Grassroots Business Fund
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Transcript of Grassroots Business Fund
April 2011
Agenda1) GBF Video
2) Overview of GBF
3) How do measure impact?) p
4) Questions & Answers4) Questions & Answers
GBF Video
Click on the image above to view GBF’s Video
Our MissionOur Mission Develop innovative, scalable models that provide
sustainable economic opportunities to millions of people at the base of the economic pyramid. Create jobs, income and wealth
for the poorfor the poor Help improve the field
of impact investing
“Supporting High Impact Businesses is a more effective M t d b ildi tMeans towards building strongereconomies in developing countries”
GBF: What We DoBuild and support High-Impact Businesses that provide
sustainable economic opportunities to millions of people living at the base of the economic pyramidg py
Invest return-based patient capital
Capacity Building/Technical Assistance Corporate governancep g Financial planning and controls Sales and marketing Manage growthManage growth
through metrics
“GBF is a leader in making sure their investees are part of the discussion. They provide what we are requesting, and while doing that, think of other ways they can help”
- GBF Client from FSG Review
GBF ApproachGBF ApproachDonors Investors
GBP GBI I
GBF
Grants Debt & Equity Capital
GBP GBI-IShared Resources
Capacity Building Grants
Debt, Equity & Quasi-Equity capitalBlended Investment Approach
High Impact Businesses
Artisans Micro Entrepreneurs
Other BoP BeneficiariesFarmers
Investment and Value-Add PProcess
GBP: Capacity Building
St t &Evaluate
Structure & Allocate
Resources
I l t Add V l R t E it
1
2 3 4 5
IdentifyAppraise & Structure
I t t
Implement Add Value Report Exit
GBI‐I: Investment Capital
1
2 3 4 5
Oversight:1. Pipeline Review (GBP Senior Management)2. ED, CIO, COO, Portfolio Advisory Committee, BoD3. ED, COO, Portfolio Managers
“GBF has a good understanding of our business. They are willing to try different financial instruments to help”
InvestmentSelect GBP investments incubated with capacity building and sold to GBI‐I
3. ED, COO, Portfolio Managers4. CIO Portfolio Management Meetings5. BoD
willing to try different financial instruments to help- GBF Client from FSG Review
Our TeamOur TeamHarold Rosen, CEO IFC – decades of investment
experience Created microfinance and SME
Agnes Dasewicz, COO Impact Investing with IFC Emerging markets private equity Founding team of one the largest Created microfinance and SME
investment practices Founded GBI
Founding team of one the largest SME funds
Investments & Capacity Building Team: Legal:Alycia Kellman (Dewey & LeBoeuf Christine Phillpotts (JPMorgan, Kenya Women Finance Trust)
Jaime Ramirez (IFC, Gone Rural - Swaziland)
Patricia Sosrodjojo – Thailand (Booz Allen, Lehman, Centre for Microfinance)
Alycia Kellman (Dewey & LeBoeuf, FINCA)
Pro Bono: Arnold & Porter, Aitken Gump
Metrics: Natasha Barantseva (Rassias Foundation, IFC)
Puneet Jhajharia – India (AXA Financial, Goldman Sachs)
Vinay Bachireddy – Kenya (Barclays Capital) Soha Ehsani – Kenya (Techoserve)
Shi Sh k I di (J h H k)
Rafi Menachem (BearingPoint, IFC) Allison Basile (Grameen Foundation)
Shiva Shanker – India (John Hancock) Eliot Marcus – Ghana (NRDC – Beijing) Rebekah McKnight (UNDP)
Our AdvisorsOur AdvisorsBoard of Directors: Iqbal Paroo
(former President & CEO, Omidyar)
GBF advisors: Jim Wolfensohn
(former World Bank President) Toshiya Masuoka
(Director, IFC) Andrew Adelson
(former Alliance Bernstein CIO)
Elaine Wolfensohn (VP, Botwinick-Wolfensohn Foundation)
Lars Thunell (IFC Executive VP & CEO)
Investment Advisory Committee: Jo Schwenke
(Former Managing Director, Business Partners)
Percy Barnevik (former ABB CEO)
Alan Patricof (Apax Partners; Founder, Greycroft LLC)
Partners) Helmut Paul
(IFC) Michael Barth
(FMO; Senior Director Darby)
CP Zeitinger (Chairman, ProCredit)
Kash Rangan (Co-chair, HBS Social Enterprise)
(FMO; Senior Director, Darby) Andrew Adelson
(former Alliance Bernstein CIO)
GBF Capacity BuildingGBF Capacity Building Total funds deployed: $2.3 million * Lessons learned:
Pre investment assistance needed
GBF Capacity Building to Date*
Pre-investment assistance needed Management (especially financial) largest
gap Not only entrepreneurs, but also their
clients and suppliers need capacity buildingclients and suppliers need capacity building Most needed capacity building done by
GBF staff (64% of Staff time in 2010) Piloting new initiatives to raise standards
Embedding managers in portfolio Embedding managers in portfolio companies Challenge Fund to support capacity building
needs through specific technical assistance grants “GBF is doing the stuff that won’t otherwise get done. grants
Note: The cost of staff led business assistance is not included
Earlier stage investments require more handholding and they integrate both.”
