World class support for high-impact startups: how we developed our Venture Platform
Mercy Corps Ventures (MCV) invests in and catalyzes venture-led solutions to increase the resilience of underserved individuals and communities. Founded in 2015 as the impact investing arm of global development agency, Mercy Corps, we’ve supported 43 early-stage ventures to scale, reach nearly 20 million users with impactful products and services, and raise over $396.7 million in follow-on capital.
For donors and funders, this article outlines the value and role of a Venture Platform in the sustainable growth of impact-focused startups, and provides examples of where you could support the future of this work.
For impact investors, this article outlines the type of post-investment support that can be offered to early-stage portfolio companies. Explore our toolkit for hints and tips that could help you replicate this.
For impact-focused startups, this series outlines the key offerings we can provide for those who are serious about scaling sustainably. If you are an impact entrepreneur looking for support, submit your pitch deck.
Written by Hetal Patel — Head of Venture Growth, and Hebe Foster — Platform Associate, at Mercy Corps Ventures. Reach out to Natalie if you have questions about our Venture Platform, and read more here to see how our Venture Platform has evolved over time.
“Capital alone doesn’t create success stories”
Heather Hartnett — CEO, Human Ventures
It is well known that the greatest success stories in venture capital almost always involve funds that provide high-touch support well-attuned to the needs of its entrepreneurs.
Although many investors deliver this kind of “venture platform” support for their portfolios, it’s often for commercial funds investing in companies at Series A stage and beyond. We have adapted this tried and tested venture platform model for the impact ecosystem, to early-stage companies with high-impact potential, operating in emerging markets.
Going beyond capital to provide a venture platform is particularly crucial for entrepreneurs launching experimental business models in nascent markets to tackle some of the toughest challenges of our time. Challenges like climate change, financial exclusion, and other global disruptions impacting refugees and migrants, informal workers, micro and small business owners, smallholder farmers, and other underserved populations.
We’ve always provided our portfolio companies with technical assistance, working to find the best ways to add value as they test their minimum viable product (MVP), apply sales tactics, develop fundraising strategies, and more. However, as we grew, we recognized we needed to deliver support in a way that scaled, leveraged our expertise, and was right-fit to the type of investments we make.
Welcome to our Venture Platform.
The MCV Venture Platform has been designed to provide a suite of services beyond capital to ensure our portfolio companies achieve impact at scale. This includes:
- Post-Investment Support
Providing a suite of services to our portfolio companies to build strong foundations for growth. - Partnerships
Leveraging a network of operational experts, advisors, co-investors, and founders to deliver this world-class support. - Pre-Investment Support
Addressing a current scarcity of support for emerging market ventures at pre-seed stage, particularly local and female founders. - Insights
Conducting action-oriented research and capture our learnings to share for the benefit of ourselves and the ecosystem. - Impact Measurement & Management
Providing deep impact expertise for companies engaging with our Venture Platform, to optimize for scalable impact.
We’ve consolidated years of experience in emerging markets to build and tailor this Venture Platform for founders of early-stage, high-impact enterprises, as they establish strong company fundamentals. And we know there is appetite for these services — in 2021 alone, we conducted more than 50 pre- and post-investment support engagements and produced a six-part insights series read by more than 4,000 industry stakeholders.
“We obviously think about impact measurement, but we’ve never had the framework to speak about it as clearly. The work that MCV has done allows our entire team, across the countries we work in, to have a common reference on the link between our daily operations and the value we are trying to create. We couldn’t be happier!”
Boost Technology
Here, we deep dive into why we developed these services, followed by what’s next for our Venture Platform.
Post-Investment Support: The Why
Our extensive suite of post-investment support services includes a set of ‘core’ offerings, including financial management, market analysis, impact measurement, and other tools that startups need to survive the “valley of death” in the earliest stages.
For companies that have traversed the early stage and are ready for scale, we also have ‘growth’ offerings that support development of customer insights, fundraising activities, strategic advisory, and board governance. All offerings are available as structured support packages (as opposed to only offering bespoke services), enabling us to scale these offerings and thus deliver our platform cost-efficiently.
These support offerings drive immediate value for startups, while embedding processes for sustained results, and they are built from founder feedback, user-centered design, lean startup processes, and other best practices, such as:
- Internal vision and culture alignment — essential for startups working with promising, innovative business models with limited resources
- A hyper focus on “the problem” and finding the right solution to build a hypothesis-driven culture with clear assumptions built upon deep understanding of the customer
- A build-measure-learn loop that sets clear KPIs and tracks milestones to ensure a data-driven way to validate assumptions
“From a hands-on perspective, the [Mercy Corps Ventures] team is brilliant and proactive. From a thinking and strategic perspective, they’re also providing great support.”
