ARGIDIUS FOUNDATION2015 REPORTSTRATEGIC INTERVENTIONS TO DEVELOP SUSTAINABLE BUSINESSES AND COMMUNITIES

CHAPTER #1FILLING GAPS IN THE ENTREPRENEURIAL ECOSYSTEM

CHAPTER #3PROMOTING A ROBUST LEARNING AGENDA TO ADVANCE SME DEVELOPMENT

LETTERSFROM THE CHAIRMAN AND THE EXECUTIVE DIRECTOR

CHAPTER #4OUR ACTIVITIES AND IMPACT

CHAPTER #2 ENHANCING THE CAPACITY OF SME DEVELOPMENT FRONT RUNNERS

We are honoured to present the Argidius annual report, which gives an overview of how we began to execute our new strategy since 2014.

SUSTAINABLE DEVELOPMENT AND BUSINESSThe launch of the Sustainable Development Goals, with their call to governments, civil society and businesses to work together on an agenda “to end poverty, protect the planet and ensure prosperity for all” has sent a strong message regarding the critical role of the business sector in building societies that promote human dignity and sustainability. With its perspective of business as a “force for good,” and its long- standing commitment to helping people help themselves by supporting small and growing businesses in developing countries, Argidius is aligned with this agenda. Broader support for the role of business in development may create new opportunities for the foundation to partner with like-minded entities and leverage its efforts to deliver on its mission “to promote the growth of small- and medium-sized enter- prises (SMEs) in order to improve the lives of the poor through increased income generation.”

CAPACITY BUILDING AND TALENTIn 2015 we continued our efforts to fund a wide variety of projects that support entrepreneurs in building sustainable and growing businesses.

Even though the main focus of our strategy is the capacity building of small businesses, we support a variety of activities that contribute to the development of successful enterprises. Aside from supporting accelerators and greater access to finance, we invested in networks for entrepreneurs, for example by supporting Impact Hub in its work in Africa and Latin America and Intellecap with its expansion in East Africa. Special attention was given to the human resource (HR) needs of small businesses. The most significant project in this category was the launch of the Argidius-ANDE Talent Challenge (AATC), which follows in the footsteps of the successful Argidius-ANDE Finance Challenge. The AATC is a competition that aims to iden-tify and promote innovative business models that support the development of talent in the small-business sector. The large number of exciting proposals was testament to the high level of innovation that can be harnessed in this area. The first-round winners address a wide variety of HR challenges, such as leader-ship development, coaching, talent develop-ment and recruitment. We are excited by the potential shown by these innovative projects to help strengthen the human resource element of small businesses in a variety of ways.

KNOWLEDGE DEVELOPMENT AND LEARNINGKnowledge development and learning remain a challenge and are key to strengthening the effectiveness of interventions for small businesses. The Argidius team was enhanced with the hiring of a monitoring and evaluation officer who is developing new measurement tools and working with other partners to con-tribute to shared insights. This will provide an additional basis for understanding and learning, which will help Argidius and its partners make better decisions in their support of small growing businesses.

Patience is needed, because it takes time to gather the data that will generate insightful analysis. So it is with the Global Accelerator Learning Initiative run by Emory University and ANDE, which recently published its first report on the effectiveness of start-up accelerators. Although in general it shows that companies that participate in such programmes do expe-rience increases in revenue, employment and funding, further analysis will be needed to better understand the drivers of those changes.

WORKING IN PARTNERSHIPArgidius aims to leverage its efforts by collaborating with others. This is taking place not only with respect to the funding of projects, but also when measuring success and impact, as is happening with the Shell Foundation and USAID. Linking some of those measurements with some of the Sustainable Development Goals could help us to better understand and generate increased support for the contribution of small growing businesses to sustainable development.

I would like to thank the Argidius team and the members of its Investment Committee for their dedication to, and engagement with, these efforts.

Herman BrenninkmeijerChairman, Argidius

A LETTER FROM THE CHAIRMAN

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A LETTER FROM THE EXECUTIVE DIRECTOR

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The Sustainable Development Goals were developed with the input of half a million people around the world, who were asked what they considered to be their most important needs. The top three answers were health, a quality education and a job. It is important to note that a job is more than work, and more than an income. Securing employment in the formal sector is the best indicator of whether a person will move out of poverty, not just materially, but also in terms of their status in the world, their participation in society and their human dignity.

