As the name suggests, navigating the Valley of Death is tough going for startups. That’s the period of time after launch and before gaining real traction when it’s particularly hard to get funding. It’s even more difficult for social ventures and, of course, those run by women.
What can help a lot is the participation of a farseeing investor willing to provide catalytic capital, thereby reducing the risk for others and encouraging them to join in on the financing.
As it happens, those startups are exactly the ones that typically participate in accelerator programs run by Miller Center for Social Entrepreneurship. That’s why it recently formed Miller Center Invest with a goal of catalyzing $500 million in capital for alumni of its programs over five years. “We can go to impact investors and say, we have an amazing pipeline to offer you—and we’re going to go first,” says Brigit Helms, executive director of Miller Center.
Ultimately, the hope is that these investments will get Miller Center grads in fighting shape to power through the Valley of Death and come out on the other side even stronger, ready to raise later-stage and institutional capital. Alumni spend 50% of their time fundraising and just 50% raise the amount they needed, according to Alex Pan, Miller Center’s director of impact investing.
About 1,300 startups have participated in Miller Center’s programs, which focus on ventures aimed at advancing climate resilience and/or women’s economic empowerment. About 50 to 100 new enterprises go through Miller Center programs each year. Some participate in multiple programs over time
One such venture is Grassland Cameroon, a grain handling company formed in 2015 that works with smallholder farmers to increase their yield and reduce post-harvest waste. Founder Manko Angwafo attended several Miller Center programs starting in 2018.
Innovation and Growth Funds
Helms points to a variety of features she thinks should attract investors. For one thing, the startups to be considered for investment are high-growth potential ventures from its alumni network, so Miller Center has a particularly in-depth understanding of their businesses. “We know these enterprises inside and out,” she says. For another, students from Santa Clara University’s Leavey Business School—Miller Center is based at Santa Clara University—will participate in due diligence, further reducing costs.
A central insight informing the approach is that most social enterprises, and certainly the ones that attend Miller Center programs, don’t fit the traditional Silicon Valley investment model. “These companies don’t usually have the exponential growth or exits of VC-based enterprises,” says Pan.
With that in mind, there are two funds, one for post-revenue startups, the other for early growth stage companies. The former, called the Innovation Fund, will use variable repayment debt, loan guarantees and subordinated loans to invest $50,000 to $200,000. The other, the Growth Fund, for startups that need working capital or lack access to uncollateralized loans, will provide $200,000 to $2 million in short-term debt.
The process: Miller will identify high potential alumni. Next, student-led teams, supervised by Miller Center mentors and staff, will conduct an initial screening of potential investments. Fund managers will then present deals to an investment committee and, later, will conduct legal and due diligence, as well as putting together term sheets. Then, working with Miller Center, they’ll syndicate deals and bring in other investors. Finally, they’ll pull the trigger on the investment and manage repayment.
A Five-Year Plan
Anchor investors include Sobrato Philanthropies and Miller Family Foundation. Sobrato Philanthropies funded initial research and exploratory work and also committed $5 million pending a matched amount of funding for the Growth Fund.
The effort is part of a five-year plan to step up Miller Center’s focus on alumni who have graduated in the last three fiscal years, especially graduates with the greatest growth potential. According to Helms, Miller Center hopes to close the funds by the summer and then start making investments.
Jeff Miller, who, with his wife Karen committed $25 million to Miller Center seven years ago and is president and CEO of JAMM Ventures, recalls his own experiences trying to raise investment money almost 30 years ago and facing the reluctance of investors to make the first move. While he elicited a lot of interest from venture capitalists, no one would step forward and sign on the dotted line. Finally, one agreed to invest, opening the floodgates. “A week later, I was oversubscribed,” he says.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.
“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.
Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.
But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.
Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.
“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.
“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.
A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.
It would also be “counter to what they’ve signaled,” he said.
More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.
“That’s going to be more important than the size of the cut itself,” he said.
In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.
“Here, the labour situation is worse than what we see in the United States,” he said.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
