Scott Anderson

NexThought Monday: (With Video) Moving Out of Orbit : Investment in emerging market small businesses is growing, like private space travel, it’s still early days

As Randall Kempner outlined the state of play in the small and growing business (SGB) sector last week, he drew a parallel to the burgeoning private space industry.

This past spring, SpaceX’s Dragon spacecraft docked with the International Space Station marking an historic achievement in privately funded, albeit unmanned, space travel. Compared with the government supported variety, business-enabled space exploration is hardly the norm, but it’s growing at a rapid pace. Now is the time for investment and experimentation, not only to reach space, but also to establish long-term settlements there, champions like Elon Musk and Richard Branson proclaim.

The same might be true of harnessing investments into the SGB sector, that similarly burgeoning field of global business, to elevate incomes, entrepreneurs and quality of life for millions. From 2001 to the second quarter of 2011, private equity in emerging markets represented $291.4 billion. For 2010 alone, the gross loan portfolio for microfinance was $68 billion. SBG investments constituted some $20 billion between 2001 and 2011, according to a Dalberg analysis.

“We’re a one-tenth of the size of emerging market private equity,” said Kempner, the executive director of the Aspen Network of Development Entrepreneurs at last week’s annual conference. “We’ve got a long way to go to be a major player, but it’s not as if we’re not making progress.”

ANDE is a network of organizations that support small and growing businesses (SGBs) and entrepreneurship in developing and emerging markets.

Globally, there are about 200 funds globally that focus on SGBs. The average SGB fund size for 2011 was $106.5 million, compared with $81.6 million in 2010, according to Dalberg data. ANDE’s member ranks also continue to grow, rising from 34 founding members three years ago, to 162 members today. The membership epresents a wide swath of impact investment, development banking, private equity and other unconventional finance organizations.

Check out my quick sideline interview with Kempner below, and read on to find out the winners of the Argidius-ANDE Finance Challenge, the Capacity Development Fund grants, as well as the research initiative winners. In all, more than $2 million in funding was distributed at last week’s conference via the three initiatives.

I’ll have plenty more on the ANDE conference, including several interviews with other participants, in the coming days.

Argidius-ANDE Finance Challenge 2012 – First Round Winners

  • Creating Bridges for Growth– George Mason University; Country Focus: Honduras

  • I&P Sahel Enterprises (IPSE)- I&P; Country Focus: Burkina Faso and Mali

  • Seed Capital That Works “From Micro to Small”- Prosperitas Capital Partners, Banco G&T Continental and the Multilateral Investment Fund of the Inter-American Development Bank; Country Focus: Guatemala

  • Demand-Dividend Investment Vehicle: Modeling, Testing, and Mobilizing a New Capital Investment Instrument for Early-Phased Global Social Entrepreneurs- Center for Science, Technology and Society – Santa Clara University; Country Focus: Guatemala, Nicaragua, Honduras, Mali, Burkina Faso

  • Creating a Mainstream Market for Agricultural Finance by Profiling Producer Organizations- SCOPEInsight; Country Focus: Central America

ANDE Capacity Development Fund, Round IV Grants: September 2012

  • Global Student Entrepreneur Awards (GSEA) Mentorship Pilot- Entrepreneurs’ Organization and MicroMentor; Awarded $37,500 Matching Grant

  • YFE: Young, Female, Entrepreneur- Oxfam/Value for Women, Fundación Capital, Cherie Blair Foundation for Women, and ANDE Women’s Working Group; Awarded $69,600

  • Developing Legal Tools Tailored to the East African Markets- Open Capital Advisors, TransFarm Africa, Acumen Fund, Grassroots Business Fund, Root Capital (ANDE Legal Working Group); Awarded $70,000

  • Enabling Youth-Led Social Ventures in Asia- Synergy Social Ventures; Awarded $26,900

  • Crowd Funding Platform to Support Impact Investing Into Entrepreneurs- New Ventures India, China, and Indonesia; Awarded $37,500 Matching Grant

  • Developing Standards for Effective Youth Entrepreneurship Programming- The Prince’s Youth Business International, Kauffman Foundation/GEW, ANDE Youth Working Group, Alliance for International Youth Development; Awarded $60,000

  • Capturing Impact: Customized Training on Outcome Data Collection and Analysis for ANDE Members- William Davidson Institute at University of Michigan; Awarded $49,617

  • Design and Delivery of an Online Learning Module for Social Entrepreneurs/SGBs- Intellecap; Awarded $60,000

  • Making the $-Valued Business Case for Incubator/Accelerator Services- I-DEV International; Awarded $63,000

ANDE Research Initiative Grant Winners 2012

  • More Sweatshops for Africa? An Experimental Study of Firms, Factory Labor, and Poverty Alleviation- Country of Project: Ethiopia Christopher Blattman, Columbia University, Innovations for Poverty Action?Stefan Dercon, Oxford University, Innovations for Poverty Action?Awarded $120,000

  • The Effects of Small-Scale Electricity Systems on Rural Communities in South Asia– Country of Project: India and Bangladesh?Davida Wood (PhD) and Bharath Jairaj, Senior Associates, Sanjoy Sanyal, World Resources Institute (WRI)?Narasimha Rao (PhD), International Institute for Applied Systems Analysis (IIASA) 2011, Austria?Awarded $120,000

  • Evaluating Household Level Impacts of Small & Growing Business Creation and Impact Investing in Peru- Country of Project: Peru?Jason Spindler: Founding Partner of I-DEV International & Managing Director (based in I-DEV’s South American Office in Peru)?Martin Benavides: Executive Director & Senior Researcher, Grupo de Análisis para el Desarrollo – GRADE, Peru?Awarded $160,000

Read more on the ANDE Funding Initiatives page.

business development, impact investing