MIT-run social enterprise incubator MIT Solve is to gain an impact investment fund with a $30m target size to back participants in its annual Global Challenges innovation contest.
MIT Solve, the social enterprise incubator and forum run by Massachusetts Institute of Technology (MIT), is looking to raise $30m for an impact-centred philanthropic investment vehicle dubbed Solve Innovation Fund.
Solve Innovation Fund is anchored by a maximum $3m commitment from private donor Noubar Afeyan, founder of venture firm Flagship Pioneering, and is expected to reach its target size with further tax-deductible gifts from donors, though an estimated date for its final close was not provided.
The vehicle will invest equity and debt in selected participants in MIT Solve’s annual open innovation contest, Global Challenges. Returns from its portfolio will be reinvested into future MIT Solve-accredited teams, known as Solvers, so the donor funding can be recirculated effectively.
Solve Innovation Fund is legally structured as a donor-advised fund (DAF), a US model enabling benefactors to receive immediate tax deductions on their contributions and recommend grant awards for the fund to pursue over time.
MIT claimed it marked the first time a DAF mechanism had been implemented for a venture fund and said Solve Innovation Fund would operate independently and externally of the university. MIT Solve will act as the vehicle’s nominated donor-adviser.
MIT Solve was formed in 2016 to nurture startups formed to address the world’s most pressing challenges in matters such as social inclusion, early childhood development and the circular economy.
The 2019 edition of its Global Challenges program will have a $1.3m prize pot available, funded by sponsors including carmaker General Motors, philanthropic office Patrick J McGovern Foundation and mobile network operator Vodafone.
Leo Reif, president of MIT, said: “As an MIT graduate and a pioneering leader in Greater Boston’s biotech community, Noubar Afeyan has a remarkable record of translating promising ideas into serious impact.
“As Solve launches this novel approach to funding innovations to advance social good, we are profoundly grateful to have Noubar as a supporter, an ally and an inspiration.”