Kwanza Tukule
Core Offerings
These core offerings support enterprises to make data-informed strategic decisions for enabling growth and accelerating impact at the earliest stages of their development.
Finance systems
With founders focused on MVP and go-to-market strategies, and less on understanding finance requirements and implementing solutions, startups face a number of challenges in the area of finance. Often they aren’t able to secure a full-time, experienced finance team or CFO. This applies across the board, regardless of sector. For example, despite an increasing number of innovative solutions in fintech and decentralized finance (DeFi), finance systems and reporting still remains a number one support need for many of these ventures.
Our finance engagements aim to build accurate finance systems for informing key business decisions and easing reporting requirements across strategy, operations, and fundraising.
CASE STUDY
Finance Systems for Accurate Reporting and Dynamic Modeling:
Pre-Seed Logistics and E-Commerce, (Kenya)In 2022, the Venture Platform team supported the CEO and solo founder with a lean, local team to restructure finance systems and processes. We reviewed, analyzed, and updated the company’s finance systems and processes, created a dynamic financial model, reviewed cash management, and created KPIs for their Series A fundraise.
Immediate outputs: Improved cash flow due to better inventory management, as well as accurate, on-time reporting via a live dashboard. The CEO also reported that the financial metrics provided by the live dashboard have been invaluable tools for the leadership team in making tactical and strategic decisions during team meetings.
Market Analysis
Assessing customer lifetime value, acquisition costs, and other unit economics with a view to testing a product in-market is vital for early-stage ventures, particularly if looking for further investment. Segmentation and knowing the competition also helps narrow the focus for a more accurate understanding of the serviceable market.
By supporting ventures to understand market opportunity and their customer base, we can ensure leadership teams are well positioned for strategic decisions about investments and growth.
CASE STUDY
Market Growth and Expansion Planning:
Fintech (Multi-Country, Sub-Saharan Africa)In 2019, our Venture Platform team worked with the CEO and growth team of a post-seed company distributing financial products to low-income, underserved workers. We implemented our market analysis tools to develop an in-depth review of more than five markets and projected expansion cost and revenue. The team leveraged the deeper return-on-investment analysis and recommendations from this engagement to directly inform their Series A fundraising and growth strategy.
Impact
Providing ventures with the tools and support they need to measure and manage their impact is critical for achieving and leveraging their purpose. This level of insight enables ventures not only to articulate their customer story but do so in highly compelling ways that accelerate their social and environmental purposes.
High-quality impact management is vital, because it:
- Increases efficiency, business resilience and investment attractiveness by helping companies better articulate and validate their customer value propositions.
- Allows ventures to more holistically identify and mitigate impact risks, important for both business and impact models.
- Creates internal team alignment around a core mission and produces strong external messaging, thus demonstrating focus on achieving sustainable impact, which is a necessity for later-stage impact investors.
Impact engagements create tangible outputs, as well as structures and frameworks for analysis of impact at scale.
“The work done with Mercy Corps Ventures was extremely helpful in understanding our impact on society. Within a few months, we moved from basic impact data tracking to a 360-degree impact view. Now, we clearly communicate, both internally and externally, about the impact we have on companies and candidates [our end users].”
Levee
CASE STUDY
Building a Foundation for Scalable Impact:
Fintech (Multi-Country, Sub-Saharan Africa)A pressing problem for micro-, small, and medium sized enterprises (MSMEs), is stock ordering. To help respond to this problem, the company enables MSMEs to order inventory via an online platform, and delivers orders via its network of agent-drivers.
Our Venture Platform team worked closely with leadership of this fintech to clarify their path to impact. Initially, we reviewed the company’s impact metrics, using an approach designed by the Impact Management Project for identifying gaps and making recommendations for improvement. This process yielded accurate and efficient data, enabling the company to build a robust impact framework that underpins their theory of change.
Growth Offerings
Growth support helps portfolio companies build on the strong foundations created in core support, fostering sustainable, ambitious growth plans that boost revenues and customer base, and ultimately amplify impact.
Customer Insights
Customer insights is synonymous with impact. Even with impact baked into their business models, our portfolio companies still need support to build solid customer insights foundations. Because without a deep understanding of the underserved consumer, there is no impact.
Customer Insights builds on the impact offering and challenges companies to dive into customer experience down to the granular details, whether that’s key touchpoints, emotions of using a product or service or how to adjust for a better response to customer needs.
We apply human-centered design (HCD) principles to embed processes that center the targeted underserved consumer within the loop of product development, sales, and technology. This often generates an increased uptake of a product or service, thus expanding desired impact.
