First Light and the Hub Team Up for $750,000 Seed Fund for Social Ventures

by Nathaniel Whittemore · 2010-09-28 23:20:00 UTC
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Last year, First Light Ventures stepped into the seed stage social venture funding void in a big way with their innovative "Village Capital" program. Now, they're teaming up with the Hub Bay Area to pour three-quarters of a million dollars into social ventures over the next two years. Of course, the money is delivered with a twist.

First Light is the seed stage arm of Gray Ghost Ventures, an Atlanta-based firm that cut its teeth innovating with capital for microfinance. Founder Bob Pattillo and his team quickly wanted to move into the seed space, but weren't sure of a cost effective way to perform due diligence on such unpredictable young companies.

The solution they came up with was to invest social entrepreneurs themselves to vette their peers and make the investment decisions on behalf of the firm. Inspired by the village associations that provide collateral and risk mitigation for microfinance loans, the so-called Village Capital funds brought together cohorts of 10-20 social ventures who got to know each other over the course of a ten week program, and who at the end would be in charge of making the decision about who would get investment dollars.

The Village Capital programs were tested in four settings, in India, New Orleans, Boulder (as part of the Unreasonable Institute) and in the Bay Area. Between the programs, First Light invested around $900,000 in 12 ventures. The process was so successful that they're growing the number of Village Capital programs over the next couple years.

First Light's partnership with the Hub will create the Hub Village Capital fund. The program will fund three entrepreneur cohorts for 12-week programs, and invest $750,000 in up to ten ventures. Like before, the funding decisions will be made entirely by the participating entrepreneurs. In addition to having a set of space assets to contribute to the project, the Hub has a built in community that it can draw upon both to populate the program and provide community for new ventures. What's more, the Hub is run by the folks behind Good Capital, and I'm sure is thinking about creative additions to the financing platform.

This program literally cannot scale fast enough. I'm glad to see its success and its growth.

To learn more, check out the website. Startups can begin applying next week.

Photo credit: The Hub Bay Area

Nathaniel Whittemore is the founder of Assetmap. Previously he was the founding director of the Northwestern University Center for Global Engagement.
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