Venture Capital for MicroFinance: Chris Brookfield (Part 4)

The strategy of running an investment firm may vary, but the end goal is always healthy and compelling returns.

SM: So you manage Unitus as a professional investment opportunity with similar goals as venture capital firms? CB: We look at investing very much as a derivative of venture capital. I would argue it is just like venture capital and that Sequoia came in on the B round of SKS, confirms that top quality venture capital is willing to invest in microfinance. We have limited partners like a normal fund and we are structured as a general partnership.

Where we are different from a traditional venture capital fund is that we have a strong connection to a non-profit and we are formed alongside a non-profit. I think that our approach is more balanced but I don’t think we are making a great deal of trade-offs in terms of investing. All of the things a social investor is interested in are also interesting to me as a professional investor. The only difference is that the social investor will have a longer timeline than the average venture capital company which on the west coast only sits on a portfolio about two and a half years.

SM: That would be the ideal world for the venture capital firms. CB: If you look at the way they make their capital, the way they earn their returns, it is usually a relatively short amount of time. It is the companies which do not have a large return that sit in portfolios for a long time.

SM: Google did not return in two and a half years. CB: That is one exception. Google is unusual because they were counter cyclical. The investment in Google was made just before the huge downturn, and the reason they stayed in the portfolio for so long is that the markets were in disarray during the timeframe they would have normally been taken public.

[to be continued]

[Part 3]
[Part 2]
[Part 1]

This segment is part 4 in the series : Venture Capital for MicroFinance: Chris Brookfield
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