4.4 Guarantee Funds

PROBIDE, a Peruvian NGO linked to the Universidad de San Ignacio de Loyola, works to provide economic opportunities to youth and support innovative technology-focused entrepreneurial activities. This focus came about based on the gap in technological innovation in Peru and the absence of a supportive entrepreneurial ecosystem. With its project, Creer para Crear or “Believe to Create,” PROBIDE is working to create that supportive entrepreneurial ecosystem, made up of universities, banks, venture capital, and angel investors, to address the needs of young Peruvian entrepreneurs. These entrepreneurs average 32 years old, generally have not finished high school and are low-income.

PROBIDE developed a model that fosters entrepreneurship, providing start-up business training with modern management tools and a focus on export activities. Each year, PROBIDE conducts a Creer para Crear contest with university students in search of innovative business ideas. It trains professors from universities from all over the country to provide business planning courses and support their students’ business plan development. The winning business plans (to learn more about the PROBIDE entrepreneurs visit YouTube: http://youtu.be/TY4AJ45U0IE) then qualify for a start-up loan from Peru’s top banks, including BBVA Banco Continental, Banco de Credito, Scotiabank and Interbank. These banks however required a certain level of risk coverage in order to provide start-up funding to these young entrepreneurs. As a result, the Inter-American Development Bank (IDB) developed a loan guarantee that would help these promising young entrepreneurs to gain access to vital start-up capital.