|The Project is to establish an Education Innovation Fund (the “Fund”), a US$100-150 million venture capital fund, to invest in early to mid stage innovative education companies that will expand access to and quality of education in the emerging markets. As an anchor LP, IFC will provide up to US$20 million in the form of a straight equity investment. Target companies for the Fund would typically include companies that are located in emerging markets, or that have or will have substantial userbases in emerging markets, including companies that have already developed, tested and, in some cases, initiated the commercialization of at least one innovative product and/or service in their home markets. Through the investments carried out by this Fund, target companies would typically aim to improve their market viability in any of the emerging markets, support their commercialization and marketing efforts, and/or finance any other capital or operational expenditure needed for their successful commercialization. The Fund will have an emphasis on global companies with a large potential impact on developing regions, especially Latin America. |
Through a Request for Proposal (“RFP”) process where more than 50 potential fund managers participated, IFC selected Learn Capital (“Learn” or the “Fund Manager”), a venture capital fund focusing on investments in the education innovation and technology space, as the fund manager of the proposed Fund.
|Project sponsor and major shareholders of project company|
|Learn Capital was founded in 2008 with offices in San Mateo, California and elsewhere. Learn is a US-based early stage venture capital firm focused exclusively on the education technology sector. It currently has over US$78 million assets under management and manages four funds. Its limited partners include large capitalization global education companies like Pearson Plc and Benesse Holdings Inc and family trust investors with a history of significant education sector support and involvement. Learn targets both above-market venture returns and high social impact in education by investing and supporting rapidly scaling global companies, many of which are located in the US, but the firm also has relevant investment experience in emerging markets.|
|Total project cost and amount and nature of IFC's investment|
|The proposed Fund size is US$100-150 million. Final fund size may vary and will depend on the appetite from other institutional investors. |
As an anchor LP, IFC would provide a straight equity investment of up to US$20 million.
|IFC investment as approved by Board|
|20 million (USD)|
|Product Line||IFC Investment (million USD)|
|Risk Management|| |
* These investment figures are indicative
|Location of project and description of site |
|The Fund will invest in (i) education innovation companies with global userbases aiming to have a significant number of users from developing countries, (ii) innovative local education companies based in emerging markets and (iii) licensing or JVs with existing companies, potentially including North-South and South-South partnerships for accelerated technology diffusion. Regardless of investee origin, the Fund’s emphasis will center on investments that impact global developing regions with a particular focus on LAC.|
|Expected Development Impact|
|- Accelerate the introduction and expansion of latest education technologies in selected markets, contributing to improved access, quality, efficiency and relevance of local education systems.|
- Promote innovation in early stage technology companies through the access to growth capital for expansion in emerging markets.
- Provide a demonstration effect of the potential for the private sector to bring innovative solutions to long standing problems in education systems in emerging markets, mainly through the use of technology.
|IFC's Expected Role and Additionality|
|- Provide debt and equity financing that might otherwise not be available to the Education Innovation Fund's investee companies.|
- Mobilize capital from other investors into what is still a relatively new and innovative sector.
- Leverage experience and network in emerging markets with the Fund's investee companies to facilitate their expansion in new markets.
- Promote best practices in monitoring the Fund's performance in terms of students access, learning outcomes, employability, and other relevant dimensions as necessary.
|E&S Risks / Impacts and Mitigation|
|Environmental & Social Categorization Rationale|
|The project is categorized as FI:2 (medium risk) according to IFC's Environmental and Social (E&S) review procedure. A review of the Fund's investment themes indicate that the fund will target investments in the education sector, focusing on investments in education technology, including software and platform development and online delivery of educational content, which may have minimal or no adverse environmental or social impacts. The fund may also invest opportunistically in projects which may include construction and operation of schools and may entail limited adverse E&S risk and impacts that are few in number, generally site-specific, largely reversible and can be readily addressed through mitigation measures. The Fund Manager will be required to conduct an E&S due diligence and monitor the target investments against the IFC Exclusion List, applicable host country E&S laws and regulations, and Performance Standards (PS).|
|Main Environment & Social Risks and Impacts of the Project|
|Key issues associated with this investment relate primarily to the E&S risks of the potential investments, and the capacity and systems in place to manage these risks. This is a first time IFC Fund and as yet does not have an ESMS outlining the procedures, responsibilities and tools for undertaking E&S risk management of its investment activities.|
Key Mitigation Measures:
In order to mitigate the key E&S risks, and formalize the approach to E&S management the Fund will implement a number of actions: (i) Develop an ESMS and capacity to review all sub-projects per the E&S laws and regulations of the sub-project's country and the Performance Standards, to be in place by commitment; (ii) conduct an E&S due diligence (ESDD), with the help of qualified professionals, as appropriate, to identify the applicable E&S risks of each sub-project and require corrective actions as needed to ensure that these risks are managed according to the Performance Standards and applicable laws; (iii) implement a monitoring framework to supervise the E&S risks of all sub-projects and report to IFC. In addition, IFC will review the first three ESDDs and that of all Category A sub-projects (if any) prior to the Fund’s investment to support the implementation of the ESMS.
|Key Mitigation Measures|
|Task Description||Anticipated Completion Date|
|Nominate E&S Officers/Department||On or prior to commitment|
|Establish an ESMS including guidelines for its|
|On or prior to commitment|
|Implement Staff Training||Prior to First Disbursement|
|For inquiries about the project, contact:|
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|Local access of project documentation|