Creating such employment is a huge challenge. In Kenya, for example, of the 850,000 new entrants to the labour force each year, only 50,000 secure formal employment. Millions of able and willing working-age adults in the developing world are seriously under-employed, oftentimes forced to engage in extremely low-productivity survival activities. Small and growing businesses have the potential to remedy this state of affairs, given that they are one of the best generators of jobs and thus a driving force towards higher-value-added activities.

This is why supporting the formalisation of responsible small and growing businesses and start-ups is a priority. It can help achieve growth, job creation, good management, income equality and access to opportunities. And it helps to stabilise societies while also enhancing the environmental aspects of growth.

A HOLISTIC STRATEGYEnsuring that more businesses launch and grow, thereby serving low-income communities and creating revenue and employment, is the core of Argidius’ mission.

Our strategy involves helping to build a viable business-development ecosystem in our target countries, which now for the first time represent East Africa, as well as West Africa and Central America. It also involves carefully selecting a small number of market-leading business development organisations and helping them attain a greater scale, either directly or through replication. And it involves understanding better what works (and what does not), in order to better focus our resources on generating quality outcomes.

We are still in the early stages of implementing this strategy, but we are already seeing some green shoots. For example, we have helped to nearly double (from USD 34 million to USD 56 million) the SME lending portfolio of a banking partner. The number of Impact Hubs in Africa has increased from one to three, with four more on the way. And we have our first report from the Global Accelerator Learning Initiative, which analyses the performance of 14 business accelerators and offers practical lessons for the improvement of all such programmes. As we progress, we aim to use our enhanced monitoring and evaluation ability to make more informed choices about our approach and about the kinds of interventions that work best on the basis of cost, impact and sustainability.

THE ULTIMATE GOALWhat matters most, however, is answering the question: How does this work change people’s lives for the better? Recently I was in Uganda, visiting an enterprise that a new partner of ours, Yunus Social Business, has been supporting with financing and business advice. This business has been using simple technology to supply purified water to schools. As a result, thousands of Ugandan schoolchildren have clean drinking water and improved health, and more than 200 men and

women have full-time, well-paid, formal jobs, doing everything from technical support to sales. The business is now poised to expand beyond Uganda.

As we develop, we aim to continually add and deepen programmes that build such businesses—ones that are profitable, growing and also a force for good.

Nicholas ColloffExecutive Director, Argidius

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CHAPTER #1FILLING GAPS IN THE ENTREPRENEURIAL ECOSYSTEMOver the years, Argidius Foundation has focused on unleashing the potential of small and medium businesses, primarily in Central America and West Africa. In 2015, the foundation expanded its portfolio to include East Africa, and also became more strategic in order to maximise its impact in each region.

The businesses are also arranged into cohorts, to promote networking and peer-to-peer learning. Job growth is the main objective, but “we also help them look at what they can do to have greater social impact in their communities,” says Marla Gitterman, Bpeace’s Chief Programme Officer.

EXPANDING INTO A NEW REGIONOn the other side of the world, Argidius chose to start working in Kenya, which has long enjoyed a reputation as the region’s entrepreneurial hub, and has a plethora of business-development service providers. “We concluded that this would result in a higher-quality pipeline of projects, and the opportunity to leverage the impact of various partnerships,” Colloff says. “Successful projects can also then be scaled to West Africa.”

One of Argidius’ first Kenya-based partners is the African Management Initiative, a two-year-old organisation that had chosen Nairobi as the market in which to roll out what it plans to turn into a continent-wide initiative—Africa’s first online social-learning platform for managers, offering a blend of web, mobile and in-person learning, supported by ongoing peer networking and accountability mechanisms. “We want to provide capacity in the engine room of organisations,” says Jonathan Cook, AMI’s Chairman, by providing management training that is “accessible, practical and locally relevant.”

Its online platform makes lessons from top experts accessible at scale, whereas its face-to- face workshops make it possible to practice the lessons in locally relevant ways. Argidius’ funding is enabling AMI to develop courses geared specifically to small and growing enterprises, on topics such as how to develop a business plan and how to go about securing funding. Moreover, the foundation’s “patient capital” is enabling AMI to offer its training at a low price point until it can grow large enough to benefit from economies of scale.

