Businesses in developing countries could soon be headed into the “Dragons’ Den.”
British charities have created a syndicate through which investors can back hand-picked businesses in developing nations using a model similar to the TV series, in which entrepreneurs pitch ideas to prospective funders.
Around 70 per cent of small and medium-size businesses in developing countries cannot access capital, according to Christian Aid, which co-founded Access To Capital For Rural Enterprises (ACRE).
Local and global investors often see deals with smaller companies as too risky or expensive, said Joanna Heywood, who leads the ACRE program for Christian Aid.
“There were a lot of enterprises we came across that were buying, or wanted to buy from, farmers and producers, and wanted to grow and expand, but were struggling to get beyond a certain growth stage,” Heywood said.
The agency decided to look beyond its traditional work of aiding poor farmers in developing countries, seeking to address problems further up the supply chain.
They are hoping to secure investments in the so-called “missing middle” of between 100,000 pounds sterling (C$189,720) and one million pounds sterling.
So far, they have found seven investors, including individuals and impact investment firms, seeking to channel around four million pounds sterling to enterprises they will select from a pool of 100.
The first deal, involving a Zimbabwean company, is now being put together, Heywood said.
Martin Rich, an investor who advised on the creation of ACRE, said it would allow the companies to access business support and “patient capital.”
ACRE is targeting enterprises that could transform the efficiency or scale of the market in which they operate.
They include a Zimbabwean producer of organic baobab tree-based products that lobbied the European Union to allow baobab imports into Europe, opening up a major new market.
ACRE also hopes to nurture women entrepreneurs and boost the incomes of women producers, in an effort to address the imbalance between the high proportion of farming done by women and the low level of assets they own, Heywood said.
Some two-thirds of the businesses in the ACRE pipeline are based in Africa, and just under half the total are involved in agriculture, with around 15 per cent in the energy sector.