AGORA PARTNERSHIPSA Better Solution to Nicaraguan Rural Poverty

Agenda:

Nicaraguan poverty The Agora Model Comparison to other methods A success story Improvements

Poverty in Context

1980’s: Civil War 1985: U.S. Trade

Embargo 1989: Collapse of

the International Coffee Agreement

1998: Hurricane Mitch

Destroyed infrastructureEconomic crisis with inflation of 13,000%Depressed coffee prices force farmers into debt

Over 500,000 people left homeless

Drivers of Rural Poverty

Poor Education & Infrastructure

Barriers to Entrepreneurship

Overexploited Land

Lack of Investment

Lack of Economic Diversity & the “Missing Middle”

Drivers of Rural Poverty

Poor Education & Infrastructure

Barriers to Entrepreneurship

Overexploited Land

Lack of Investment

Lack of Economic Diversity & the “Missing Middle”

Drivers of Rural Poverty

Poor Education & Infrastructure

Barriers to Entrepreneurship

Overexploited Land

Lack of Investment

Lack of Economic Diversity & the “Missing Middle”

Drivers of Rural Poverty

Poor Education & Infrastructure

Barriers to Entrepreneurship

Overexploited Land

Lack of Investment

Lack of Economic Diversity & the “Missing Middle”

Barriers to Entrepreneurship

Closed Social Networks (i.e. Entry) Lack of Formal Business Training (i.e.

Education) Lack of Financing (i.e. Access to Capital) Poor Entrepreneurship Climate (i.e.

Execution)

Drivers of Rural Poverty

Poor Education & Infrastructure

Barriers to Entrepreneurship

Overexploited Land

Lack of Investment

Lack of Economic Diversity & the “Missing Middle”

Drivers of Rural Poverty

Poor Education & Infrastructure

Barriers to Entrepreneurship

Overexploited Land

Lack of Investment

Lack of Economic Diversity & the “Missing Middle”

The “Missing Middle”

The “Missing Middle”

The Agora Model: Barriers to Entrepreneurship

Entry

Education

Access to Capital

Execution

Merit-based identification of promising entrepreneurs.

Intensive consulting by US-based graduate students.

Direct investment in promising ventures that meet strict criteria.

Support including: strategic advice, business contacts and financial management.Barriers to

Entrepreneurship

Agora Solutions

The Agora Model: Company Profile

Clearly defined constraint to growth

Operate in sectors where Central America has natural competitive advantage

Cash flow positive

Innovative

Require investment of $25K to $250K

• Eco-tourism• Sustainable

agriculture• Value-added

manufacturing• Agricultural

processing• Organic foods,

etc.

Or can be within 18 months

Provide product or service that is new or reaches new customer base

The Agora Model: Social Impact

An Agora Entrepreneur must:

Be capable of creating a clear and quantifiable social impact through:

• Job creation• Protection of

environment• Providing

goods/services to the needy

Adhere to Agora’s social responsibility guidelines by meeting or exceeding:• Ethical,• Legal,• Commercial and• Public

Expectations

Support the 10 Principles of the UN Global Compact covering:

• Human rights• Labor standards• Environment• Anti-corruption

Comparison

Agora Partnershi

ps

Microfinance

Institutions

Traditional

Venture Capital

Technical Assistance Groups

Example:Procredit

Example:Technoser

ve

Debt Financing

Equity Financing

Target Micro Firms

Targets SMEs

Provides Consultin

g

Comparison

Agora Partnershi

ps

Microfinance

Institutions

Traditional

Venture Capital

Technical Assistance Groups

Example:Procredit

Example:Technoser

ve

Debt Financing

Equity Financing

Target Micro Firms

Targets SMEs

Provides Consultin

g

Bambucasa

Jan Van Bilsen- successful entrepreneur Harvests and converts bamboo into

affordable building materials for housing

Testimonial

“The guys in the village next to my farm were making $1 a day, and that’s when they could find work. I offered them a consistent salary and trained them in bamboo treatment and construction... Now they are a solid, highly motivated team, with good skills, good salaries, and a long-term perspective on how to get out of poverty through training and learning skills... The success of the business is key to all of this. If we can't make the business side work, none of the change we hope for is going to happen. That's why an organization like Agora is essential.” – Jan Van Bilsen

Ways to Improve

Lack of strong quantitative metrics No effective ways to measure impact of work Best measures of workshop effectiveness currently

come from participant surveys New metrics such as ROI needed to evaluate success

of entrepeneurs receiving consulting and funding

• Consulting hours provided by MBA consulting teams:over 6,800• Consulting hours from local Agora staff and volunteers:3,000

Ways to Improve

More extensive and effective communication

New organization which is not widely known

Expand on website and annual report Refine website: contains several links

which do not work• Profiles of Agora’s work in local newspapers, television,and radio: 24

Ways to Improve

Increase Funding Eventually start to increase size and scope

• Applications to Agora program: 148• Ventures matched with consultants: 32• Consultants matched with ventures: 142• Agora-supported companies receiving investment from the Agora Fund: 3• Agora-supported companies receiving outside investment: 3