Andrew Carruthers — East Africa Impact Investments

Transcript

1. 1 Focus: Growing Breakthrough BoP Businesses ♦  Can  grow  rapidly  to  scale  by  mee4ng  BoP  market  demand  for  basic   goods  and  services  like  educa4on,  healthcare,  informa4on  and   energy.  Rapid  growth  to  scale  is  achieved  by:   ❖  Sa4sfying  latent  demand,  not  perceived  needs.   ❖  Joining,  shaping  &  expanding  exis4ng  markets  rather  than  seeking  to   create  new  ones  (unlike  technology  businesses).     ❖  Addressing  the  twin  problems  of  access  and  affordability.   ♦  Innovate  business  models  and  adapt  technologies  to  profitably:   ❖  Widen  BoP  market  access   ❖  Reduce  cost  and  price   ❖  Improve  quality   ♦  Thereby  generate  double-­‐digit  financial  returns  and  very  large  scale   social  benefits  to  BoP  consumers.     The  Fund  targets  breakthrough  businesses  serving  base-­‐of-­‐the-­‐ pyramid  (BoP)  markets.  Breakthrough  businesses…  
2. 2 Example Investments ♦  Bridge  Interna4onal  Academies   v  Access  to  educa4on  (one  of  the  first   external  investors)     ♦  4AFRI  Media     v  Access  to  informa4on  (seed  and  expansion   capital;  first  external  investors)   ♦  Paradigm  Kenya   v  Fuel  efficient  cook  stove  distribu4on,   improving  health,  household  economics   and  emissions  (largest  shareholder)   ♦  Gerum  Motors   v  Assembly,  distribu4on  and  financing  of   low-­‐cost  mobile  business  plaUorms  in   Ethiopia  (closing  October  2012)    
3. 3 ♦  3rd  percen4le  pupil  achievement   ♦  Universal  “free”  educa4on  is  NOT  free   ($2-­‐5/month)   ♦  30-­‐50%  of  instruc4on  4me  lost  due  to   teacher  absenteeism  &  neglect   ♦  No  accountability  to  parents   ♦  A  $40  billion  global  market…   ♦  For-­‐profit  schools  @  $4  per  month   ♦  Pupils  outperforming  peers  by  100%  in   literacy  and  25%  in  maths  skills   ♦  84  schools  serving  27,000  students  at   end  September;  1,100  employees     ♦  Opening  45  new  schools  in  Jan  2013   ♦  Target:  10  million  students     ♦  June  2009  investment  valued  at  5.5x  in   June  2012  Series  C  financing   Existing Investments: Primary Education State  School  System  
4. 4 Existing Investments: Mobile Information Access “Google  &  Craigslist”   (Addis  Ababa)   ♦  <  5%  Internet  penetra4on   ♦  Lost  4me   ♦  Informa4on  asymmetry   ♦  Yet  there  are  c.  500  million  mobile   phones  in  Africa   ♦  Mobile  phone  is  the  compu4ng   plaUorm  of  choice   ♦  Informa4on/content  portal  on  the  mobile   ♦  Built  and  launched  mul4ple  applica4ons:   e.g.,  health  management,  job  search,  news   ♦  Added  5  million  users  in  10  months   ♦  Pursuing  geographic  and  related  business   expansion   ♦  2009-­‐10  investment  valued  at  2.6  –  4.3x  in   drao  term  sheets  for  next  round  financing  
5. 5 Existing Investments: Energy Efficient Stoves ♦  Up  to  35%  of  household  income  spent   on  wood  or  charcoal   ♦  10  –  30  hours/week  foraging  for  wood   ♦  Respiratory  ailments  causing  1.9   million  deaths  per  year  globally   ♦  Fire  hazard;  300,000  deaths  per  year   ♦  Deforesta4on/environmental  damage   ♦  50%  saving  on  fuel  (4me  &  money)   ♦  Reduce  smoke  &  toxins  by  75%   ♦  Local  (Kenya)  contract  manufacturing   ♦  Target  sales:  >  1  million  stoves;  first   year  sales  1.7x  plan   ♦  Pre-­‐sold  carbon  offsets   ♦  >  20%  projected  IRR   Tradi4onal  Stove  
6. 6 New Investments: Mobile Business Platforms ♦  4  motor  vehicles  per  1000  popula4on;   130th  out  of  134  countries   ♦  Highly  concentrated  vehicle  ownership   ♦  Auto  rickshaws  banned  from  Addis   ♦  Poor,  unmetered  taxi  service   ♦  Licensed  garbage  collectors:  broom   and  push  cart   ♦  Proprietary  vehicle  designs:  taxis,   garbage  collectors,  mobile  kiosks,   ambulances,  delivery  vehicles   ♦  Simple  assembly  in  country     ♦  33%  cheaper  than  exis4ng  taxis;  4  –  5x   beter  fuel  efficiency   ♦  Genera4ng  income,  asset  ownership  &   credit  history  among  BoP   ♦  >  40%  projected  IRR   Addis  Ababa  Taxi  
7. 7 Investments in the pipeline: Slum Sanitation and Energy ♦  8  million  people  lack  access  to   adequate  sanita4on  in  Kenya   ♦  80%  of  slum  dwellers  pay  to  use   inaccessible,  unhygienic  toilets   ♦  Pit  latrines  and  “flying  toilets”  in  urban   areas  are  unhygienic  &  contaminate   the  water  supply…   ♦  …  Causing  disease,  disability  &  death   ♦  Franchising  low-­‐cost  toilets  with  air-­‐ 4ght  30L  containers  in  the  slums   ♦  Collec4ng  the  waste  daily  and   processing  into  organic  fer4lizer  and   energy  (biogas)   ♦  Providing  employment  &  affordable   access  to  toilets;  improving  health,   protec4ng  the  water  supply   ♦  High  margin,  full  cycle  business   conceived  by  MIT  grads   Kibera  Sewer  System   The  Solu4on  
8. 8 ♦  5  million  (of  8  million  total)  Kenyan  households   are  small  scale  farmers  (SSFs)   ♦  Lack  of  data  and  co-­‐ordina4on  means  that  SSFs   pay  high  prices  for  farm  inputs  and  receive  low   prices  for  their  produce     ♦  SSFs  have  no  visibility  on  market  trends,  local   weather  and  other  essen4al  agricultural   informa4on   ♦  SSFs  typically  receive  only  10%  of  the  value  of   their  crops,  with  90%  taken  by  numerous   intermediaries   ♦  SMS-­‐based  informa4on  portal,  commodity   exchange  and  “Groupon”  for  SSFs   ♦  Access  to  current  market  prices  in  five  Kenyan   markets,  and  localized  weather  &  agricultural   informa4on   ♦  Connects  SSFs  to  jointly  market  crops  in  greater   volume  to  secure  beter  prices     ♦  Aggregates  SSF  orders  for  farm  inputs  to  obtain   bulk  discounts  from  suppliers   ♦  Offers  an  online  exchange  for  SSFs  to  sell  direct   to    na4onal  and  interna4onal  buyers,  paying  7%   brokerage  commission   Small  Scale  Farmers   Investments in the pipeline: Virtual Commodity Exchange The  Solu4on