CASE STUDY
Customer Insights Mapping to Inform Product and Marketing:
Fintech, (Multi-Country, Sub-Saharan Africa)In 2020, the MCV Platform team worked with the CEO and founders of a post-seed company offering credit products for underserved gig economy workers, distributing them via multiple B2B partnerships. The team and HCD experts conducted consumer behavior research with journey maps, touchpoint analysis, persona creation, and recommended automated feedback loops. From this, the company updated marketing tactics and collateral, embedded feedback mechanisms, recruited a specific customer insights role, and increased acquisition and retention numbers.
Fundraising
It is crucial for companies to build robust projections that will speak to KPIs that investors at later stage rounds need to see, and to ground-truth assumptions to build a solid narrative around the business model, revenue model, and impact.
Drawing on deep expertise within the team, we help ventures develop a five-year financial forecast, advise on growth strategy, prepare pitch collateral, and introduce them to relevant investors in our network. The results are the proof: Our portfolio companies have gone on to secure $355 million at a 90 percent follow-on rate to date.
CASE STUDY
Series A Fundraising and Growth Strategy:
Cross-Sector, (Multi-Country, Sub-Saharan Africa, Asia)In 2020, the Venture Platform team supported the CEO and co-founders of a unique business model to develop a comprehensive fundraising strategy as the capital markets contracted due to COVID-19. We rapidly validated expansion assumptions (markets, products, channels) and scenarios, created a sensitivity analysis, supported pitch material creation and matched the company to relevant investors. The company went on to close a strong Series A funding round, executed on the business plan, and experienced growth in new products and markets. Series A investors appreciate the detailed analysis and planning that was part of the fundraising strategy.
While we have a structured approach to implement offerings efficiently and allow for scale, we are always open to founders’ requests for bespoke support. To scale with our portfolio and be most efficient with our support funding, the Venture Platform balances the tension between bespoke and structured support, utilizing an in-depth, up-front assessment followed by a phased implementation of structured offerings to strike this balance.
If you’re an impact investor building a Venture Platform, explore our toolkit for hints and tips that could help you replicate this.
Partnerships: The Why
It takes partners to build an ecosystem. With the goal of fostering support that is entrepreneur-friendly, nimble, and tailored, we leverage our network of operational experts, advisors, co-investors, and founders.
“You’ve got to be a pathological partner builder’”
Tim Rann — Managing Partner, Mercy Corps Ventures
From day one we’ve utilized Mercy Corps’ reach to understand the most cost-efficient, high-value external support in markets globally and secure partners offering reliable, skill-specific solutions in all the areas key to success, such as finance and accounting. Technical support providers are complementary to our offerings in order to address core needs as effectively as possible. As MCV, we add value because of our deep understanding of both parties: our partners value the time and effort we can put into understanding their engagement requirements, while entrepreneurs value the smooth introduction to high-value expertise.
Key Venture Platform partners have helped propel our portfolio companies toward their purposes:
- Executive coaching, from organizations such as Rippleworks
- Innovation programs with grant funding to run targeted initiatives, such as Agrifin Accelerate and Youth Impact Labs
- In-depth rapid customer insights and feedback loops for business model review, with 60 Decibels (formerly Acumen Lean Data)
- Tech-specific mentoring and coaching from the Google SDG Program
- Modular learning for a variety of startup types and phases and access to corporate networks, with Moving Worlds
We also know when partnerships aren’t the right fit. Sometimes they are too costly, too remote, or not nimble enough for our entrepreneurs.
We’re always seeking partners in the ecosystem looking to contribute to post-investment support for high-quality impact ventures. Please reach out to discuss how we can continue building our Venture Platform together.
Pre-investment support: The Why
By and large, the venture capital system is set up to miss or exclude local and female founders. These founders are often close to being investment-ready but are missing the networks, feedback, and support to get over hurdles to funding.
Much more support is needed at this stage to expand opportunities for the best ideas to seek and capture investment — no matter the founder’s background — to increase diversity of founders within investment pipelines, expand understanding of the needs local and female founders have at this stage, and build a more inclusive ecosystem of impact ventures. Additionally, startups at early-stage are in an excellent position to integrate diversity considerations into their product/market fit and business model design, which could significantly scale their impact to new underserved customer segments over the longer term.
To overcome the current scarcity of support, we have been leveraging our Venture Platform and Investment Team to bolster very early-stage companies within the ecosystem.
Our primary criteria for pre-investment support include:
- The venture is run by local and/or female founders.
- The team has a working financial and/or business model in place.
- The venture is looking to raise funding in the near future, usually at pre-seed or seed stage.
- The venture is prepared and able to commit time and attention to our offering in order to realize its value.