Ultimately, to achieve impact on a large-enough scale requires systemic solutions, involving multiple partners from different sectors working together in synergistic ways. Argidius is providing funding to the East Africa chapter of the Aspen Network of Development Entrepreneurs (ANDE), which is striving to boost the SME ecosystem by helping to facilitate collaboration among inter-mediaries and local stakeholders in the sector. “One of the biggest challenges is that organisa-tions are often not talking to each other,” says Jenny Everett, ANDE’s Deputy Director.

The funding is designed to help the chapter increase its capacity to carry out its mandate, and to become financially sustainable. “We will always be grant dependent,” Everett says, but the Argidius funding can help the chapter attract more dues-paying members and also build staff capacity to find new international and local funders.

Argidius engaged a consultant, Caren Holzman, to map the entrepreneurial ecosystem in countries in which it has active partnerships, starting with Kenya, Guatemala and Nicaragua. The resulting reports offer “a bird’s-eye view of the landscape and who is doing what, where and how,” Holzman says.

The goal is to use them to “proactively grow those ecosystems,” says the foundation’s Executive Director, Nicholas Colloff, by identifying gaps, and then funding programmes and encouraging collaborations that can fill them. He hopes the reports will then become “living maps” that are actively curated and used by other donors, as well as policymakers, service providers and entrepreneurs.

Argidius is also collaborating with the Dutch Good Growth Fund (DGGF) to better understand the dynamics of entrepreneurial ecosystems. DGGF piloted its #ClosingTheGap series in Kenya and is preparing to conduct a similar assessment at a regional level in francophone West Africa. Rather than creating an inventory, it adopts an access-to-finance lens to take a

closer look at an ecosystem’s connections and the challenges faced by different segments of the SME market. Taken together, the two types of ecosystem maps would allow the foundation “to analyse what should be available, as well as what is available,” Colloff says.

INSIGHTS - AND ACTIONFor now, Holzman’s first reports have already yielded numerous actionable insights. She found, for instance, that SME interventions in Kenya are heavily focused on Nairobi’s shining stars in the technology sector, while overlooking rural areas and less trendy businesses, and that Guatemalan entrepreneurs had access to plenty of start-up support services, but that there was a dearth of support for long-term development.

The latter conclusion prompted Argidius to support Bpeace in managing a mentorship programme for entrepreneurs running small and growing businesses in that country. Through long-distance mentoring, in-country visits, or apprenticeships in the United States, Bpeace’s volunteers share their expertise regarding a range of industry-specific or core subjects.

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“ We want to provide capacity in the engine room of organisations. ”

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PROFILEPROFILEALTERNAAFRICAN MANAGEMENT INITIATIVEHelping Smallholder Coffee Farmers to Enter a Premium MarketHarnessing Training to Drive Growth for Businesses and their Employees

Nidia Gómez, who had experienced economic struggles during her own childhood in Quetzaltenango, had been keen to work for a social enterprise that would help her community. She got her chance in 2011, when she was hired by Federación Comercializadora de Café Especial de Guatemala (FECCEG), a federation of 13 Guatemalan coffee-farmer cooperatives that is dedicated to helping its smallholder members boost their profits in a sustainable way.

In 2013 she became involved with FECCEG’s latest initiative—the launch of Kishé Foods, a brand that aims to integrate the supply chain all the way from the farmers to the final product: roasted coffee. It hopes that selling higher-quality beans (certified organic and Fair Trade) directly to consumers at premium prices will increase farmer incomes and reduce their risks, by giving them a financial cushion. It is now selling this coffee in the United States.

To help with the launch, Gómez turned to Alterna, an accelerator that works with socially and environmentally focused businesses. The group teamed them up with an adviser familiar with the American market, who helped Kishé with its branding and sales strategy. One bit of advice Gómez implemented was to ensure that the packaging included small but important details about how the coffee was produced.

Gómez, who oversees the company’s financial, marketing and business strategy functions, aspires to continue to grow the business and establish a solid presence in the American market. Profits will flow back to Guatemala to support FECCEG’s social programmes. The cooperative offers training on such topics as organic production and diversification, and also educates its members about basic human rights.

“I enjoy knowing that my job will help families in my country,” Gómez says. “That is the most important thing for me.”