- GBF Client from FSG Review
GBF Portfolio SnapshotGBF Portfolio Snapshot
Committed Investment 5.8% Current Yield* Committed Investment Portfolio by Sector ($8.4M)
Artisanal 12%
69% of the total portfolio is invested in loans and quasi-equity structures, with the remaining 31% invested in
Committed Investment Portfolio by Sector ($8.4M)
SE Asia 8%
Latin
BoP Services 31%
Innovations in Finance 18%
remaining 31% invested in preferred or straight equity. All investments are in for-profit companies.
South Asia 16%
Latin America 31%
Agribusiness 39%
Most investments range from $200,000 to $800,000 (excluding smaller working capital loans). Average investment size has already
Africa 45%
investment size has already increased, and is likely to reach the $500,000 - $1 million range.
“The stage and size of their investments is great. The smaller $200-$500K space doesn’t have many players. They can also do debt, equity, and grants.”
- GBF Client from FSG Review
Note: Current yield on outstanding provisioned portfolio and does not take into account updates (convertibility options, etc)
Portfolio & Financial ReturnsPortfolio & Financial Returns
Agribusiness AgribusinessAgribusiness In Sub-Saharan Africa, agriculture
accounts for approximately 2/3 of employment and 1/3 of the economy*
GBF’s Investment,to date Over $3,000,000
Average Investment Size ~$300,000
Crucial to providing economic opportunities for millions of smallholder farmers
80% of agricultural labor in Sub-Saharan
Size
Number of Investments 11
gAfrica is performed by women*
Key issues that GBF will help clients address: Product/geographic concentration
Countries Ghana, Tanzania, Kenya, Bolivia, Peru, Cambodia, India
Number of farmersProduct/geographic concentration Price fluctuations Lack for farmer/supplier loyalty Introduction to new markets
E t l t d i k
Number of farmers directly impacted ~2.6 million
Export-related risks Quality control & standards Export contract structure
*Gates FoundationGates Foundation
LATCO InternationalLATCO InternationalModel for agricultural processing ecosystem: Improve efficiency and quality through training
A t k t th h li k ith W t b Access to markets through links with Western buyers Economic value through working capital, ownership for farmers
GBF i t t d C it B ildiGBF investment and Capacity Building: $700K for equipment, transport; ISO 9000, HACCP
certification, improvements in farmer training, financial management, improved governanceg p g
Results: Sales growth 41%/yr, cash flow positive business Exporting to 8 countries – Japan #1 Farmer associations add value by pre-processing seeds Ownership of tools through financing from Latco
GBF’s Impact• GBF’s High Impact Businesses have generated economic opportunities for over 1 millionGBF s High Impact Businesses have generated economic opportunities for over 1 million people, and improved the lives of an additional 4.8 million in Africa, Asia and Latin America.*
• 98% of the people impacted by GBF’s portfolio companies live in countries with a GNI per capita of less than $1,200 per annum.
