Building on an established expertise and local network, Open Capital Advisors (OCA) developed an innovative program to support early-stage, high growth potential enterprises raising <$500,000 in East Africa, with support from the United States Agency for International Development’s (USAID) Partnering to Accelerate Entrepreneurship (PACE) Initiative. The PACE Investment Readiness Program (IRP) is a unique partnership that encourages investors to engage and financially support enterprises at the pre-investment stage through a subsidized cost-sharing structure, which blends development and commercial capital.
At conclusion in 2016, PACE IRP exceeded all of its established targets, identifying 222 enterprises, screening 63 high-potential enterprises, providing pre-investment support to 15 enterprises, and mobilizing $2.3 million in early-stage investment (between $50, 000-500, 000) from four partner investors and 14 non-partner investors into six enterprises. By increasing investment in enterprises, OCA generated financial returns, job creation, livelihood improvement, and economic growth in local communities.
The design and implementation experience of PACE IRP presents useful insights for others considering ways to encourage impact investment in early-stage enterprises in developing countries:
- The role of pre-investment capacity building in mobilizing early-stage investment
- Investor demand for standardized impact metrics
- The opportunities and limitations for scaling this model of pre-investment support to MSMEs