This is the third in a ten-part series on the top trends in impact investing we predict for the upcoming year.
#8: Mobile Goes Mainstream
The past five years saw microfinance go mainstream—with IPOs (SKS Microfinance, Banco Compartamos), pension fund investments (TIIA-CREF), and $1 billion-plus dedicated funds. People have been asking for years, “what’s next?” While the commercial potential of mobile/ICT (information communications technology) has never been discounted—several of the impact investing industry’s highest-profile exits have come from the mobile/ICT sector—2012 is the year that mobile will join microfinance in going truly mainstream.
What do we mean by mainstream? First of all, in 2012, Silicon Valley venture capitalists and New York private equity funds alike will pay much closer attention to mobile. We saw this in our own networks in 2011—Village Capital peer-selected company MobileWorks, which enables villagers in India to make extra cash performing micro-outsourcing tasks, was accepted to Y-Combinator, and has raised over $1.5 million, while another Village Capital company, Kopo Kopo, raised almost $1 million from Blue Orchard, a mainstream microfinance investor, and Khosla Ventures, one of Silicon Valley’s best-known companies. With a strong pipeline of incubation (especially in Bangalore and Nairobi) and a large, smart group of mobile-focused funds, prospects have never been brighter.
The other development we anticipate is that mobile will increasingly become passé in impact investing, as microfinance has in the past five years. And that’s not necessarily a bad thing. As venture funds and private equity groups start to put capital into mobile innovations for the base-of-the-pyramid, mainstream capital markets will replace risk/philanthropic capital, and investors seeking additionality may look elsewhere. But there are a great deal more commercial investors than impact investors, worldwide, so the rise in the capital markets may allow yesterday’s mobile investors (many of whom invested in microfinance the day before yesterday) to blaze new trails looking for the next big thing.
By Ross Baird. Photo credit Ken Banks.