Unreasonable Capital believes that entrepreneurs building rapidly scalable businesses are our best bet for solving significant social and environmental challenges. We partner with world-class entrepreneurs positioned to bend history in the right direction.
Focus
Exclusively in emerging markets: Clean energy. Financial technologies. Innovations in agriculture and artisan-driven fashion. We believe these industries can address the fundamental underpinnings of endemic poverty.
Exclusively in emerging markets: Clean energy. Financial technologies. Innovations in agriculture and artisan-driven fashion. We believe these industries can address the fundamental underpinnings of endemic poverty.
Amounts
25% of a financing round, from $50,000-$500,000. As a global fund, we invest only when an approved local investor also participates in the financing.
Our Portfolio
We are humbled to have partnered with the companies below. Having launched our fund in 2016, we are just getting started...
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“Unreasonable provides a wellspring of new business models that address both recognized issues and emerging global problems. It could become a hotline to new intelligence in developing markets.”
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“For those of us who puzzle over what it takes to catalyze the potential of promising start-up entrepreneurs, Unreasonable offers an impressive case. It unequivocally demonstrates the power of an unlikely mix of factors to yield profound organizational transformation over a very short time period.”
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“Unreasonable is a bit like the TED conference on steroids… But where TED brings luminaries together for a day or two to discuss a particular problem plaguing the world, Unreasonable focuses on the start-up businesses offering solutions to those problems.”
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Our Approach
An Unreasonable Advantage
Unreasonable Capital sits within the Unreasonable Group family, which supports entrepreneurs developing scalable solutions to global challenges through business mentorship programs that include Unreasonable Impact, Unreasonable Goals, and Project Literacy Lab. The Fund’s investments benefit from the access, partners, and knowledge within this network of over 200 partners (e.g. UNICEF, The World Bank, Google, and Nike), 250 mentors (e.g. founder of WordPress, CMO of Unilever, Director of Stanford’s d.school), and 50 partner investment funds (e.g. Acumen, Draper Fisher Jurvetson, 500 Startups). We see this combination as an Unreasonable Advantage that will help our entrepreneurs scale their businesses.
Profit Merged With Impact
Rather than tracking dozens of impact metrics for our own reports, we support great companies whose impact is baked into their profit model. Therefore, revenue growth is directly linked to impact. To illustrate the equal focus on profit and impact, 50% of the investment team’s financial incentives are tied to the impact performance our investments. This incentive ensures we invest exclusively into companies at the nexus of both financial return and measurable impact.
Long Term Support + Insights
Unreasonable Capital’s ability to support investments and generate insights is unmatched because we (i) spend less time on deal flow generation and more on investment support, and (ii) are a global investment fund, sharing best practices across geographies and industries. After we invest, we partner with entrepreneurs through weekly calls, developing entrepreneurs’ business strategy and financial models, helping manage boards of directors, connecting entrepreneurs across Unreasonable’s network.
FAQ
Are you an impact first or finance return first fund?
Unreasonable Capital invests at the nexus of both impact and financial return. Our thesis is that a company designed to solve a meaningful social or environmental problem is better positioned for outsized financial returns over time. To illustrate the equal focus on being profit and impact motivated, 50% of the investment team’s financial incentives are tied to the impact performance our investments. This incentive ensures we invest exclusively into companies that are profitably solving our most pressing challenges – effectively.
Why focus on emerging markets?
- Impact: Emerging Markets often times have an entrenched legacy of poverty. We will be investing into ventures positioned to solve the most meaningful social and environmental challenges faced by these markets.
- Economic Trends: According to the World Bank, “Developing Countries” are growing at more than twice the pace of developed markets (see graph). Data from the International Monetary Fund shows that the purchasing power parity of emerging markets will surpass that of developed nations in the next 5-10 years (see the data). And according to research conducted by Ernst &Young, the number of households in emerging markets with an annual income of over $30,000 USD is increasing at over twice the rate of more mature markets like the Eurozone (see the numbers).
- Technology Adoption: Leapfrog technologies like solar and mobile phones are seeing unprecedented adoption rates across emerging markets. These technologies, like many others, are proliferating because of non-competitive market dynamics and incredible customer demand. According to the World Bank, mobile adoption rates in emerging markets are surpassing rates in the United States and other developed countries. (see mobile tends).
Why don't more people invest into emerging market startups?
It’s hard. Though emerging markets are growing at twice the pace of developed ones, finding compelling investment opportunities in these regions is difficult. Investors in these markets must make sense of unfamiliar economies, different regulatory systems, and entrepreneurs who are seizing opportunities that may not exist anywhere else in the world. To be effective, investors need deal-flow engines, networks on the ground, and practical experience working with startups in these markets. We are launching Unreasonable Capital because we believe we are uniquely positioned to seize the opportunity and generate significant social, environmental, and financial returns in the process.
