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The US government has launched a major new initiative to link its aid agency USAID to the private and entrepreneurial sectors in a bid to promote technological innovation in the developing world.

The Development Innovation Ventures (DIV) fund was launched in Washington, DC earlier this month (8 October) to link the private sector's financial discipline to the public sector's scale and reach in developing countries.

US$1 million has already been invested into eight different ventures including an affordable, clean, fuel-cell bike, solar lighting in rural Uganda and mobile phone health surveillance in India.

Announcing the launch of the new fund, USAID' administrator Rajiv Shah called for a new chapter in the relationship between USAID and entrepreneurs, one in which the two work together towards a common goal and to the benefit of both.

"Borrowing from the venture capital model, DIV was created to promote high-return and sometimes high-risk ideas and projects, catalyze game-changing innovations and create new portals of entry for social entrepreneurs to work with USAID," said Shah.

"Innovations like DIV are just one of the many reforms we're leading at USAID, reforms that will revolutionize not just the way this agency operates, but how development is conducted throughout the world.

"We are working hard to ensure that same spirit of entrepreneurship, of turning need into opportunity, informs all of our work.

Neal Lesh, chief executive officer at Dimagi, Inc., an organization that received US$100,000 in the first round of funding for their CommCare project said entrepreneurship for development is "important work that needs more stimulation".

The funding will allow Dimagi to carry out tests of its mobile phone disease diagnosis software in India. Lesh said that the tests will motivate the team to work towards DIV's further funding stages that will allow them to develop their system further. 

This is a very positive, new step towards bringing science and technology into development work, said Cathy Campbell, chief executive officer of the US Civilian and Research Development Foundation. "I really am impressed with what Rajiv Shah is trying to do with USAID, really working to apply science and technology including the creation of a science and technology advisor in their office."

"This fund will provide opportunities to apply innovative approaches and technologies to meet local development needs," she said, but she questioned whether these projects would provide sustainable models that others can replicate in the country and "really help build and distribute innovative approaches within a community".  

The ongoing question for development agencies is "how do you best build an innovative environment in [developing] countries", she said.

"More [funding] would be a whole lot better — one million won't go too far," she said. "But it is a pilot to get it started, a seed investment to test the technology of a particular idea in a specific environment, but if you want to grow companies and expand opportunities, obviously it's going to take significantly more investment."

Maura O'Neill, chief innovations officer at USAID in charge of the DIV fund told SciDev.Net that over 100 projects applied for the funding, proving interest for such innovative ventures. A second round of funding is now open and USAID will decide in the next month how much it will invest in the future rounds, she said.