This post was originally published on the Huffington Post Impact Blog
UNICEF wants to support innovative programs in a way that goes beyond large grants to nonprofits.
This week, it launched an Innovation Fund that will invest -- venture-capital style -- in a number of startups serving children in developing countries.
The agency will put $9 million toward early-stage startups that focus on empowering young people with technology and providing real-time data about underserved populations. UNICEF is also looking to invest in startups that provide the necessary tech infrastructure to support these services.
"The world's problems are getting bigger and faster, and we need to match that speed," Chris Fabian, co-leader of the UNICEF Innovation Unit, told HuffPost. "Even with the Innovation Unit in place, we weren't going fast enough since we can only work on problems in succession. The fund will help to quickly get a number of programs into action all at once."
Its first round of $9 million in funding comes from four big investors: the governments of Denmark and Finland, the Walt Disney Company and the Page Foundation. These groups are considered investors rather than donors because they will receive returns including intellectual property and access to new communities of consumers, Fabian said.
The fund is part of the growing trend of impact investing, in which investors create social impact in addition to receiving standard monetary returns. The concept emerged in 2007 at a Rockefeller Foundation initiative and since then, has been adopted by Goldman Sachs, Acumen Fund and others.
In the first round, the fund will support about 60 companies for 12-18 months, and will aim to help each of them produce a working prototype of their idea. Then, each startup will be in a good position to look for more funding from the private sector or grants, Fabian said.
UNICEF ran a year-long prototype of the Innovation Fund last year and invested in 20 projects. A few of those companies have successfully scaled up. One is the game-based education startup called eLearning Sudan, to which UNICEF gave $70,000 last year. This year, based on its successful prototype, the Dutch government invested $5 million in the company to adapt it for refugees in Europe. Another venture, U-Report, a social messaging tool, now has 1.9 million users.
When asked about the success rate of early-stage startups, Fabian said they were prepared for failure, and that even unsuccessful ventures provide useful lessons. "90 percent of our stuff fails, but that's okay. We just want it to fail quickly."
Krithika Varagur is an Associate Editor at the Huffington Post.
Photo Credit: Unicef