How are you measuring your impact as a fund?
While the impact investing industry devotes a tremendous amount of effort to quantifying “impact,” we believe in simplicity and focusing our energy on investing and building great companies whose impact is baked into their business model. To this end, each company we partner with will report quarterly on one core social or environmental impact metric (“Impact KPI”), in addition to the one metric they will track in regards to how they are affecting women and girls in poverty (“Gender KPI”). When placing a new investment, we work with the entrepreneur to identify their Impact and Gender KPI’s. We then get these KPI’s approved by the Fund’s “Impact Committee” which is made up of three individuals with no economic tie to Unreasonable Capital. This Impact Committee helps determine what we will measure in line with a company’s impact and this committee determines how successful our investments are overtime at achieving their desired impact. Knowing 50% of our investment team’s financial incentives are tied to the impact performance our investments, the Impact Committee serves both as a source of advisement and accountability.
Why measure impact on girls and women in poverty?
Unreasonable believes that our best lever for ending global poverty is investing into solutions that benefit women and girls without excluding boys and men. It has been shown that an educated girl in poverty will reinvest 90 percent of her future income in her family, compared with 35 percent for a boy. Though the core product or service of our portfolio companies may be gender agnostic, we believe that what you measure is an indicator of what you value and that what you measure often changes behavior overtime. To this end 100% of our investments will track their impact on women and girls in poverty. Still not convinced? (Watch this 2 minute video).
I want to join your team, how do I apply?
We are flattered that you asked =). If you are interested in joining our team at Unreasonable Capital, we’d love to hear from you. Please feel free to connect with us via the contact form at the bottom of the site. We are currently hiring for a Vice President. You can find out more information by clicking this link.
How will you transfer insights and learnings to your investors?
Monthly, we will share a 1 hour insights based conference call and once a quarter we will send out an insights report focuses on the intricacies of investing into emerging market startups solving pressing social and environment challenges. At the end of the day, investing in emerging markets is challenging – cultural, legal and geographical aspects all require careful navigation. However, we believe Unreasonable Capital is not only uniquely positioned to invest into startups in these markets but also to transfer the insights, patterns, and lessons we learn along they way back to our Limited Partners.
What is the Girl Effect Accelerator?
The Girl Effect Accelerator was launched in partnership between the Nike Foundation and Unreasonable Group – a first of its kind international accelerator dedicated exclusively to scaling up ventures that are measurably benefiting girls in poverty. Today, less than two cents of every international development dollar is directed towards girls – the very people who could do most to end poverty. We launched this program to make girls visible to the entrepreneurial, business, and investment worlds.
What exactly is Unreasonable Group?
Unreasonable Group‘s mission is to become “the largest and most effective platform in the world for entrepreneurs positioned to solve BFPs” (“Big F***king Problems). Each entity under the group is designed to leverage entrepreneurship and investment to solve the world’s most difficult and meaningful problem-sets and each of these companies will support the investments that Unreasonable Capital places.
To date, Unreasonable has launched a small portfolio of companies: UNREASONABLE.is, the Girl Effect Accelerator, Unreasonable at Sea, Unreasonable Alchemy, and of course, Unreasonable Capital. In addition we work closely with our sister organizations at Unreasonable East Africa, and Unreasonable Mexico.
What is your process for selecting investments?
Although the majority of our investments will come from the participants in Unreasonable accelerator and incubator programs, we are also open to investment opportunities from outside our programs. We are always looking to invest into seed and early stage companies with operations in emerging markets who are (i) are working to solve problems related to endemic poverty, (ii) are willing to track their social and environmental impact, (iii) have rapidly scalable and profitable models, and who (iv) have alignment around a potential exit strategy.
Once we identify these investment opportunities, we then finance up to 25% of an entrepreneur’s capital raise if they secure the remaining 75% of the investment round from qualified investors. We see this as a way to ensure that entrepreneurs can leverage our dollars in their fundraising efforts and that ultimately, we drive significantly more investment dollars into worthy startups across emerging markets. Additionally, we require that one of the co-investors has an active presence in the region the venture is operating. We will place an investment only if all these criteria are met.
How do you generate new investment opportunities?
Though the Fund is not limited to investing into entrepreneurs who participate in accelerator programs run by our sister organizations at the Uncharted and Unreasonable Alchemy, the majority of our investments will come from our programs. Uncharted is rapidly expanding into new markets each year (2015 included Unreasonable East Africa, Unreasonable Mexico, and the launch of Unreasonable Labs). Additionally, the Unreasonable Group continues to launch new programs, including the Girl Effect Accelerator and Unreasonable at Sea. These programs, as well as future programs, will serve as great pipelines into the Unreasonable Capital. That said, the Fund’s deal flow isn’t solely comprised of enterprises that participate in the programs run by Unreasonable. If you are a fantastic entrepreneur with a world changing idea, or you know one, we would love to hear from you!
