Venn Foundation, the St. Paul-based startup that won the impact ventures division of the 2017 Minnesota Cup, has teamed up with the Bush Foundation for a new initiative to drive $1 million in seed capital to early-stage social businesses before January 1, 2020.
Under the "$1 Million by 2020" initiative, Venn Foundation will back social impact startups from Minnesota, South Dakota, North Dakota and the 23 native nations in the region. Bush Foundation will serve as the anchor financial support for the initiative.
Venn will deploy seed capital to early-stage businesses through Program-Related Investments (PRIs), a special kind of philanthropic investment intended to advance a charitable goal. PRIs can be structured as any financial tool (loan, equity, etc.) and made to any time of recipient that is advancing a charitable purpose – including social impact startups.
"We like to call PRIs 'The Starship Enterprise of Capital," said Venn Foundation CEO Jeff Ochs in a release. "Because PRIs can go where no other capital has gone before. Since risk and return expectations are anchored against one-time charitable grants, PRIs can succeed where for-profit capital markets often fail, like the earliest stages of business development."
As an anchor supporter of Venn's initiative, Bush Foundation is making a contribution of $250,000 into a donor-advised fund (DAF). Any individual, business or foundation can set up a DAF with Venn and recommend that their charitable donations and grants be used to make PRIs. Financial returns from these PRIs can go back into participating DAFs for donors to recommend redeployment into new PRIs or as grants to nonprofits.
Venn will deploy the funds from Bush Foundation as PRIs for up to 10 regional social businesses on a three to one match basis. In this way, the two foundations hope to mobilize a broad set of donors behind early-stage social businesses and attract the $750,000 in capital needed to meet their goal by 2020.
Venn Foundation has already backed two local startups, Binary Bridge and Asiya, under its "$1 Million by 2020" initiative. Binary Bridge is commercializing a rugged electronic medical record system called BackpackEMR that is specifically designed to support humanitarian medical missions and rural clinics in developing countries. The company has received $100,000 in PRI capital to date, according to Venn. Asiya, a startup selling sports hijabs, has received $85,000 in PRI capital through Venn.
Venn Foundation is accepting applications from social businesses for PRI financing on a rolling basis.