Total People Supported By Sector(Wealth Creating Activities)
Total People Supported By Sector(Cost Savings Activities)
Agribusiness55,048Innovations in
Finance
Agricultural Technology
2,125,007Mobile
Banking377,388
Artisanal106 266
Finance173,678
Cl EJobs
60 288
Lighting226,458
Total: 5,884,177
106,266 Clean Energy2,508,162
60,288
Total:334,992 Total: 5,297,303* As of December 31 2010, , As of December 31, 2010
Measuring Impact & PerformanceMeasuring Impact & Performance GBF uses metrics to improve enterprise performance:
Best of breed framework:I t Pl i A t d L i (iPAL)Impact Planning, Assessment, and Learning (iPAL)
Blended metrics approach: financial, social, operational Social Impact Review verify number of people reached Surveys, Progress out of Poverty, Client & Verification GBF Social Return on Investment (SROI):
directional but not determinative Opportunity to contribute back to the field:
Co-host annual industry metrics workshop with Aspen Network of Development Entrepreneurs (ANDE)(ANDE)
Global Impact Investing Ratings System (GIIRS) “Pioneer fund”
Emphasis on making it useful to the businessp g
GBF Activities: New InitiativesGBF Activities: New Initiatives
New Partnerships Enhanced Business AssistanceAssistance
Building Local Platforms:Angel clubsLocal banks/funds
Test models such as co-funding new
Embedded Managers Place mid and top level managers in
investee companies – top need of all clients
investments, enhancing credit lines, or mobilizing parallel funding from other deals (ProCredit, Rabobank)
Corporations
Challenge Fund Facilitate a means for investees to
collaborate and develop solutions to share with other businesses Corporations
Help expand corporate services and build capacity to offer affordable services at BoP (BrazAfric)
share with other businesses
iPAL Expansion Utilize findings from iPAL to enhance
targeting of Business Assistance and Technical Assistance Providers Work with specialized TA providers to
develop new financing models to leverage their work (Transfair)
operations improvements; start verification; target environmental and labor standards
What Differentiates GBF?What Differentiates GBF? GBF transitions companies from social to commercial
capitalI ti i t t lth b ildi Innovative investments – wealth building
Industry leading capacity building Provides a hands-on and flexible, patient capacity building -
tailored to meet the specific needs of the investees GBF combines investing with field-building s
building a more accurate and persuasive g pcase for impact investing Leader in measurement and transparency–financial performance and external impactsfinancial performance and external impacts of its investments
Looking ForwardLooking ForwardGBF has built a strong foundation to:
Scale: Provide sustainable livelihoods to at least one million beneficiaries
Follow On Funding: Investees become self-sustainable: 75% of our investees gain access to commercial capital
Investment: Achieve 5 to 8% return on committed capital over the next 5 years
Sustainability: Make GBF sustainable as an organization and reduce dependence on grants
Innovation: Build new industry model(s)
University Partnerships
Ways to Get Involved with GBF Summer Field Internships (MBAs) Summer DC Based Internships (Undergrads & MBAs)p ( g ) Winter Break/Spring Break Field Internships (Huntsman
Program)For more information For more information on GBF, please visit our website atour website atwww.gbfund.org
Annex SlidesAnnex Slides
Social Return on Investment (SROI)Social Return on Investment (SROI) is used to calculate the:
E ti t d tifi bl i l i i tEstimated quantifiable social-economic impact that a business will generate; and
Project the number of beneficiaries the HighProject the number of beneficiaries the High Impact Business will reach with additional investments
On average for $1 dollar invested into GBF’s portfolio enterprises,
$16 of social‐economic impact is generated(As of December 31, 2010)
Calculating the SROI • Identify the BoP beneficiaries and the type of impact created by the
Step 1Identify the BoP beneficiaries and the type of impact created by the business model*
St 2• Link the quantifiable impacts to the financial model using SROI
templateStep 2 template
Step 3• Project the number of beneficiaries in future years*
p
Step 4• Estimate the total economic returns, including terminal value in
perpetuity at a 5% discount rate
Step 5• Estimate the total amount of external financing, including future rounds
Step 6• Calculate the SROI ratio of the High Impact Business
**Assumptions are used in calculations when data does not existp
Progress Out of Poverty Surveys
What exactly is a POP survey?•A fully customized tool of approximately 15 t ti i l di15 easy to answer questions – including type of housing material, education level, and access to basic services
•Designed to help benchmark the socio-economic standing of beneficiaries against available national statistics and tools (Ex. Grameen Progress out of Poverty Index
• Allows GBF to demonstrate the degree to which our client enterprises’
Grameen Progress out of Poverty Index, USAID PAT, MDG indicators)
Allows GBF to demonstrate the degree to which our client enterprises operations improve the lives of their beneficiaries
•Helps to verify/revise assumptions used in the SROI p y p
Client Feedback Surveys
Why conduct a client feedback survey?
• Allows for improvement of services provided
• Creates an open forum to share opinions and suggestions on improvements and current performanceperformance
• Helps ensure a partnership approach where all sides are in tune to each other
Who is surveyed?
1.Beneficiaries/Clients about GBF’s Investee1.Beneficiaries/Clients about GBF s Investee Social Enterprises
2.GBF’s Investee Social Enterprises about GBF
Survey Results
49% of surveyed HAIproducers are living b l $1 25 d
Selfina borrowers see a positive correlation in th l i thbelow $1.25 per day
and are considered by USAID to be in “extreme” poverty
the loan size they receive and the increased profitability of their businessp y o t e bus ess
With over 5,000 surveys collected 44%
32% of LATCO International farmers in th i fi t ith thsurveys collected 44%
of LabourNet (LN)workers are seeing higher quality of work
their first year with the company are living below the absolute poverty line, and that percentage drops to 13% for farmers whobecause of the LN
training they received
to 13% for farmers who have worked with LATCO for at least one season.
Survey Training/ Administration
Survey Snapshots/ Training
Training HAI staff on survey aggregator tool
Tool custom built in excel w/ immediate reports
29
w/ immediate reports produced
Survey Aggregator/ DropBox