In 2012, a small group of people gathered in Chicago to begin working on a unique business model. They came from diverse backgrounds — university professors, serial entrepreneurs, investors — but each believed in the power of using capitalism to create positive change. Impact investing, a term that had only recently been defined by the Rockefeller Foundation, was sparingly put into practice by select firms, mostly on the coasts. So with the backing of seasoned founders and investors, Impact Engine launched as one of the country’s first impact-oriented startup accelerators.
Now, in August of 2019, Impact Engine is celebrating the seventh anniversary of its first investment (through its first accelerator fund) and a series of achievements to date. Our co-founders, Jamie Jones and Linda Darragh, as well as our original Managing Director, Chuck Templeton, still serve on our boards and have seen Impact Engine transition from an accelerator to a full-fledged venture capital and private equity firm. We currently manage a venture portfolio of 28 active companies, made our first private equity investment in April, and have fine-tuned our approach to impact measurement, among many learnings over the years. The team has blossomed to include eight full-time employees, mostly women, and we are women-owned — which makes Impact Engine a rarity.
While much has changed since the launch of our first accelerator, one aspect of our work stays constant: the joy of witnessing our portfolio companies grow, both in profit and in impact. This month marks the seven year anniversary of Impact Engine’s first investment, which was Pangea Money Transfer. Our investment in Pangea is particularly meaningful: aside from being the first addition to our portfolio and a graduate of our original 12-week accelerator, Pangea is headquartered in Chicago and has grown to be a successful Fintech platform serving customers all over the world.
Pangea’s mission is to provide affordable and secure money transfer services for the billions of underbanked consumers across the globe. The target market for this work includes over 200 million migrant workers who send money to families and loved ones located in developing countries, with total annual global remittances projected to hit $550B by the end of this year. The average remittance fee hovers around 7%, meaning that users are collectively paying a massive amount to send money — funds that could otherwise be spent on education, economic development, and more.
The United Nations, recognizing the burden of these costs on international workers and their families, incorporated remittance fee reduction into the Sustainable Development Goals that were launched in 2015. As part of SDG Goal 10, “Reduce inequality within and among countries,” the United Nations sets a target for lowering remittance costs to 3% or less, and an elimination of fees higher than 5%. The achievement of SDG Goal 10 could mean users save a collective $25B each year, resulting in an additional $1B spent on education, and ultimately helping to lift many families out of poverty.
Pangea’s work is aligned with SDG Goal 10: its mobile app platform enables users to send money internationally, within seconds, and for an average cost of remittance for almost half of what traditional vendors charge. Aside from its social impact, the ingenuity of Pangea’s technology has led to exponential growth: after initially launching as a money transfer service between Illinois and Mexico, Pangea has expanded its coverage area across three continents. Customers are now able to transfer funds from most US states to thousands of retail locations located across Latin America and Asia. Pangea’s most recent product, Pangea Connect, was launched in June of this year and offers Remittance-as-a-Service (RaaS) technology that enables new partners to expand their reach and provide money transfer capabilities directly to their customers via a branded mobile app.
The success of Pangea is a testament to the quality of the mentoring and support provided during Impact Engine’s first cohort. It is also an affirmation of the core belief that Impact Engine was initially founded upon: it is possible to align profit and impact. As we look to the future, we are excited by the potential of our funds and the companies we have invested in, as well as the impact investing movement as a whole. We invite you to stay connected with us as we continue to grow both our portfolio and the Impact Engine community for years to come.
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