A global development financier's Silicon Valley foray

Mon Apr 13, 2015 1:58pm EDT
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By Sarah McBride

SAN FRANCISCO (Reuters) - San Francisco-based startup Planet Labs, a company that aims to blanket the skies with low-cost satellites, has raised nearly $140 million from investors that include Russian billionaire Yuri Milner and SpaceX backer Draper Fisher Jurvetson. Now, the company has raised an additional $20 million from an unlikely contender: the venture arm of the International Finance Corporation, a multilateral lending organization that’s part of the World Bank.

The IFC describes its mission as "alleviating poverty and creating opportunity." Generally, that has meant investing in emerging markets, not the Silicon Valley.  

But lately, the Washington, D.C.-based IFC has taken a broader view of its role, including funding startups it thinks might eventually benefit poverty-stricken countries, even if the companies are U.S.-based and have other funding sources.

The Planet Labs investment comes on the heels of the IFC’s $4.5 million investment last year in cloud-connectivity company Ayla and a $5 million investment in 2013 in online-education company Coursera, both based in California. Its first Silicon Valley tech investment was NeoPhotonics (NPTN.N: Quote), a now publicly traded networking company the IFC backed in 2006.

“We seek to invest in companies and help them grow into markets we’re interested in,” said Nikunj Jinsi, the global head of IFC’s venture team. “It’s not like we invest all day long in Silicon Valley companies.” Any profits from the team’s investments are used to fund other IFC projects, a spokeswoman said.

   This fiscal year, the venture group expects to invest more than $100 million, most of it in the developing world. But to critics, any investment by the team in Silicon Valley startups is troubling.

“They should be spending more time and effort finding investments in developing countries,” said Luiz Vieira, coordinator at the Bretton Woods Project, a nonprofit that monitors the World Bank. “It’s not like capital is challenging to get in California.”

The IFC launched its venture capital work about 10 years ago, and the team’s annual investments have grown rapidly since then, doubling since 2013. Still, the venture operation represents only a tiny portion of the IFC’s overall investments in development.   Continued...

Chester Gillmore, director of manufacturing operations for Planet Labs holds a mini satellite at his office in San Francisco, California April 7, 2015. REUTERS/Sarah McBride