The Fund Manager Perspective: Moving the Needle on Inclusive Agribusiness Investment

ISF

The fifteenth briefing note in a series from the Initiative for Smallholder Finance interrogate how different impact-oriented agribusiness funds combine public and private capital to build a more inclusive agricultural market.

This report presents three insights from ISF research:

Fund managers use dramatically different approaches to develop and assess pipeline investment opportunities. Most fund managers spot opportunities the traditional way, through word of mouth and professional networks. More recently, savvy NGOs have onboarded investment teams or created their own fund vehicles to connect enterprises from their field work to investors.

Technical assistance (TA) plays an important role, but is tough to get right. Funds that invest in smaller agribusinesses often need TA for both the investee and their underlying small producer networks. This TA is expensive and time consuming, but can multiply impact or pave the way for future growth. Some funds, such as the African Agriculture Fund, have structured sidecar TA grant facilities to systematically deliver business and impact support around their investments.

The relationship between capital and fund managers matters. When capital providers with different risk, return, and impact profiles work together to structure a fund, fund managers must become sophisticated stewards of the fund’s impact agendas for them to thrive.

    Date
    01 May, 2017
    Type
    Policy and Research Reports
    Region Focus
    Global
    Sector Focus
    Agriculture
    Sub-Sector Focus
    Agriculture Finance