Tag Archives: Entrepreneurship

Small Biz Challenges

In the Kokolemle section of Accra, I met a group of female farmers and entrepreneurs pondering a move into agribusiness. Their issues—access to capital, access to markets, finding affordable office space, defending intellectual property—are all issues my small business clients in Boston have wrestled with. Some of the obstacles are a bit more extreme. However, many of the same skills, along with a dash of cultural sensitivity can address these problems.

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IMPACT INVESTING IN EMERGING MARKETS

Recently, I along with a group of mid career professionals participated in a 3 day workshop entitled “Break into Impact Investing.”

The workshop consisted of seminars from leading practitioners in the field. They represented organizations such as Village Capital, Accion Venture Lab, Infodev (World Bank), and the Calvert Foundation.

Impact investing is a broad category that addresses many topics of concern around the globe. This workshop devoted much attention go early stage ventures in the developing world.

  • The Village Capital seminar for example focused on a case study featuring an a successful entrepreneur turned investor who need to allocate investment dollars between two mission driven startups, and Village capital’s own investment fund and a donation to Village Capital’s non-profit entity.
  • Infodev provides funding and support to entrepreneurs in the developing world. The seminar featured a startup in Kenya and dealt with several issues faced by impact investment funds such as how to define success, fund structure, and governance.
  • The Accion Venture Lab presentation offered insights on assessing a social venture at its earliest stage.
  • The Calvert Foundation discussed fixed income investments in the impact investment context, using vehicles such as the Community Investment Note to fund several kinds of loans to social enterprises, and the Ours to Own campaign to raise capital to revitalize urban centers including Denver, Baltimore, and the Gateway Cities of Massachusetts. The Calvert Foundation is a bit of a departure in that it uses debt instruments for impact investing.

All the presenters gave us frameworks to guide the process of impact investing. They had in common the identification of a value proposition or unmet need, development of a business model, and building a strong management team. It seem the elements of a promising startup are the same regardless of whether or not social impact is a factor.

It is also interesting to note that most of the cases and enterprises discussed were in Asia and East Africa. It was pointed out that Kenya is considered one of the more attractive countries for impact investing. East Africa’s popularity among the impact investment community is largely due to the advanced startup ecosystem in East Africa compared to other parts of the continent. The concerted effort to make Nairobi an African technology hub, plus the impressive regional integration efforts of the East African Community have attracted investment of all kinds including impact investment.

Careers in Impact Investing

In addition to learning about the industry, the workshop included insights on career options in impact investing.

The workshop organizer, Impact Business Leaders is in the talent development business, so the workshop was very much about career development and creating the talent pool for the impact investment industry.

Throughout the weekend career paths were revealed both implicitly and explicitly. Some of them include:

  • Portfolio manager – working with financial statements, managing relationships with portfolio companies.
  • Analyst/CFO – Overseeing accounting and financial analysis, being a resource to management for understanding financial issues.
  • Adviser/Consultant – working directly with entrepreneurs providing advice and technical assistance.
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Financing African Startups

Last week I was privileged to attend a panel discussion about how to make capital available to startups and entrepreneurs in Africa. The fact that this conversation took place is further recognition of a burgeoning ecosystem of startups with a desire to use commerce to change their societies for the better. While innovative new businesses are emerging in many places a few major cities have emerged as centers of innovation:

  • Nairobi, Kenya – where a technology district is being built and where Google has an office,
  • Johannesburg, South Africa – the commercial hub of the most developed economy on the continent,
  • Accra, Ghana – which is also contemplating an innovation zone, and
  • Lagos, Nigeria – the commercial hub of the largest national market in Africa

 

Here are 6 key observations from the conversation:

1. Foreign investors are interested in investing in African startups. Speakers in the panels included the director of a prominent US based angel investment group exploring opportunities in Africa as well as a couple of beginning angels. Others in the gathering also had ties to investor networks.

2. Investors are looking for startups that can scale—and they are difficult to find. Although they are prepared to do smaller deals, they are not interested in microfinance. Investors as do all of us in this community are interested in making meaningful change. Companies that can scale not only provide attractive returns.  They also have social impact in the form of job creation,  human capital development, and integrating African business into the global supply chain.

3. The startups that scale and that are attractive to investors tend to be in innovation-intensive industries–IT/telecom, green business, life sciences—or are in some ways participants in these industries. Their founders tend to be well educated with ties to universities in their countries and abroad.

4. There is also a need to fund grass roots businesses whose owners may be more locally oriented and not well connected to global capital or global commercial networks.

5. The US investors in the room recognized the difficulty investing and managing a portfolio from a distance. Even domestically they generally maintain the 4 hour rule by which they invest only in company’s within 4 hours drive. One of the key challenges for the African startup ecosystem is to overcome the distance factor.

6. The answer was potentially in the room—Africa-based investors who invest in African companies. If one can get comfortable with these companies—in their ability to vet companies and to support and mentor the entrepreneurs in their portfolio, then foreign investors can finance these investors. Two such investing companies were in attendance. We will monitor their progress with great interest.

 

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