2.3.3 Provide young entrepreneurs with diverse financing options that extend beyond start-up phase

Young entrepreneurs, especially growth-oriented entrepreneurs, need more than just motivation, mentorship, and skills. They also need financing. Micro loans or seed financing is a good start but may be insufficient to meet the growth goals of rapidly-expanding businesses. Lara Goldmark, formerly the Technical Area Manager for Economic Policy at DAI, an international consulting firm, commented that young entrepreneurs still face a significant challenge of accessing the appropriate type of financing to support their business' growth efforts. This is not necessarily an issue of lack of financing, but rather a matter of finding the right match of business aspirations, size, region, and focus. Several investors are responding to the needs of young entrepreneurs around the world by filling gaps in financing while promoting innovations.

Practical Tips: Investors Discuss the Types of Youth Enterprises They Support

Innovation for Africa (i.4.A.) is an investment company focused on identifying strategic market opportunities in technology. The company provides start-up capital and mentorship to technology entrepreneurs with investments focused at the post-prototype stages but before a product or service is introduced to the market. The company enables entrepreneurs to bring ideas to market, filling a gap in a venture-funding landscape that favors more mature enterprises. The company provides US$30,000 to $50,000 of support with no more than 20 percent equity. It is particularly interested in enterprises that find innovative solutions to rural problems. For more information, see http://i4afund.com/.

To understand whether or not a youth enterprise might qualify for support, they consider whether entrepreneurs:

  • Focus primarily on technology, prioritizing mobile technology?
  • Operate in East Africa?
  • Put forth solutions to improve access to information or access to financial services?
  • Create opportunities and raise the standard of living?
  • Need support to prove their product in the market and reach growth-stage?
  • Have considered the worst-case scenarios? Have they done their research and refined their idea?

Based in Jordan, Oasis 500 is a seed investment and development company supporting innovative enterprises in the Middle East and North Africa (MENA). The company provides entrepreneurs with investment, training, and mentorship in an eff­ort to accelerate the transformation of their business ideas and start-ups into high-growth companies in the ICT, digital media, and mobile sectors. Oasis 500 works to promote an entrepreneurial culture of risk-taking. This is particularly important in the MENA region where young people have traditionally depended on government posts or have been unable to find investors to grow their company past the start-up stage. The organization has trained over 1,000 entrepreneurs and created 300 jobs. To understand whether or not a youth enterprise might qualify for support, they consider whether entrepreneurs:

  • Operate in the MENA region with a focus on IT?
  • Plan to use funds for growth rather than salaries?
  • Are willing to change and adapt their plan?
  • Seek support, capacity building, and mentoring from established entrepreneurs?
  • Are run by entrepreneurs past the newly-graduated stage with a serious business plan?

For more information, see http://www.oasis500.com/.

The U.S.-based Calvert Foundation (CF) has invested US$200 million in 250 community organizations in all 50 states and over 100 countries. Internationally, CF supports MFIs, intermediary funds, sustainable trade (mainly the coffee sector in Latin America and the Caribbean), and financial service providers to the poor in Africa. CF is a debt lender, borrowing money to lend money, and focused on three- to five-year investments of US$1 to $5 million. To understand whether or not a youth enterprise might qualify for support, they consider whether entrepreneurs:

  • Need to fill a gap between seed capital and accessing finance from commercial markets?
  • Can demonstrate business acumen and a feasible business plan?
  • Have a supporting team capable of governance and management, with the ability to execute?
  • Have three years of operating experience?
  • Maintain a successful track record of borrowing and repaying debt capital?

For more information, see http://www.calvertfoundation.org.