At the Beginning
In early 2000, a group of friends met to discuss how they could alleviate poverty. They discussed various economic development methodologies including education, microcredit, and cooperatives. These initial discussions led to the formation of Unitus Action Groups, where individuals brought friends, family, co-workers or neighbors together to unite their efforts in fighting poverty (hence our name: “unite us” became “Unitus”). Much good came from these Unitus Action Groups. Sizable donations were made to worthy NGOs worldwide. But for all their successes, the founders were still not convinced that they were realizing poverty alleviation on a sustainable, global scale.
In the context of this self-evaluation, they traveled to Bangladesh in January 2001 to learn about the Grameen Bank and meet with Muhammad Yunus, Grameen’s founder. The trip changed their lives. It left them convinced that microcredit was the key to large-scale poverty alleviation. But a question still remained: With thousands of microfinance institutions (MFIs) already in existence, how could Unitus best support and leverage microcredit and microfinance? And could Unitus really reach scale quickly if it was constrained by building a field support organization from scratch? Wouldn’t it just be duplicating and overlapping efforts if it created an MFI of its own?
With advice from Muhammad Yunus and further research, the group moved in a new direction and began to explore the microfinance industry in-depth—its successes, failures, strengths, weaknesses, and opportunities. After months of evaluation, a new strategy was developed for Unitus, one that could truly alleviate poverty for millions of people: the Unitus Acceleration Model. To implement this strategy, Unitus formed Unitus Labs, a 501(c)(3) non-profit, in 2000.
Over 10 years, Unitus leveraged the Unitus Acceleration Model to partner with 23 MFIs in India, Southeast Asia, South/Latin America and East Africa who ultimately were able to deliver quality microfinance services to more than 12 million poor families by mid 2010.
Unitus Labs’s professional staff identified the highest potential early stage MFIs. We then set up multi-year, aggressive, goal-based partnerships in which we committed to work alongside each MFI, providing advisory services and catalytic debt guarantees. Our advisory services were tailored to each situation and included technology, human resources, capital raising, marketing, product development, leadership development and strategic planning services. The results were MFIs which were doubling their client reach each year — 8 times the industry average. And many of these MFIs were winning industry recognition for efficient operations, transparency and lower interest rates for their clients.
More about Microfinance Acceleration >
Unitus Equity Fund
In 2005, Unitus began to see the opportunities for commercialization of microfinance in India, a hugely underserved market for microfinance. Unitus setup a separate investment fund called Unitus Equity Fund (UEF), a first-of-its-kind, early-stage catalytic microfinance equity fund based in Seattle and Bangalore. The two primary goals were to: (a) provide much-needed equity capital to promising early stage MFIs, and (b) demonstrate that financial returns were possible in this space in order to attract mainstream financial capital to a sector heretofore considered too risky and unproven. UEF’s investment strategy was to take minority investment positions in small MFIs to help them increase their delivery of quality microcredit products to unserved poor communities – and to do so at significant scale and with reasonable profit. The vision was high-volume, low-cost, good-quality microcredit for the <$2/day income masses.
Fundraising for UEF was extremely challenging because of the many risks involved in venture investing in small, private overseas companies in foreign currency with little visibility for liquidity. As a result, most of the investors were social impact investors who understand that they were putting their capital at risk for the potential of significant social benefit first and foremost.
To date, UEF has made investments in seven MFIs, most of which are in India. In 2009, Unitus hired Elevar Equity to manage UEF.
In 2007, Unitus started to see increasing demand for sophisticated capital advisory services from both Unitus MFI partners and non-partners. Unitus decided that we could have more impact on poverty by spinning out the Unitus Labs capital markets team into a new social enterprise providing corporate finance services. Unitus raised money from seed investors and launched Unitus Capital with its main office in Bangalore in 2008.
As of the Q1-2011, Unitus Capital has successfully raised more then $550 million of debt and equity capital for social enterprises, primarily in the financial services space. They have also expanded to serve social enterprises in China and Southeast Asia and have clients in non-financial services sectors.
In July 2010, Unitus Labs announced that it was making a strategic change to no longer focus on accelerating microfinance and would be researching new focus areas. Unitus Labs researched the latest data, sought counsel from a variety of experts and explored multiple different opportunities that fit with our mission and our approach. The opportunity that most caught our interest was creating improved livelihood opportunities for the working poor. Most importantly, two things emerged from this process: (1) a vision/goal for catalyzing a new market for livelihood ventures; and (2) a team of people who were ready and willing to setup a new venture to pursue this goal. The new venture, Unitus Impact was setup in early 2011 as an investment management company focused on creating livelihood opportunities at global scale and impact.
Unitus Seed Fund
In October 2011, Unitus Labs initiated a new pilot initiative in India called Unitus Seed Fund to increase development of innovative new businesses in emerging markets which have potential for improving the lives of millions of people living at the base of the economic pyramid. Unitus Labs believes that many of the next great ideas for realizing poverty impact on large scale are going to come from entrepreneurs creating startups with new disruptive models and systems which are intended to be for-profit businesses. In the summer of 2012, Unitus Seed Fund spun out of Unitus Labs as a separate venture investment management company and fund in order to scale-up investing operations and impact. More about Unitus Seed Fund >