What industries will you invest in?
Unreasonable Capital will invest in industries where impact and profitability are maximized – currently, there is tremendous opportunity in (i) scalable clean-energy solutions, (ii) technologies designed to promote financial inclusion and access, and (iii) innovative mobile solutions focused on agriculture, and (iv) companies that are disrupting consumer supply chains between emerging markets and developed markets.
What geographies will you invest in?
Unreasonable Capital will invest into a global portfolio of entrepreneurs operating in emerging markets such as Africa, Southeast Asia, and Central and Latin America. Although the majority of our portfolio will be headquartered in emerging markets, there will also be opportunities to invest in ventures based in developed markets that are looking to launch in emerging economies.
How will you oversee such a diversified fund?
Very carefully, and by accessing local resources in each market. Every investment we place will be part of a larger investor group, which will be composed of members with industry knowledge as well as a local presence in each geography. This combination will help the companies navigate industry dynamics as well as local business climates. As partners and when needed, we will conduct weekly calls with our investments for the first 6-12 months post closing an investment round. Thereafter, we will share monthly and quarterly calls with each investment. Furthermore, once a year, we plan to visit each of our investments in market. Time saved because Unreasonable programs are acting as deal-flow engines around the world will be disproportionally allocated to actively supporting our diversified fund.
How many investments and how will you manage them?
We will make 5-7 investments per year, and the fund will ultimately have 20-25 investments. You can view our current portfolio of investment here.
How will you structure each deal?
We will structure all investments unique to the context of the company, geography, and the potential for an exit. Although we envision the majority of our fund will be equity, we will also be participating in some debt financing and convertible notes as well as quasi-equity structures like royalty financing, revenue-share agreements, and when appropriate, factoring.
How does Unreasonable Capital view investment exits?
We will only allocate investment into deals that have a clear exit strategy and in deals where the entrepreneur is aligned with the intended exit strategy. In cases where the likelihood of an acquisition or Initial Public Offering aren’t likely, we will not make equity investments and will instead explore debt financing as well as quasi-equity structures like royalty financing, revenue-share agreements, and when appropriate, factoring.
Are there exit opportunities for startups in emerging markets?
Yes. Although there are literally thousands of examples, we’ve listed out a few below to highlight that exits are very real across emerging market.
- The Chinese e-commerce company Alibaba, which was founded in 1999, recently reported the largest global IPO ever.
- The India based micro-finance bank, SKS Microfinance had an IPO in August 2010. The company was valued at US$1.5 billion and five weeks after trading began, the share price rose 42 percent.
- In Africa, there have likewise been multiple billion dollar exists pointing to the reality that companies who move first to serve the basic needs of the African mass market return huge multiples. As an example, Celtel exited for $3.4 Billion 8 years after founding and Investcom was purchased for $5.5 Billion when they had just under 5 million pre-paid mobile customers in Africa.
- This past year, WhatsApp was acquired for 19B by Facebook largely because of it’s presence in emerging markets. Today, WhatsApp has an over 450M estimated monthly users in developing markets and this acquisition was targeted at securing this new market of users for Facebook. This is a signal for the future of multinationals purchasing startups with users across emerging markets. In January of 2014, Facebook also acquired the 18 month old India based company, Little Eye Labs for $15M.
- Multinational educational company, Pearson is “aggressively” going after for-profit education companies in Latin America, Africa, India and China (their CFO explains why in this article). For example, Pearson bought a controlling stake in the India based TutorVista for $127M, acquired a subsidiary of an a Brazilian educational company for $499M, acquired Global Education (Based in China) for $155M, and acquired 75% stake in CTI Education Group (South Africa) for approximately $50M.
- Yahoo recently acquired the Bangalore based startup, Bookpad for a littler under $15M. While the deal is relatively small, it was placed after less than 12 months after the company was founded. Yahoo has also acquired the Jordanian social media site, Maktoob for $167M and the Tawainese online community, Kimo for $145M.
- Ebay purchased China based e-commerce site EachNet for $150M, the India based Baazee.com for $50M, and the Argentina based online classifieds company, Alamaula for an undisclosed amount that was estimated to be $200M.
Contact us
Interested in collaborating or have further questions? Don't hesitate to get in touch
Drop us a line
We are excited to brainstorm collaboration and to answer any questions you may have. Please feel free to use the form on this page to write us a note or just email us directly at [email protected].
Unreasonable HQ
Boulder, Colorado
Concerns or Grievances
Unreasonable Capital takes all reports of concerns or grievances seriously, whether related to our organization, those we invest in, or work with as partners. If you have a concern or grievance, we request you report it via the online form (linked here), or by leaving a voicemail (+1-413-308-0209). The results of all investigations can be monitored via the report (linked here). Please feel free to read more about Unreasonable Capital’s Concern and Grievance Policy and review procedure in this document.