After working as a computing-class tutorial assistant at an accounting institute for three years, Janeth Mosha accepted a job as an officer at Off-Grid Electric in Arusha, Tanzania. Prior to assuming her job responsibilities, like all new hires, she took a custom training course developed by African Management Initiative. It was comprised of courses plus in-person workshops on effective communications, goal setting, productivity and marketing.

“The courses were an eye opener,” she says, “because I had never taken business courses before.” She liked the fact that, unlike classes she had taken in college, these courses gave students more time and freedom to do things on their own, such as take self-evaluation quizzes at home in the evenings. They also offered opportunities for them to learn in a group setting, practising what they’d learned while receiving feedback from peers and the facilitator. They performed exercises designed to replicate what they would experience in their jobs.

The courses paid off right away. “My responsibility as an officer was to get customers, and the marketing class really helped me, by explaining how to segment and target customers,” Mosha says.

Her job also required her to manage three sales agents, so at a later date she was also given the opportunity to take an AMI leadership course to hone her management skills.

“I learned to create a great team, for example by praising team members publicly and cajoling them privately,” she notes. “I also found the goal-setting course helpful. I wanted to attain a certain number of customers; I got to the number, and I was promoted.” She now works as a trainer and recruiter.

“I am driven to be the best at what I do,” she says. “I want to take on new challenges and more management responsibilities.”

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CHAPTER #2ENHANCING THE CAPACITY OF SME DEVELOPMENT FRONT RUNNERS

Each new Impact Hub team can also learn from the experiences of those who have already gone through the process. “One thing we’ve learned,” Miller says, “is that a lot of people rush to open spaces before building enough community. If you don’t know the community and what they want before you start, you will probably provide the wrong thing.” Another lesson learned is that Impact Hubs that raise more start-up capital and can afford larger spaces tend to generate more revenue and have the capacity to run programmes that strengthen their value propositions.

On the heels of this intense and deliberate growth spurt, Impact Hub is now primarily focusing on helping the spaces to launch, while still entertaining offers for new spaces from motivated teams that approach them. It is also exploring ways to help them become financially self-sufficient, for example by monetising the value of providing a pipeline of SMEs to investors.

ESTABLISHING A BASE IN A NEW REGIONAnother route to expansion is for an organisa-tion to replicate its established services in a new geography. Intellecap had been offering an ecosystem of support services to

entrepreneurs through a networking platform, financial and advisory support, and capital deployment instruments in India since 2002. It then decided to open an office in Kenya, from where it could offer similar services to the entire East African region.

The organisation had dipped its toes in the African market by doing limited projects there and observing how an increasing number of Indian social enterprises were expanding to the continent. To further test the waters, it brought its convening platform to Kenya in 2014. “The feedback was phenomenal,” says Stefanie Bauer, Associate Vice President of Intellecap.

“Every step gives us more insights to validate whether another service is required,” Bauer says. “After we started with the Sankalp Africa Summit, we saw the need for early-stage capital. This encouraged us to bring our angel network here. Later we realised that growth capital is also a challenge for social enterprises.” As a result, Intellecap has begun offering investment banking services and is considering deploying its own capital in the region in 2017. It is also facilitating partnerships between Indian and East African businesses.

One of Argidius grant recipient that is striving to do both is Impact Hub, a global network of entrepreneurial communities that offers its members an ecosystem of resources, program-ming and collaboration opportunities. It had already helped to launch hubs in Europe before helping to launch one in South Africa in 2010.

Thanks to two Africa Seed Programmes that supported entrepreneurial teams interested in starting an Impact Hub in their cities, seven more hubs are now in various stages of being rolled out across the continent. Three (in Kigali, Rwanda; Accra, Ghana; and Bamako, Mali) opened in 2015 and early 2016; two others (in Khartoum, Sudan and Harare, Zimbabwe) are launching in 2016; and two more (in Freetown, Sierra Leone and Bujumbura, Burundi) are slated to open in 2017.

The expansion of the Impact Hub network has led to greater brand awareness and made it easier for each local team to recruit innovative entrepreneurs to join their community. Potential hub partners—especially larger, international ones—are also comforted by the fact that other Impact Hubs are already successfully operating in an African context. “It’s hard to sell service-delivery opportunities,” says Natalie Miller, Impact Hub’s Business Development Lead for Africa. But having multiple hubs on the continent “greatly increases our value proposition, which is that they can access entrepreneurial communities across the region with one connected entity.” This allows the hubs to leverage resources and relation-ships that can help their members grow their businesses and expand to new markets. “It is, in essence, access to opportunity,” Miller says.

