As the executive director of MIT Solve, a tech incubator launched in 2016 that sources and supports solutions to global challenges, Alex Amouyel has watched the social-impact innovation landscape evolve significantly in the last three years.
Each year, Solve issues a set of four challenges that cover sustainability, health, economics, and education. Past challenges have asked questions like: How can individuals and corporations manage and reduce their carbon contributions? How can urban communities increase their access to sustainable and resilient food and water sources? How can coastal communities mitigate and adapt to climate change while developing and prospering? For each challenge, Solve issues an open call to tech innovators to submit ideas for projects to address it; the finalists, who usually number around 30 out of over 1,000 submissions, receive technical and financial support from MIT in bringing their projects to market and scaling them up.
“There’s an increase in focus on these issues in the U.S. and across the world, and there’s definitely increased movement on the political and investment spectrums,” Amouyel says. “Those are good things, but it’s probably still not enough.”
One gap that Solve has identified is a lack of startup capital for early-stage social-impact startups working to build out solutions to problems across the globe; Amouyel calls this the “pioneering gap.” Last year, for instance, Nigerian entrepreneur Nnaemeka Ikegwuonu pitched his business, called ColdHubs, which develops and deploys solar-powered walk-in cold rooms for fishermen and farmers in coastal communities. The company’s goal is to help fishermen improve their economic outcomes by keeping their fish fresh while contending with the fact that many of these communities don’t have access to an electrical grid.
Amouyel says that Solve submissions like ColdHubs indicate where social entrepreneurship is going. Like 60% of Solve submissions, it’s a for-profit business. “We’re agnostic to project type—people can submit nonprofit or for-profit ideas, or academic projects,” Amouyel says. “But the growing trend is that people who want to change the world and have innovative ideas are increasingly structuring these as for-profit companies.”
Solve, in its three-year history, has been effective at attracting funding for its finalists: To date, it’s drawn over $12 million in funding from a variety of philanthropic partners. But those resources, she says, are mostly delivered in the form of grant funding. “A lot of our for-profit teams have told us that what they really need is project finance, and there isn’t a massive market for that—it doesn’t really exist [at] small scale for smaller projects,” Amouyel says.
So in May of this year, Solve announced that it will launch a $30 million Solve Innovation Fund, an independent investment vehicle for which MIT Solve will act as the adviser. The fund will target investments at early-stage, for-profit companies like ColdHubs or Untapped, a for-profit company working to close gaps in access to clean water in Haiti and several African countries. For-profit Solve ventures like these often need up-front capital to develop and implement their solutions before they start turning a profit, and the Solve Innovation Fund aims to provide that. There will still be grants available for nonprofit teams, but Amouyel says Solve recognized that with the uptick in for-profit ventures in the social innovation space, “we were probably leaving some investment opportunities on the table.” Returns from the fund’s investments will be reinvested into future for-profit Solver teams, creating a self-perpetuating investment vehicle for social-impact ventures.
This years’ cohort of finalists will be the first to have access to the fund. The challenges this year focus on the circular economy, healthy cities, early childhood development, and community-driven innovation. The submission window closed July 1, and before the finalists are selected during the UN General Assembly in September, anyone—including members of the public—can view the submissions and make comments or ask questions of the entrepreneurs to help improve them. “We try to take a human-centered approach to these issues,” Amouyel says. So in addition to encouraging entrepreneurs to think about how their projects will directly impact livelihoods, the Solve team aims to get a diverse set of eyes on the solutions that they could potentially interact with.