All there is to know about our ENVenture Growth Fund
We see acceleration as being an important driver in the growth of any micro enterprise and this is guiding our entry into this space.
August 27, 2019
The Roots of the EGA
Over the last four years, we have incubated clean energy micro enterprises in rural Uganda and now a new investing dawn awaits us. This addition is based on the growth needs of the enterprises we have seeded and what we see happening in global achievement of SDG7 by 2030. ENVenture’s growth trajectory has formed in its path a plethora of hardworking and mission-driven Community Based Organisations (CBOs) that have not only exhibited a certain zeal to excel in community work, but to also incorporate social business. The social business concept was formed over a decade ago and The Yunus Center today defines a social business simply as a cause-driven business.
At a recent workshop organised by a global development agency, we were inside the room and witnessed a dialogue exchange of CBOs and CSOs of all sizes and capacity, sharing their experiences on challenges and applied best practices. What constantly came up as a point of discussion was how to apply social business in civil society. At ENVenture we have learnt that CBOs in Uganda have a need to launch businesses but lack capital and the required borrowing capacity needed by financial institutions for several reasons. Identifying the right loan at convenient terms can be strenuous because a small business loan could quickly cost a little more than the loan itself. In rural Uganda, deeper penetration of decentralized renewable energy access is yet to reach its full potential. These challenges stem from high costs associated with establishing supply chains by cleantech manufacturers, expectation of default and high cost of acquiring customers.
We have addressed this need by first identifying our target. The primary beneficiaries in our business model are rural CBOs who are a medium for the last mile, our secondary beneficiary. We are tapping into a network of over 10,000 rural based Ugandan CBOs to create micro-enterprises that sell cleantech products at sustainable margins. We provide a CBO with a seed loan of $2000 (secured and disbursed in three tranches), capacity building, three month on-site mentorship, and a mobile app for bookkeeping. The 80 plus CBOs we have partnered with to incubate clean energy businesses now express a commitment to go further. This need is mutually beneficial, the CBOs prefer to utilize ENVenture’s channel due to familiarity and reporting convenience; ENVenture has a mission of creating sustainable energy enterprises.
The EGF Today and Going Forward
The EGF is an accelerator that will enable business growth by unlocking more capital and capacity building to the seed energy micro enterprises created through ENVenture. It is worth noting here that we are not venture capitalists. Our supporters fund the pool that is lent out to qualifying CBOs. The repayments are channeled back into the fund and the cycle revolves. The EGF is for CBOs that have excelled in their micro enterprises and want to expand their energy businesses due to a growing customer base. To qualify for EGF, we send out calls in our network and ended up shortlisting CBOs based on past performance and an assessment of future plans. The past performance indicators are usually set i.e. CBOs that have repaid their seed loan on time, made and reported monthly sales of more than $300, improved bookkeeping and created a lasting impact in their community. Future plans are based upon the feasibility, longevity and the value creation ability of the project. Once these are tick marked, we then invite the shortlisted CBOs to pitch their big idea to a panel comprising ENVenture personnel and an external expert. The EGF is provided to businesses that have gone past the initial start up stage with ability to navigate risk factors often faced by new entrant micro enterprises. We aim to run this program based upon the following ways;
Informed selection of micro enterprises. Having created a network of micro enterprises, we are vigilant on tapping into CBOs with sound strategy, planning and outreach to enable the EGF grow their business by introducing value adding products such as solar water pumps, milk coolers.
Strong internal network support. We are piloting Community Energy Savings and Loans Associations (CESLAs) to pool together repayments from different CBOs to drive more community impact from clean energy though mutual learning and collaboration.
Capacity building. Free training and staff support availed by a team of ENVenture’s fieldwork officers.
What comes under the EGF?
1. Loan financing from a revolving money pool- A CBO that successfully acquires the EGF automatically qualifies for a clean energy loan that is larger than their seed loan. Our supporters and funders for the EGF are looking to recoup an impact so succinct it should be offered to a micro entrepreneur that seeks to distribute cleantech on a grandeur scale. The loan ranges starts at USD 3000 with corresponding interest rates starting at 18%. This ambitious but attainable goal is designed upon a well thought out benchmark on which to award the loan i.e. past performance against the partnership loan agreement, project proposal, pitch and ability to pay back in full and on time. Much like the seed round, we intend for this fund to be a revolving one that enables capital provision for the seeded CBOs that can eventually qualify for the EGF. We are hoping the EGF becomes a motivating factor in encouraging our CBO network to collaborate and move larger volume inventory.
2. Physical and remote mentorship- A business undertaking is only as good as the people around it. We run a Business Development Fellowship Program where we attach a business mentor (aka Business Development Fellow) who volunteers to work with the clean energy enterprise for a three-month period. Utilizing a unique combination of theoretical learning and applying them into the workings of a rural start up, a Fellow is trained to blend the social business at its outset into the normal affairs of the CBO. All hands are laid on deck for this process. To date we have onboarded over 30 fellows for three-month tenures with some of them extending that period. The EGF CBOs will have highly experienced professionals that have broadly worked in different forms of business environment and are willing to wholesomely vest their time and expertise into implementing the business. Human capital and financial capital are a continuous crucial blend for a micro entrepreneur to succeed.
Interested in supporting the EGA? We are currently seeking grant funding to enable more scale up of the EGF.
Interested in obtaining a loan from ENVenture? Click here if you are a CBO to register your expression of interest.
By Marvin Tumusiime, Program Officer at ENVenture.
ENVenture is a social enterprise that is building out the ecosystem in the last mile for clean energy access through financing, capacity building and technology.