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One way Argidius seeks to achieve greater impact is by fortifying and expanding the reach of organisations that have proven particularly effective at helping SMEs. There are multiple ways for such organisations to scale up their efforts—for example, by replicating a successful programme, or offering a full suite of services in a new location, or enhancing core operations in strategic ways that leverage the organisation’s strengths. But enhancing impact is not enough; it’s also vital that growth be achieved in a sustainable fashion.

“ Every step gives us more insights to validate whether another service is required ”

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Intellecap’s 15 years of experience in India are making it possible for the East African offshoot to get up to speed relatively quickly. However, “you cannot just apply the same blueprint for a solution that was developed somewhere else,” Bauer notes. In Africa, for instance, there is little angel-investing experience, so Intellecap expects to spend significantly more time raising awareness about equity and angel investing before entrepreneurs are comfortable talking with investors, and vice versa. Bauer also sees a need for longer-term hand-holding and investment-readiness support in order to bolster the pool of local entrepreneurs.

The pay-off is expected to come in the creation of a pipeline of investor-ready enter-prises that can attract local and international investors who are eager to invest. Intellecap is confident that it can reach sustainability within three years in East Africa, by serving as an intermediary and offering a combination of fee-based consulting and investment- advisory services.

BUILDING IN-HOUSE CAPACITYA third way to expand reach is to help a service provider leverage its strengths. After an established organisation excels at its core functions, notes Argidius Foundation Executive Director Nicholas Colloff, “the next step is to ask: What do we have to offer the market as a whole?”

TechnoServe, for example, has developed and applied a suite of methodologies and tools, such as business plan competitions and accelerators, to develop the entrepreneurial sectors in a host of countries around the world. Argidius is now helping the organisation to launch a cross-portfolio entrepreneurship practice. The goal is to make TechnoServe “a more efficient learning machine,” says Simon Winter, TechnoServe’s Senior Vice President of Development, both for its own benefit and “so other players can adapt the knowledge we’ve developed around finding more cost- effective models to help enterprising people grow their businesses faster.”

The practice leader’s first order of business has been to start figuring out how TechnoServe can make the most meaningful contribution to the field—what it must do differently, both internally and externally; what practical evidence about its portfolio would be of most use to others; and which partner engagements and other opportunities it should prioritise.

In the end, the success of all these efforts will be measured by the impact they have on the ultimate beneficiaries—the entrepreneurs being helped—and the poverty-alleviating opportunities they create.

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PROFILEIMPACT HUB ACCRACreating a Launching Pad for Start-Ups

John-Paul Parmigiani fell in love with West Africa while working on humanitarian projects in the region. Eager to do something with a longer-term payoff, the American eventually concluded that “entrepreneurship is a great vehicle for making change.” He studied entrepreneurship and conferred with a friend who was attempting to launch a business in Ghana. They noticed an unmet need for a place where people could work on their start-ups. The two of them and several others joined forces and launched Hub Accra three years ago. It grew rapidly and then, in 2015, joined the global Impact Hub network, in order to take advantage of its global reach and the knowledge accumulated in other hubs.

Being part of the network also gave the newly rechristened Impact Hub Accra greater visibility, and membership doubled in about six months. “The rapid growth provides validation for how the start-up ecosystem is growing,” Parmigiani says. “There is a lot of demand for the programmes and services we offer, both from local entrepreneurs and from international actors looking to plug in to local change-makers.” The international profile of the founding team members, who hail from Ghana and North America, “helps people from both sides plug in rapidly.”

Additionally, the Impact Hub brand has given the space greater credibility, which he credits for attracting major players such as the Case Foundation, which sponsored a business-pitch programme for female entrepreneurs and awarded money to those who presented the most promising ideas.

There is also a wealth of knowledge in the Impact Hub network, which Parmigiani and his co-founders have tapped to get ideas about financial modelling and how to generate more revenue through programming, for example. He anticipates that this will help them fulfil their vision, which is to create an entire innovation district around the hub, spinning off centres focusing on industries such as health care and connecting people dealing with industry challenges with entrepreneurs eager to build businesses to solve them.

