Gates' Impact Investment to Support Unitus Seed Fund

Unitus Seed Fund, an early stage venture fund based in Bangalore and Seattle, has announced that a number of tech executives, including Bill Gates, have agreed to invest in an impact investment fund focused on startups working to address extreme poverty in India.

More than fifty investors have committed a total of nearly $17 million to Unitus Seed Fund LP, which, together with United Seed Fund India, will provide more than $20 million to startups in the agricultural, education, energy, healthcare, e-commerce, retail, and water sectors in India. Although the amount has not been disclosed, Gates, co-chair of the Bill & Melinda Gates Foundation, is investing his own money, not the foundation's. "Impact investing is a powerful model with the potential to build markets and drive change for the people who need it most," said Gates in a statement. Other investors in the fund include Khosla Ventures founder Vinod Khosla, Concur Technologies CEO Steve Singh, and the Michael & Susan Dell, Deshpande, Lemelson, Sorenson Impact, and Wadhwani foundations. Unitus already has made investments of between $100,000 and $250,000 in fourteen companies, including Smile Merchants, which operates low-income dental clinics near Mumbai, and Hippocampus Learning Centers, a network of private kindergartens serving rural and low-income students.

Gates' investment in the "for-benefit" company puts him at odds with Warren Buffett in the debate over whether private investors should back businesses with explicit social and environmental missions and metrics, Quartz reports. In numerous public statements, Buffett has favored the traditional separation of business and charity, telling a conference last year that "it's tough to serve two masters....I would rather have the investment produce the capital and then have an organization totally focused on the philanthropic aspects."

That view is shared by venture capitalist and Netscape co-founder Marc Andreessen, who on a panel two years ago said he "would run screaming from a B Corp. The split model makes me nervous and I don't think we would ever touch that....It's like a houseboat. It's not a great house and not a great boat." Critics of the impact investing approach like Andreesen may be softening, however, Quartz notes. Earlier this year, Andreessen's firm, Andreessen Horowitz, invested in AltSchool, a network of micro-schools offering personalized education that is in the process of becoming a certified B Corp.

Will Poole, co-founder and managing director of Unitus, told Quartz he had recently spent several days on a houseboat in Kerala, India. "It was an excellent boat and a fine house," he said, "and we provided local economic development at the same time."