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Only by letting millions of entrepreneurs try new ideas, to innovate, to create businesses that put those ideas to work in a competitive and open way, only by doing those things are we going to be able to tackle the world’s big problems.
- Angel Cabrera, Chair, World Economic Forum Council on Entrepreneurship
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SGB
Small and growing businesses (SGBs) are commercially viable businesses, typically from 5 to 250 employees, that have strong potential for growth -- and thus for creating economic, social and environmental benefits
SGB
SGB
SGB
SGB
SGB
Despite potential benefits, formal small business sectors in low income countries are much less developed
1. Contribution percents are median values for income group Source: Ayyagari, Beck and Demirguc-Kunt, “Small and Medium Enterprises across the Globe: A New Database”, World Bank 2003; Dalberg analysis
5/30/11
5/30/111
5/30/11
5/30/111
Share of total Employment (%)
Other Sectors
Formal SME SectorInformal Sector
5/30/111 5/30/111
Contribution to GDP (%)
5/30/11
5/30/115/30/11
5/30/11
5/30/11
5/30/115/30/11
5/30/11
4
18
57
0
20
40
60
80
100
16
51
0
20
40
60
80
100
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SGBsWill Create
Impacts
•Job Growth•Wage Growth•Revenue Growth•Net Income Growth•New Products•Customers Served•Suppliers Supported
Economic Benefits
Steady jobsIncreased incomesWealth creation
Social Benefits
Social goods (glasses)Social infrastructure (toilets)
Environmental Benefits
Reduce deforestationImprove air quality(LPG)
Leading To:
The Promise of SGBs
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Financial Flow Schematic of SGB Sector
Social impact investment
Commercial investment
Grants for capacity building
Blended capital investment
Capacity building only provider
Capital and capacity building provider
Capital only provider
Small and growing businesses
Microfinance provider
Traditional private equity provider
Mediumbusinesses
Microfinance clients
SGB Sector
Private Equity
Microfinance
$25k
$2m
7 7
The State of the SGB Sector
8Note: Only includes funds with known vintage years. Some funds may no longer be in existence. Source: Dalberg and ANDE analysis. Data is from public announcements.
5/30/115/30/115/30/115/30/115/30/115/30/115/30/115/30/115/30/11 2010 (1H)
Consider SGB Investments (“SGB Inclusive”)
Primarily focused on SGB Investments
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15
22
New SGB investment funds by year
97
67 8
23
26
30
18
31
9
Began fundraising in reference year
22
15
5/30/11
5/30/11
5/30/11
5/30/115/30/11
Source: Dalberg Analysis
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Number of SGB Focused Fund
10
$10.5 bn
$5/30/11 bn
$5/30/11 bn
$2 mn
$20K
Inve
stm
ent S
ize
Targ
et Total EM PE target fundraising 2001-1H2010
Total SGB Focused fundraising 2001-1H2010*
Microfinance**Gross Loan Portfolio2009
Source: Emerging Market Private Equity Association, Mix-market, Dalberg Analysis* Figure is cumulative fundraising amount from 2001-1H2010 performed by funds that consider investments in SGB sector. Actual amounts raised will vary and will be lower than announced target fund size.** Microfinance data from 2009 Total Global Gross Loan Portfolio
Target funds considering SGB sector remain relatively small compared to overall EM PE and Microfinance
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5/30/11
5/30/11
5/30/11
Total: $5/30/11.2 bn
$5/30/11.5 bn
$9.7 bn
5/30/11
Total: $22.6 bn
$5/30/11.3 bn
$5/30/11.3 bn
6% 11%% SGB Focused
Source: Emerging Markets Private Equity Association, Dalberg Analysis
Fundraising amounts among SGB focused funds outpaced growth of
non-SGB fundraising
In 2009, 6% of all EM PE fundraising amounts were SGB focused while
1H2010 11% of fundraising amounts are SGB focused
After slowdown since 2008, there is new momentum in fundraising for SGB focused funds
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Geographic Focus of SGB Funds2001-1H2010
15%43%
8%
10%
13%
11%
Latin AmericaAfrica
Middle East South and South East AsiaCentral & Eastern Europe East Asia
Note: N=217, does not include 3 funds with unknown investment regions.9 funds investing in multiple regions are counted once for each region.Data includes funds launched and publicly know to be fundraising between 2008-2010Source: Dalberg analysis (2001-1H2010)
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Increase in Focus on SGB Financing…history shows that countries thrive when they invest in their people and infrastructure; when they promote multiple export industries, develop a skilled workforce, and create space for small and medium-sized businesses that create jobs
President Obama, Ghana Speech July 2009
“ “
SMEs/SGBs New Focus Area for Development among multilaterals
• IFC Road Map 2009-2011 identifies strengthening SMEs and agribusiness as the first pillar in creating sustainable growth
• FAO identified SMEs as critical to food and health security through enhancing the food value chain
Bilateral donors as drivers of new SME Funds
• US: President Obama in Cairo June 2009 dedicated to investing in businesses and technology at the Entrepreneurship Summit; Food security policy places emphasis on supporting SMEs
• G20 has launched the SME Finance Challenge to catalyze finance and financial services for SMEs
SMEs New Focus for Financial Opportunity
• Emerging market SMEs as a channel to access the growing BoP market• HSBC has reported that emerging market small businesses are the most
confident going into 2010
Sources: IFC Road Map, FY09-11 Creating Opportunity: Doing Our Part for an Inclusive and Sustainable World, March 27, 2008; HSBC Small Business Confidence Monitor 2010; On the Frontiers of Finance: Scaling Up Investment in Sustainable Small and Medium Enterprises in Developing Countries, World Resources Institute, 2009; OPIC; IFC;
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Who is ANDE?