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CHAPTER #3PROMOTING A ROBUST LEARNING AGENDA TO ADVANCE SME DEVELOPMENT

After three years, one of the five organisations may be selected as the winner and awarded a prize of up to one million euros to use to scale up their programme. But the hope is that the competition will generate value from the start, by raising awareness of the challenges and catalysing other resources to help solve them. Additionally, “we hope to see success stories emerging from the competition that will inspire more emerging-market professionals to explore careers with entrepreneurial firms,” says Randall Kempner, ANDE’s Executive Director. He also hopes that it will motivate small businesses to create better work environments and use them to attract qualified candidates who are willing to trade wages for a more dynamic workplace.

Argidius is also funding the Global Accelerator Learning Initiative (GALI), a comprehensive assessment of business accelerator programmes being carried out by ANDE and Emory University’s Social Enterprise @ Goizueta. It aims to rigorously assess the effectiveness of the many accelerator programmes around the world that are trying to help early-stage ventures to grow. It is comprised of two complementary research programmes—a global market assessment of accelerators (aiming to understand what

these accelerator programmes are, where they are located and how they are structured), and building out Emory University’s Entrepreneurship Database Program. The latter effort has partnered with more than 50 accelerators and collected data from more than 4,000 businesses. Researchers have surveyed entrepreneurs who apply to such programmes, including those who weren’t chosen to participate, to see how well the accelerated entrepreneurs do over time compared to the non-accelerated ones. The new initiative will scale up that programme and look at more than 10,000 enterprises.

“This will help us answer serious questions about whether accelerators work or not,” Colloff says. Some specific questions to be answered include whether accelerators help businesses attract funding and increase revenue, and which types of accelerator programmes have the greatest impact. The data will be useful to funders as well as to accelerators, who can use the insights to improve their services. It will also be made available (in an anonymised form) to researchers and others interested in this space.

In 2015, the foundation partnered with ANDE to launch the Argidius–ANDE Talent Challenge (AATC). Modelled on the Argidius–ANDE Finance Challenge, which concluded in 2015, the AATC is providing funding to five organisations to run pilot programmes aimed at testing innovative solutions to a problem that plagues small and medium businesses in all emerging markets: recruiting, training and retaining talented mid- and senior-level managers. In a climate of unstable economies and conservative business cultures, working for start-ups is dismissed as being too risky and/or too poorly remunerated by the vast majority of qualified candidates.

The five participating organisations will be testing a variety of approaches in at least one Argidius target country each. Their projects run the gamut from leadership training and coaching, to developing technology-based

tools that help businesses source and screen talent by focusing on behavioural economics and “soft skills.”

SHEDDING LIGHT AND INSPIRING CHANGEThe pilot programmes are expected to gener-ate many insights about how to best overcome this pressing HR challenge, such as whether it might be preferable to focus on developing and promoting talent that is already in-house, or to seek creative solutions such as leveraging opportunities to work with short-term outside advisers. It will also help shed light on more general questions, such as: “Are good managers found or made?” says Nicholas Colloff, Executive Director of the Argidius Foundation.

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Funders and implementing organisations have been growing more aware of the value of benchmarking practices as a way of identifying and promoting the most effective interventions for assisting SMEs in developing countries. When shared across organisations, such learnings can promote a collaborative environment in which peers gain insights from each other’s failures, as well as successes, and refine their work accordingly. Argidius Foundation has adopted this approach on several fronts.

“We’re levering off each other in order to hopefully get resources to the right places.”

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PRELIMINARY RESULTSThe first in a series of GALI annual reports was released in early 2016, based on data that Emory University began collecting from Village Capital’s accelerators in 2013. One of its findings was that participants in the Village Capital programmes experienced investment growth that was eight times greater than that experienced by the rejected entrepreneurs. Researchers aren’t yet sure how much of that disparity can be attributed to the accelerator programming versus other factors, such as the quality of the accepted entrepreneurs themselves, or to the value they may derive from simply being associated with the Village Capital brand.

The report also identified some differences between the highest- and lowest-performing Village Capital programmes. For instance, the highest-performing programmes gave entrepreneurs more time for independent work and devoted more time to developing their presentation and communication skills, as well as to networking, and organisation structure and design.

