Innovation for the Swiss Financial Industry
Zurich, Switzerland, January, 13 2011 -
responsAbility is launching responsAbility Ventures I, the first venture capital fund under
Swiss law investing in companies with development impact. The new vehicle gives
qualified investors access to promising early-stage markets at the base of the global
income pyramid, investing in companies with high growth potential and development
A striking feature of base of the pyramid (BOP) markets is their sheer size. At present three billion people in Asia and Latin America, Africa and Eastern Europe are buying goods and services which in many cases fail to adequately meet their needs. Many people in BOP markets do not have basic amenities such as a reliable supply of energy, proper lighting, efficient agricultural machinery or information and telecommunications equipment (ICT).
While most poor households would actually have sufficient financial means to cover these basic needs, appropriate goods and services are not available or their ability to consume them is limited by inadequate distribution, the high costs of transport, or a lack of steady income. Being poor is expensive. Households in developing countries have to pay more than their counterparts in industrialized nations – often not just in relative, but in absolute terms – for basic goods and services.
Companies that manage to access this untapped market potential by providing efficient and reliable products that are easy to distribute can create substantial commercial and social value. With households able to meet their basic needs more effectively thanks to these new products, their standard of living improves and resources are freed up for productive activities.
New investment vehicle
Now for the first time an investment vehicle is being launched on the Swiss market that allows qualified long-term investors to invest systematically in BOP business models. responsAbility Ventures I is a limited partnership for collective investments that holds a balanced portfolio of companies in areas such as energy supply, agriculture and ICT that are relevant in terms of development.
One example of the products in which responsAbility Ventures I invests is a type of robust, bright solar LED light that has taken the place of inefficient, harmful kerosene lamps wherever it has become available. Another energy-related investment in the portfolio is a system for using agricultural waste to generate power, which is replacing diesel generators in rural areas. responsAbility CEO Klaus Tischhauser sums up the idea behind responsAbility Ventures I: “The fund reconciles the interests of investors and people in developing countries: the more successful the companies we’ve identified are, the greater the development impact of their products and services.”
Business case with development impact
The concept behind the fund was developed in collaboration with Helvetas, an organization specializing in development cooperation, and the DOEN Foundation in the Netherlands, and is supported by the Swiss State Secretariat for Economic Affairs (SECO), the Swiss Agency for Development and Cooperation (SDC), and the SNV Netherlands Development Organisation. Melchior Lengsfeld, Managing Director of Helvetas: “I’m delighted about the launch of responsAbility Ventures I, a trailblazing sustainable development initiative contrived by the private sector.”
responsAbility Ventures I raised 15 million USD at first closing and 2.35 million USD for its related Technical Assistance Facility, and is taking subscriptions starting at 250,000 USD from interested qualified investors.