Through this approach we’re able to support ventures with great potential for impact even when they might not fully fit our investment criteria. This also enables us to reach ventures that aren’t already favored by the impact investing community. It allows us to support nascent solutions in non-financial ways, such as our Investment Readiness workshops for female founders in Francophone Africa. This type of support offers entrepreneurs a route to potential investment either with us, or through signposting to ecosystem partners and other investors.
CASE STUDY
Robust Financial Projections to Support Growth:
Pipeline Company (Kenya)Kenya’s dairy industry contributes roughly 4% to national GDP and provides for the livelihoods of 1.8 million people. However, issues such as inadequate quantity and quality of feeds, along with diseases, and poor access to credit and output markets, present a huge opportunity to optimize milk production.
The team explored a potential investee with an agricultural tech solution tackling several of these issues. By providing light-touch advisory on their financial model and pitch deck, we supported this company to successfully apply to a renowned accelerator, hugely improving their chances to scale. They also secured a strong term sheet from two leading impact investors, evolved their approach to financial analysis, and diversified their channel acquisition risk.
Insights: The Why
We bring the power of a learning lab to our Venture Platform. Leveraging our unique position with a host of stakeholders, we conduct action-oriented research for valuable insights which inform the ecosystem. Sharing insights and market trends, along with transparency around successes and failures supports later-stage investors and other actors to make smarter decisions and investments that are more secure, it drives interest into markets we believe in, and it enriches the support we provide to our portfolio companies.
CASE STUDY
Insurtech series exploring the role of crop microinsurance in boosting the climate and financial resilience of smallholder farmers (six-part series)
Smallholder farmers produce one-third of the world’s food and make up the majority of the 608 million farmers in the world. Many, however, remain underserved and exposed to climate shocks due to various challenges along the value chain. One promising intervention is in the nascent field of crop microinsurance, an insurance offering designed for underserved farmers. Through action-oriented research, we produced a series that explored the complexities, challenges, and potential of this industry. We leveraged data and expert stakeholders (insurtech investors, donors, governments, agriculture value chain players, re-insurers, and others) to understand success and challenges, barriers to scale, and future-facing business models leveraging new technology. This type of focused research can inform decisions for a range of actors, from startups to investors to policymakers.
“We love all of [the Insurtech Series]! I am just thrilled that you picked up on these issues, and can amplify them well beyond what we can do on our own. We’ll likely pivot to new advocacy work off of this series, sharing it as we try to push more attention into this space.”
One Acre Fund
We’ve always believed we have to leverage all the assets and tools we can to support and de-risk impact-first ventures. This was at the core of our vision for post-investment support since MCV started investing and supporting ventures. We also appreciate that all types of tools are needed to develop a robust ecosystem and to accelerate scale and impact. Many of our co-investors, partners, and collaborators have different versions of these support tools, and we’re excited to learn, share, and partner with them.
What’s next for our Venture Platform?
As the world confronts the climate crisis, economic disruptions, and shocks of significant magnitude, Mercy Corps Ventures is expanding its portfolio of startups that strengthen the resilience of their users. Through our Venture Platform, we are supporting startups to develop and embed climate adaptation and resilience solutions into their business models, product offerings, and distribution approaches to positively impact the wellbeing of their customers.
We see opportunities to grow our Venture Platform offerings to add value and accelerate scale across the types of models we invest in and support. Specifically we want to increase products that address the risk magnified by climate shocks and double-down on centering the experience of the underserved consumer:
- Minimum viable product (MVP) development: A disciplined approach that ensures product development centers around the underserved consumer, developing and testing products focused on the user journey and needs as much as the technology. Accounting for climate and financial shocks must be embedded throughout.
- Traction and scale: Building on robust customer insights with action-oriented research, specifically on what tools can increase resilience, that informs company product development, marketing and strategy, as well as informing the wider ecosystem.
- Incorporating new technologies: Emerging technologies, along with innovative business models and distribution approaches are often the birthplace for solutions to complex problems. We’re researching how blockchain, satellite imagery data, mobile-phone penetration, and more, can be leveraged to test climate smart services and adaptive agriculture practices. We know technology and new ways of deploying it — embedded smart-contracts, cross-border productive-use lending, market analysis for the voluntary carbon market (VCM), and much more — will serve to democratize access to carbon markets and increase co-benefits to communities and land stewards.
The above are a few areas that our Venture Platform is evolving to address. We’re learning, iterating, and testing solutions that can best support impact-first ventures. That’s why we have worked hard refining and developing a model for supporting entrepreneurs that validates their ideas, builds foundations, and scales sustainably.
If you’re an impact investor building a Venture Platform, explore our toolkit for hints and tips that could help you replicate this.