges and mentors, 99 “Solver teams” from 32 countries, and more than 100 member organizations.
“We cannot solve today’s complex multi-dimensional challenges by foreign aid, by public services, or by philanthropy alone," Amouyel wrote in a recent op-ed for The Boston Globe. "No one actor has all the answers or the monopoly of good ideas. Cross-sector cooperation—working with the public, private and non-profit sectors—is more critical now than ever before."
Image credit: Claire Tardy/Pixabay
Based in southwest Florida, Amy has written about sustainability and the Triple Bottom Line for over 20 years, specializing in sustainability reporting, policy papers and research reports for multinational clients in pharmaceuticals, consumer goods, ICT, tourism and other sectors. She also writes for Ethical Corporation and is a contributor to Creating a Culture of Integrity: Business Ethics for the 21st Century. Connect with Amy on LinkedIn.