Here I am again, this time directly from Africa, so this newsletter is about news from the ventures: the first candidate from our new cohort is funded, and our first generation businesses are establishing themselves in the market. Things are moving!
MORE SEEDS THROUGH BRIDGE LOAN
Of course, we have not yet collected the €1 million in investment donations planned for this year. On the other hand, our ventures are urgently waiting for money to grow further. When I was in Nairobi last week, we found a good way to fund a venture anyway. I had written before about Marbi Agric, which offers credit-financed seeds to smallholder farmers and combines this with insurance packages and group loans to minimize risk for all involved. Bernadette Mwanza’s business is already growing profitably (last year they grew from 3,000 to 5,000 customers), and she has received her first commercial loans – but without collateral, 10,000 euros is always the limit. So we decided to give her an interest-free loan of 50,000 euros over six months so that she can start the new planting period. If we are successful with our fundraising for her in the meantime, we will convert the loan into an equity investment. If not, she pays it back in the fall, and we use it to pay our team’s salaries. There remains a risk of default, of course, but Bernadette has proven in recent years that she delivers what she promises.
The beauty of our approach, I think, is that different elements feed into each other. Right after Bernadette, I met Oliver Obwana, the CEO of Full Spoon: they produce peanut butter in mini sizes and distribute it in slums to contribute to healthy nutrition (peanuts contain about 50% protein). The demand for these mini-sizes is huge: when my colleague Lynn and I were in the Kimera slum of Nairobi in November, 7 out of 10 kiosk owners wanted to stock the product immediately. The only thing is, Oliver has a cash flow problem and can only sell for cash; the kiosk owners, on the other hand, take one to two weeks to sell and then pay for the products. We agreed with Full Spoon on a small test budget of 1,000 euros, which they can use to offer longer payment terms. If this indeed leads to more kiosks listing the product, Marbi Agric comes into play: they supply Full Spoon with peanuts and can wait a little longer for their money in the future thanks to our credit, which in turn helps Full Spoon to relieve their customers and thus build distribution.
By the way, this example shows that every donation helps: already with 1,000 Euro we can help a company to develop and test a new distribution strategy. If you are convinced: We are happy about every donation (see donation button at the top)!
SAVING MONEY WITH THE MOST EFFICIENT BIOMASS STOVE
While the new cohort is slowly getting off the ground, things have also been happening with our first cohort. Right now I’m in Ethiopia celebrating the registration of our clay stove business with the team there: after an incredibly long time, the company has finally been registered and bears the amazingly uninspiring (but legally mandated) name Impacc Clay Stove Manufacturing PLC. Unlike our other businesses, where we invest in existing startups, here we founded the company ourselves and are now involving local entrepreneurs step by step. The product we bring in is good: just last week, the Ethiopian Ministry of Energy officially confirmed that it is the most energy-efficient biomass stove in all of Ethiopia – selling for 5 Euros, while the second best is a product imported from Asia that sells for 100 Euros. That’s something to work with! Yesterday, when I was in Awash in the Afar region near Somalia, I saw the first stoves in use: Maserat, a mother of two, switched to the stove two months ago, and now cooks faster and “harvests” so much charcoal that she can fire her charcoal stove (used to make coffee, for example) completely without outside coal. Her neighbor has calculated that she saves 20 cents a day on firewood – that doesn’t sound like much, but for someone who lives on 2 euros a day, it’s actually quite a lot; and besides, it recoups the initial cost of the stove after a month. All this is good news, but of course there is still a lot to do: the next challenge is to make appropriate firewood – cut into small pieces and dried – available to customers, either through cooperations with wood traders or through our own sales activities. Whether and how we succeed – more about that next time.
A final question before I leave you: would you like to read more about our ventures in the newsletters? Should they be shorter, longer, less frequent, more frequent? In any case, I invite you to follow us on LinkedIn (see button with symbol on the right) for short updates on our activities every now and then.
Stay safe, Till