COLLABORATING WITH OTHER DONORSArgidius has also begun to form closer relationships with other donors, occasionally meeting with them in groups to discuss challenges and solutions. They are consulting each other about plans, seeking to build on the hard-won knowledge that exists within the network. “We’re levering off each other in order to hopefully get resources to the right places,” Colloff says. “We can prod and test each other to see if we’re thinking rightly about issues, and hopefully improve.”

The foundation also plans to make public the third-party evaluation reports it now routinely commissions for larger programmes. This will allow peers, implementers and members of the public to “see how we’ve done against a set of reasonably rigorous standards,” Colloff says. “It will be really interesting, because some of the reports will not be good. Then we will admit we funded failure. Donors and service deliverers don’t talk enough about that, or about what they’re learning from it in terms of what’s working and what’s not. People are relieved when you’re honest.”

Releasing such reports will also allow people to look across a large set of programmes and notice patterns that can lead to programme redesigns. And it will enable organisations that lack the resources to do such robust measurement and evaluation themselves to learn from market leaders.

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PROFILEPUMTaking a Plastics Factory to the Next Level

After working as a dentist for years, Sofía Moya de Peña decided it was time to team up with her siblings and parents to help run the family business—a plastics factory in San Pedro Sula, Honduras. “It’s a way to grow a family legacy,” she says, and “it is also a way to help with the growth and prosperity of the city we live in by creating employment opportunities.” Registered as an official social enterprise, Vanguardia has three bottom lines—economic, environmental and social.

It employs 213 people and also generates livelihoods for numerous suppliers, including suppliers of waste plastic for its recycling programme. The company teaches low-income people how to separate and clean such plastics, and how to do basic accounting. It also introduces them to suppliers of plastic waste. Each provider now employs several

more people. Moya de Peña’s goal is to keep growing the company and eventually to expand throughout Central America. To help her achieve this, she turned to PUM, which connects entrepreneurs with senior experts who work on a volunteer basis. For the past five years, an expert in flexo-graphic printing has been spending two weeks per year at the factory, holding workshops and talking with staff one on one to help them improve their processes. “His advice has helped us improve printing quality, reduce production costs and ensure that our clients are satisfied,” Moya de Peña says. PUM also arranged for Vanguardia’s production manager to visit plastics companies in the Netherlands, to learn more about their processes.

“Thanks to these improvements, we increased printing product sales from approximately one million kilograms in 2009 to 1.6 million kilograms in 2015,” Moya de Peña says.

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CHAPTER #4OUR ACTIVITIES AND IMPACT

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To complement our external learning initiatives, we are also increasing our focus on monitoring and evaluating the impact of our own portfolio. Historically we have looked at it through a single “Return on Total Investment” (ROTI) figure for each partner, and aggregated these for a portfolio view. We are in the process of building on this approach to gain deeper insights into the impact of our partners.

To inform our understanding of what kind of interventions work best on the basis of impact, cost and the sustainability of the delivery model, we have developed a framework within which these comparisons can be made. As a key part of this, we are contextualising and categorising our grants at the enterprise, partner and intervention levels. This framework will allow us to disaggregate enterprise performance from distinct partners, and carry out comparisons both within (what does “good” look like) and between (what is more effective: a standalone business planning competition with a large reach, or a cohort-style accelerator on a path to long-term sustainability?) intervention types.

Going forward, we are populating this framework with data we already have, but, to get the most out of it, we are also developing tools and guidance for our partners to improve response rates and data quality, and to supplement revenue as a proxy for success with additional metrics related to investment raising and employment creation. (However,

we also remain mindful that patience will be required, for it can take time for changes in enterprise performance to manifest following an intervention.)

This approach is part of our wider learning agenda, as described in Chapter 3, and will be enhanced by external evaluations that examine the cultural and contextual factors that affect how and why an intervention works (or does not); which aspects have the greatest effect; and how we, our partners, and other players in the sector can learn from this and increase our impact.

West Africa Latin America Global Eastern Europe East Africa

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Access to finance Accelerator Platform ResearchOrganisational development

Thirty-nine grants were either active or approved in 2015, spanning ten categories and five intervention types. Each category is part of our strategy to either build the business development ecosystem in our target geographies, or to develop the capacity of market-leading organisations.

