2016 ANDE Annual Conference Session Panel Recap

Providing Comprehensive Technical Assistance to SGBs: Exploring Competing Approaches


The Aspen Network of Development Entrepreneurs (ANDE) is a global network of organizations that supports entrepreneurship in emerging markets. ANDE focuses on small and growing businesses (SGBs) based on the idea that SGBs have the potential to create jobs, stimulate long-term economic growth, and produce environmental and social benefits. SGB’s, as defined by ANDE, are commercially viable businesses with 5 to 250 employees and seeking growth capital from $20,000 to $2,000,000.

SSG Advisors has been an ANDE member since 2014 and is constantly engaging with SGB’s across its diverse portfolio. Whether we are supporting capital raising for agribusinesses through the West Africa Trade Hub, or mentoring clean energy businesses in the Private Financing Advisory Network-Asia, we consistently work with brilliant entrepreneurs and dynamic businesses in a variety of capacities. Generally, our engagement comes about as part of a larger, donor-funded engagement, rather than as a direct contract with the SGB itself. In the development context, such support funded by a third party is typically referred to as “technical assistance” (TA).

At ANDE’s annual conference in 2016, SSG’s Director of Sustainable Investment, Darius Li, moderated a spirited discussion on technical assistance alongside two other panelists, Tahira Dosani, Managing Director of Accion Ventures, an impact investor, and Pedro Eikenbloom, Business Development Manager at PUM, a volunteer-based technical assistance provider. The discussion explored three main issues in the provision of TA: 1) Making the case for TA – where is it still most needed in the process, and how best can it be most effectively utilized?; 2) Discussing the different approaches and best practices in TA delivery; and 3) Identifying ways TA can be improved in its application and value to clients and beneficiaries.

Major takeaways from the discussion include:

  • Both pre and post investment TA are vital to the success of SGB’s. All participants agreed upon the necessity of TA and how it is a critical enabler to the placement of capital, and success after the fact, as the company absorbs the investment and continues to grow. The question remains, however, who is best positioned and willing to pay for that support.
  • Although the majority of TA for SGBs today is subsidized by donors, there may be a business case for investors to invest in pre-investment TA as a way of increasing overall returns. Anecdotally, doing so creates long-term financial value: supporting early stage companies increases their probability of ultimately being successful, and thereby improving exit opportunities and returns. Providing TA also helps attract better deals because it allows the investor to offer more value to potential portfolio companies, attracting a higher quality pipeline, transactions, as well as co-investors, particularly in a competitive deal situation with multiple bidders. Investors also learn from providing TA- it makes them better investors because they become more adept at understanding and solving the issues their portfolio companies face, enabling them to spot red flags early on. The combination of these benefits strongly suggest that providing TA can be a differentiator that yields greater returns for investors.
  • There are many different models of providing and paying for TA, and there may exist more effective models that better align long-term interests between TA providers and recipients. TA providers have explored a number of different models in this regard. Open Capital, for example, charges a deferred fee, payable on success. Others, like Growth Africa, take a combination of equity and success fees based on revenues, capital raised, etc. Other models for paying for TA include profit sharing models, self-liquidating exits, VPO, etc – all can be great for aligning incentives between TA providers and SGB’s, but the downside is they are also more complicated to structure. The bottom line is that there are a number of creative approaches emerging that TA funders, recipients, and providers can explore in finding better ways to work together.
  • Standardizing TA service delivery is key to reducing cost and increasing efficiency. For example, Accion always evaluates whether the TA needed is truly bespoke, or, alternatively, is an opportunity where best practices can be extracted and template-ized so that it can be shared with the broader portfolio on a more cost effective basis. Over time, Accion has recognized distinct patterns within their portfolio, with many companies sharing similar challenges. This is made possible by their narrow focus on seed stage investments for financial inclusion startups operating in emerging markets. As a result, they have met common needs for TA by developing distinct learning tools that are shared online and dramatically reduce costs over the long run. 20 such examples are available to the public in Accion’s Venturelab resource library.

 

Vermonters Brave the Cold to Support Philippines Rebuilding Efforts

On January 22 at New Moon Cafe, Burlington-based international development firms SSG Advisors and TetraTech ARD hosted a fundraiser event for rebuilding efforts in the Philippines following last November’s Typhoon Haiyan. Our two organizations currently collaborate on a sustainable fisheries project called ECOFISH (Ecosystems Improved for Sustainable Fisheries) in eight coastal Philippine communities, making the Burlington fundraiser a fitting endeavor.

While Haiyan was a major blow to the area, we are continuing with our work on ECOFISH to form strategic and community partnerships as the project enters its second year. SSG Advisors is linking ECOFISH project resources with leading multinational and Philippine companies, business associations, foundations, and government agencies. We are advancing ECOFISH goals through public private collaboration. We are addressing local needs by collaborating with stakeholders such as municipal governments, SMEs, fishing cooperatives, and a range of CBOs. We focus on improving livelihoods by strengthening community business planning for ventures such as value-added production, aquatic farming, and ecotourism development.

The fundraising event proved a powerful collaboration of Vermont-based community members and organizations. We were extremely proud and motivated by the outpouring support of over 100 Vermonters braving sub-zero cold to support the initiative.

During the fundraiser, we spoke by Skype with Gerry Silvestre, the ECOFISH project Chief of Party. Mr. Silvestre spoke to guests about the impact of the typhoon, especially on fishermen and their destroyed boats. He also touched on how the Philippine government and private sector have been able to provide only about 10% of what is realistically needed for a full recovery.

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The fundraiser would not have been possible without the support and donations from New Moon Cafe, not only for their venue, but also for their amazing staff and food donations. Food and silent auction items were also donated by Zero Gravity Beer, City Market, Mirabelle’s, Ben & Jerry’s, Green Mountain Coffee, Frog Hollow, Stowe and Bolton ski resorts as well as many others. Notable Burlington bands Mint Julep and Nowa Randall Crosby with Franky Andreas donated their musical talent.

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We raised over $3000, making it clear that Vermonters understand what extreme weather can do to rural communities, from Irene to Haiyan. Donations from this event went towards the Philippine Business for Social Progress (PBSP) and Anscor, two non-profits in Coron, one of the many Philippine communities affected by the strongest typhoon ever known to hit land. PBSP and Anscor’s work provide essential goods and services to support relief, recovery, and rebuilding efforts.

 

SSG Advisors Welcomes New Director to Vermont Home Office

SSG Advisors is pleased to announce that Brett Johnson is joining SSG Advisors as a Director. Brett joins SSG from Carana, where he served as Global Practice and Market Strategy Advisor. He brings nearly 15 years experience developing inclusive markets and investment promotion strategies. Most recently, he served as Advisor to the Private Capital Group for Africa, a USAID-led initiative to expand investment, both domestic and foreign, into African markets.

As Director, Brett will lead provide technical leadership to SSG project teams and support new company initiatives. A native of Vermont, Brett holds an MA from Johns Hopkins SAIS. For more information, see SSG’s Our Team page.