Acquisitions Spur Growth for Open Source Startups
Five Venture Fund Portfolio Companies have made successful exits in 2021, demonstrating sustainability and their potential to scale
This year saw the first successful exits of portfolio companies from the UNICEF Venture Fund. Prior to their respective acquisitions, Atix Labs (Argentina), Geospoc (India), Giraffe (South Africa), Veative Labs (India), and Kimetrica (Kenya) received early-stage investment and technical assistance to build open source digital platforms that bring positive impact to children's lives. The five solutions range from Artificial Intelligence (AI) powered solutions for mapping rural schools to financial services enabled through blockchain technology.
The UNICEF Venture Fund is a $35M+2527ETH+8BTC pooled fund – the first financial vehicle of its kind in the United Nations – that makes equity-free investments and provides acceleration support to early-stage, open-source, emerging technologies with the potential to impact children on a global scale.
Central to the Venture Fund’s investment thesis in emerging technology products is to provide seed funding in exchange for open source IP and to build communities to problem solvers that are building solutions backed by financially sustainable models. This creates a value return to the Venture Fund and its partners – as well as a de-risked pipeline for capital investors. The Fund invests exclusively in for-profit startups registered in emerging economies (across 67 countries to date), with a commitment to building a diverse portfolio.
These five exits confirm our initial thesis: that investing in and supporting traditionally overlooked opportunities can spur new, publicly available innovations that attract capital and generate a return surpassing the initial investment.
We expect these five to be the first of many. Open source solutions generate revenue - 80% of our portfolio companies successfully do so – and are increasingly garnering private investment. The funding landscape is rapidly changing. In 2004, only nine firms producing open source innovations had raised venture capital funding; however, in 2015, this number had increased to 110, raising over $7 billion from venture capital funds (Accel Partners).
While trends are promising, our early-stage innovators continue to face challenges in accessing sufficient financing to take them to the next stage. The Venture Fund has established two funding tiers to address the financing gaps prevalent for mid-stage growth companies, aiming to accelerate more promising solutions, positioning them for sustainable investment so they can increase third-party funding
Looking for investment opportunities in frontier technologies that are generating value and results for children? Check out the Venture Fund’s full portfolio and our upcoming investment cases for opportunities in Digital Public Goods.
Learn more about our portfolio companies' exits
Learning and Career Platforms
Access to quality education is fundamental to reducing gender inequalities, increasing incomes, and addressing poverty gaps. The effects of COVID-19 have created further disparities, especially in Low- and Lower-Middle Income Countries (LMICs) where 258 million children already did not have access to schooling even before the global pandemic. Research from the World Bank shows that 53% of children in LMICs cannot read and understand a simple story by the end of primary school. To address the learning crisis, startups, private and public sector actors alike are leveraging educational technology (EdTech) solutions to enhance and facilitate learning and increase access to quality education for many learners, especially those in remote parts of the world.
The EdTech market is projected to reach $350 billion by 2025, with China and the USA as dominant players. It is essential that while this market is being shaped and growing, learners from LMIC markets are not left behind. To date, the Fund has invested in 21 EdTech solutions, with two solutions being acquired to address learning disparities in their respective regions.
In India, Veative Labs was acquired by Dev Clever Holdings to expand learning and career products across schools in India that are affiliated with the National Independence Schools Alliance. The acquisition will open Veative’s virtual content to 70,000 schools across India, which are attended by 1.3 million students. Veative Labs received investment from the UNICEF Venture Fund in 2018 to release parts of their library of VR educational content as open source, as well as to make it available on WebVR, increasing accessibility and reducing costs of using the technology.
[The] UNICEF Innovation Fund allows us to diversify our offering, which will present opportunities of value to investors. Without the investment, we wouldn’t have gotten to WebVR just yet, because we need to choose the most viable path as a for-profit entity.
In South Africa, Giraffe was acquired by Harambee Youth Employment Accelerator, South Africa’s primary player in the youth employment ecosystem and a member of the Presidential Youth Employment Initiative — the largest coordinated effort to combat youth unemployment in South Africa.
With UNICEF’s support, Giraffe developed a series of free educational courses designed to help young people become more employable. The investment by the Venture Fund also enabled the Giraffe team to create a matching system to identify the best candidates for specific job opportunities. By designing an ontology spanning main industries, roles and skills, the Giraffe team created a framework to match candidates to jobs based on their profiles and recommend them for specific opportunities.
Digital Infrastructure for Transparency and Efficiency
The UNICEF Venture Fund invests in blockchain solutions that increase efficiencies, cut transaction costs, and simplify transaction processes.
Atix labs was funded by the UNICEF Venture Fund in 2018 to further develop a global social platform that connects Small and Medium Enterprises (SMEs) with funders in different locations, facilitating the investment process and giving more visibility to use of funds by SMEs and their impact on-ground. Atix Labs is using blockchain technology for cross border investments and as a tool for impact accounting across all sectors.
This year, Globant acquired Atix labs to expand its offering in the blockchain market. Through this acquisition, Atix labs will become a Globant independent studio, giving Atix labs room to develop a more mature approach, relying on Globant’s processes and tools while continuing high quality software development.
When we applied to the Fund, Atix had less than 20 employees, had almost no open-source implementations; we did not work with any international organization and most of our blockchain projects were proofs of concept funded by early adopters.
Today we are almost 70, we have a portfolio full of productive blockchain implementations, we interact with companies, funds, and organizations and we have participated in dozens of open-source projects, and most of the time, being able to show what we did with the [Venture] Fund helped us to open the doors for us.
Satellite Imagery for Resource Planning
Geospoc received investment from the Venture Fund in 2020 to develop a tool for detection of rural schools and hospitals using satellite imagery and machine learning. During the investment period the detection tools were open-sourced, providing policy makers with a tool to reliably derive insights for planning purposes.
Geospoc was acquired by Ola Cabs to enhance Ola’s geospatial services, in particular, the team will generate near real time maps as well as 3D, high-definition (HD) and vector maps and create visual feeds to understand road quality. This work will help Ola bridge data gaps for their work in mobility in order to ensure transport is accessible, sustainable and convenient. Considering the recent increasing air quality concerns and congestion in India’s capital, mobility platforms play an increasingly significant role in the mobility of individuals.
Working with the UNICEF Innovation Fund gave us access to tap into Project Connect open-source validation tool which is implemented in the Geo-Qi: Mapper dashboard.
Kimetrica’s work over the last decade in different crisis contexts has highlighted the need for evidence-based decision making. In 2017, Kimetrica received funding from the UNICEF Innovation Fund, to further develop MERON, a lightweight and rapid method for assessing childhood malnutrition. It does not depend on enumerator assessment and removes measurement, transcription, and interpretation error. Along with this product for rapid assessment for malnutrition, Kimetrica have decades of experience in famine early warning systems, food-security and in-depth surveys.
In December 2020, Kimetrica was acquired by the American Institute for Research (AIR), one of the world's leading Behavorial research organizations. This transaction allows AIR to expand its work in areas Kimetrica has expertise while leveraging the latest technology ranging from software development, data science and machine learning to address client's needs.