NUMBER OF GRANTS BY STRATEGIC ALIGNMENT

Geography 18 Capacity 16 Learning 5

NUMBER OF GRANTS BY CATEGORY AND REGION

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ROTI is calculated by considering the net change in annual enterprise revenue for the years following an intervention, compared to the annual revenue prior to the intervention, and dividing this by the total investment from all sources (primarily grants in the case of the partners considered here). Complete data on all of the businesses that have received our partners’ support in relevant years is not available (and in the majority of such cases—such as for platforms, learning initiatives, and intermediaries that support intermediaries— is not even suitable); therefore, it should be stressed that ROTI is a comparison tool, rather than an absolute figure.

Data is, however, available for 60 per cent of cases for which we might hope to get incremental annual revenue figures, representing more than 750 of the 1,000 businesses supported by the 14 partners being considered. Analysis is at an early stage, with the framework described previously still

being populated. Nevertheless, a number of high-level observations can already be drawn:

1. The ROTI of these 14 partners ranges from -0.2 to 15, and is greater than two for nine of the partners. These represent very good returns. But to really understand the impact our partners are having, additional questions need to be answered regarding how much of the business growth can be attributed to our partners and, at an even higher level, the additionality our support for these partners has.

2. Businesses that receive acceleration services, whether in a cohort model or business planning competition, increase their revenues faster than those that receive services from organisations directly providing access to financial services. Is this because accelerators are better at picking winners, or because access-to-finance initiatives require long lead times (for instance to build a fund) before their impact on enterprises manifests?

3. One of our partners had a negative ROTI, caused by one large enterprise in its portfolio experiencing delays on two major regular contracts. That revenue came through in 2016 (had it come through in 2015, it would have resulted in a ROTI of 1.5), demonstrating the impact outliers can have on this type of analysis.

4. One low ROTI score represents the challenges faced by a partner when its assumptions regarding the needs of

entrepreneurs (on which their expectations were based) turned out to be inaccurate. The partner realised this in 2014 and changed its programme approach.

These observations primarily lead to more questions, which we are using to inform our increasing focus on monitoring and evaluation, and which we intend to examine more deeply through our internal and external learning agenda over the coming years.

AVERAGE RETURN ON TOTAL INVESTMENT (ROTI) BY INTERVENTION CATEGORY

Argidiusfunding

Total cumulative

funding

EUR 7 m EUR 7.5 m EUR 14.5 m

Other funding

INVESTMENT LEVERAGE

Our EUR 7 million in support to these 14 partners leveraged an additional EUR 7.5 million in philanthropic support.

Our support also leverages capital, the full extent of which is not captured here but will be included as we develop our comparison framework.

Examples include: helping a banking partner to increase its lending portfolio for SMEs from USD 34 million to USD 64 million; a partner in West Africa raising capital (EUR 7.9 million, the majority of it from in-country sources) for its first two funds; and the graduated SMEs of an accelerator partner raising more than USD 11 million.

Accelerator 8.8

Organisational development 2.52

Access to finance 1.86

TO CREDITS

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CREDITSThe Argidius Foundation 2015 Report was produced by:

Texts: Catalyst Communications LLC, USA and the Argidius Team

Design: Eigen Fabrikaat, The Netherlands

Project Management: Argidius Team and the Porticus Communications Team

Copyright: Argidius Foundation, Switzerland, July 2016

Contact: mail@argidius.com

Website: www.argidius.com

Photos (in order of appearance)

Cover: Agora – Teysha: copyright Stuart Freedman

A Letter from the Chairman: Oxfam America WISE – Carmen Can: copyright Ilene Perlman

A Letter from the Executive Director: Root Capital – Nyamarura: copyright Stuart Freedman

Chapter 1: Agora – Kingo: copyright Stuart Freedman

AMI – Learning Lab: copyright Stuart Freedman | Alterna – Kishé Foods: courtesy FECCEG

Chapter 2: TechnoServe – Madre Culture: copyright Stuart Freedman

BPN - PEFAMSA: copyright Stuart Freedman

Impact Hub Accra: courtesy Impact Hub

Chapter 3: Root Capital – Sorghum Pioneer: copyright Stuart Freedman

PUM Vanguardia: courtesy Vanguardia | PUM – Llantas y Servicios: copyright Stuart Freedman

Chapter 4: AMI – Winning Women: copyright Stuart Freedman

Credits: Alterna – Doña Pancha: copyright Stuart Freedman

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