Getting to Series B
With the USD 70m Series B raise, the Sama team is showcasing that impact is fit for venture capital.
Sama, our portfolio company, delivering accurate data for ambitious AI to Fortune 2000 companies, secured USD 70M in Series B funding, the second round of equity financing for the company. This marks the transition from solidifying product-market fit to truly taking the business and impact to scale. On the road to Series B, Sama has received many recognitions for its innovative technology and impact sourcing model, including inclusion on the Forbes AI 50 and Fast Company’s World Changing Ideas lists.
That said, getting to this milestone has not been straight-forward. The team had to overcome the “valley of death” and bust many myths along the way. One by one. A few of them are highlighted below, cementing the viability of purpose-driven companies and hopefully inspiring other entrepreneurs to bust myths on their path to purpose and profitability.
Myth #1 | Impact requires a trade-off between purpose and profit
Although impact investing has become more mainstream over the past decade, the notion that there is a trade-off between impact and financial return is still very much alive - despite academic evidence pointing to the opposite. While purpose-driven companies may integrate impact in their business models in different ways, Sama’s Series B raise solidifies the fact that there is no trade-off between purpose and profit as you grow, when impact is inherent to your value proposition and product.
The company partners with big corporations – Google, NVIDIA, Walmart – to provide them with quality data to train their machine learning models. Sama provides high-quality annotated text, images, and videos for a range of use-cases, powering robot-assisted surgery, autonomous vehicles, personalized online shopping experiences, and more. As part of its impact sourcing model, the company hires over 90% of its workforce from low-income backgrounds and marginalized populations in Kenya and Uganda, training them and granting them employment in the digital economy. What’s more, Sama is an anti-ghost work company. Each of its employees are hired ethically and receive fair compensation and benefits.
Sama upskills people from underserved communities in machine learning, digital skills, and soft skills. Some are employed as "Sama Agents" in Sama Delivery Centers in Kenya and Uganda, working on data projects for international clients such as Google, Walmart, Ford, and Microsoft.
For over 10 years, Sama has partnered with leading global brands. Their stellar commercial performance has been achieved as they continue to scale opportunities for underserved individuals through the digital economy. Sama was one of the first AI companies to become B-Corp certified and has helped over 56’000 people lift themselves out of poverty. Its training and employment program was recently validated by an MIT-led Randomized Controlled Trial, confirming the effectiveness of its impact sourcing model by demonstrating that individuals that received both training and inclusion in Sama’s hiring pool exhibited lower unemployment rates and higher average monthly earnings.
“Sama’s openness to evaluate the impact of their programs with the rigor of a randomized control trial was refreshing and shows that they’re a leader in the movement toward ethical practices within the AI industry.” David Atkin, Professor of Economics, MIT
Myth #2 | Diversity is a pipeline problem
We have all seen the data in one shape or form, white men get the lion’s share of investor funding. Despite the movements calling for diversity, women-led startups account for just 2.2% of the USD 150 billion invested in companies by VCs annually. Many have argued that the lack of diversity is caused by a pipeline problem, that there simply are not enough qualified investment opportunities – especially as it regards tech businesses. With the Series B raise, Sama paves the way for busting the myth once and for all.
Sama is a female founded and led tech company that is deploying an impact sourcing model creating opportunities for marginalized communities, with over half of Sama agents intentionally being women. Founded by late Laila Janah and now led by CEO Wendy Gonzalez, the company has achieved responsible hyper-growth, and consequently, for the second year, a spot on the Inc. 5000 list as one of America’s fastest-growing private companies. The data speaks for itself.
Sama’s Series B raise represents the largest round for a female-led AI infrastructure in history. The round is led by CDPQ’s Equity253 fund that targets companies that leverage diversity and inclusion as a vector of development. The fund is put in motion because studies clearly validate that diversity in companies fosters better decision-making and has positive impact on innovation, risk management, productivity, and financial performance.
“At the BESTSELLER Foundation, the rationale for investing in diversity is also clear – not only for profit and for purpose, but also to ensure structural change through the positive ripple effects that transcends generations. Sama embodies such rationale by improving employment and income for those with the greatest barriers to work and changing the narrative for their dependents” says Anne Cathrine Garde, Investment Manager and Head of Scaleups.
Sama has a purposeful hiring model with over half of Sama Agents intentionally being women.
Myth #3 | Impact does not fit the venture capital model
Sama was started as a non-profit organization because no one believed it could ever be a business. When late-founder Laila Janah pitched venture capitalists on Sandy Hill Road, the impact sourcing model was disregarded as it did not fit the typically parameters of hyper growth and capital efficiency. On the opposite side of the spectrum, grant givers did not believe that impact sourcing could meet the basic needs of the marginalized communities. Sama proved both groups wrong. The company was ahead of its time, but luckily the landscape has changed a lot since then, and with the Series B raise, Sama is showcasing that impact is fit for staged financing.
Since 2015, with Wendy Gonzalez on board, the company has focused on building a repeatable and scalable business model. From 2016 and onwards, Sama sustained itself on earned revenues and became a profitable nonprofit. With the BESTSELLER FOUNDATION investment in 2017, the Kenyan subsidiary was transformed from a non-profit to a for-profit company. Jannek Hagen, Managing Director was a part of the team driving the investment decision,
“We invested in Sama Kenya back in 2017 as the first investor. Since then, we have witnessed how the team has transformed from a not-for-profit to a full-fledged, for-profit AI technology company”.
The investment set the precedent for Sama at group level to be transformed into a for-profit to attract further financing, talent, and expertise the following year. In 2019, Sama completed their USD 14.8M Series A funding with venture capital Ridge Ventures leading the round supported by Social Impact Ventures, Bluecrest Limited Capital, Salesforce Ventures and BESTSELLER Foundation.
Today, Sama has taken the next step in its journey with the Series B raise that will take its purpose and profitability to new scales. In 2021, the landscape of impact investing looks different with the proliferation of many asset classes that are embracing an impact lens, covering the whole investment lifecycle. The time for launching an impact business is ripe and a big recognition goes to founders like Leila Janah, who ahead of her time proved the viability of purpose-driven businesses.
Let us bust more myths together, one by one!
As an entrepreneur, how are you busting the myths of impact? In a Sub-Saharan African context, where Sama and the BESTSELLER FOUNDATION have a strong presence, the journey towards impact equilibrium is twofold. Let us jointly normalize the concept of purpose-driven businesses while highlighting and measuring the impact that is happening on the ground. Our goal is to continue to ensure that impact is not diluted or misrepresented but used as a competitive advantage.
Co-authored by Anne Catherine Garde (BESTSELLER Foundation) and Amanda Durepos (Sama). Read more about Sama here.