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Aspen: a non-partisan organization whose mission is to bring together people who should be collaborating on societal challenges but would not do so ordinarily.
Network: an interconnected group or system
Development: improving the economic, social and environmental welfare
Entrepreneurs: individuals whose passion leads them to organize available resources in new and more valuable ways
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The ANDE Vision
A thriving local SGB Community that addresses the finance, human capital, market access, and enabling challenges faced by SGBs
A well functioning, growing and global SGB Sector that is creating and building successful SGBs at increasing rates in developing
countries
Successful SGBs that demonstrate an attractive market and stimulate the
growth of local finance and service providers
Successful local entrepreneurs to serve as angel investors and
demand an improved business environment
Long-termOutcome (15 yr)
Mid-termOutcome (10 yr)
Near-termOutcome (5yr)
Significantly increased prosperity for the people of the developing world as measured by increased incomes, higher quality of life
and social and environmental advances
Vision
$902 million dollars of capital deployed1
$ 176.8 million dollars of SGBCD
services provided2
11,100 SGBs Supported3
508,770
Employees4
678,325Suppliers5
57,633,335Consumers6
Impact of ANDE member support of SGBs to date
1. n=57 member funds cumulative to date 2. n=28 members reported over 2009-2010 3. n= 71 members cumulative to date 4. n=37 members as of the latest reporting period 5. n=18 members cumulative to date 6. n=19 members cumulative to dateSource: ANDE member data
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Note: N=63, does not include 3 ANDE member funds that have not provided target IRR rangeSource: ANDE member data
0-5% 5-20%
47%
Target return rangeAbove 20%
3%7%
6%
14%
13%
ANDE Member Target IRR Ranges
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One-on-one mentorship
10 20 30 40
Entrepreneur/Basic Business Training
Direct Consulting Services
Impact/Evaluation Services
Establishing Market Linkages
Business Plan Development
Business Plan Competitions
Acceleration
Number of Members
Note: Respondents could select more than one answer. N=57 Technical assistance and Investor members who provide TASource: ANDE member data
Capacity Development Services Provided to SGBs by ANDE Members
Incubation
65%
63%
63%
53%
47%
35%
33%
32%
28%
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Where in the World is ANDE?Percent of ANDE members supporting SGBs by region, percent by HQ location
and locations of ANDE Regional Chapters 2010
Note: Funds investing in multiple regions are counted once for each region; Source: ANDE member data, n = 93 members
57% in Latin America, 17% HQ
59% in Asia and SE Asia, 4% HQ
32% in Europe, 10% HQ
5% in Oceania
Latin AmericaMiddle East and North AfricaCentral & Eastern Europe Asia and Southeast Asia
Oceania
Sub-Saharan Africa
61% in Sub-Saharan Africa, 9.5% HQ
25% in Middle East/North Africa, 1% HQ
59% HQ in North America
ANDE Regional Chapter
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45 Capacity Development Providers
35 Investors
21 Research, Academic and
Corporate Institutions
18 Foundations
4 Other*
*Includes individual and strategic partner members
ANDE Members
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What ANDE Will Do: 2011 Activities
Knowledge Creation/Sharing
Training
Metrics and Evaluation
Capacity Development Fund
• Launch at least 2 additional Regional Hubs• Develop & begin implementation of research agenda• 2011 Annual Conference (4Q 2011)
• Leadership Training (4Q 2010, 1Q 2011) • Investment Officer Training - Mexico and India• Orientation Training
• Promote Adoption of ANDE Core Metrics and IRIS • Metrics Conference (2Q 2011) • Robust Metrics Working Group
• Replenish CDF Funds (1H 2011)• Third RFP: Select Recipients (3Q 2011)
Education/Advocacy • Launch Policy Working Group• Strengthen Partnerships with Dev Agencies• Develop advocacy strategy for European DFIs
