The founder of I-DEV shares how tech, microfinance, and strategy in underdeveloped countries helps mom-and-pop-shop economies thrive.

 

 

In this podcast, you’ll hear what the inside of an impact-investing and strategy company looks like. You’ll also hear what questions an impact investor asks to find out what problems and needs are occurring on the ground in developing countries.

 

Episode Summary:

• 2:10 Raising $80 Million in 45 Countries | Patricia tells us how a group of passionate bankers, investors and managers have impacted 350 companies worldwide.
• 4:35 Inspiring Success Stories | I-DEV International works with all sizes of companies, including the leading tech company in East Africa. Even so, the impact is with local family businesses as mom-and-pop shops get access to funds, apps, and metrics to run their businesses.
• 15:30 The Innovation Answer in SMS and Data | When a developing country adopts mobile money, the opportunity for innovation skyrockets. Hear how an investor thinks about building business in a mobile-first economy.
• 21:20 Get on The Ground | “You need to have somebody on the ground in that country to be abl to understand the different dynamics.”
• 30:00 On the Ground Insight: How Can We Help? “Do the people you really want to impact even have access to a phone? Let alone to the internet? And if they got access, would they actually use it?”

Full Post

“I-DEV International is a strategy and investment advisor focused on supporting the leading businesses in emerging markets to achieve growth, innovation and also to raise the capital they need to get to those levels. We particularly focus on Latin America and Africa.”

Where IDEV Came From

Patricia talks about the group of investment bankers, Operations, Management consulting. This group was interested in helping to build out startups in emerging markets in order to grow the economy in underdeveloped companies. With their expertise, they have been able to bring business best practices into East African and Latin American startups and companies.

“We believe that’s where a lot of innovation and push for economic development and progress comes from. If we look at developed countries, that’s where a lot of job creation happens as well.”

Patricia talks about the different groups in I-DEV and gives a breakdown of the finance and business development industry.

 

Group 1: Insight and Strategy

IDEV has an insight and strategy group, which focuses on consulting portfolio companies of the impacting investing sector. The insight and strategy group answers the question, “How will this business get to profitability? How will they get to their next market?” I-DEV brings a birds-eye view of the scaling process and years of business experience to companies who would otherwise make do in an environment with few resources.

Group 2: Investment Advising

I-DEV also has an investment advisory group, which focuses on helping companies raise capital. Raising capital can be an exciting experience with the help of professional consultants when a third-world country company realizes they could have access to thousands or millions.

Group 3: Innovations and Direct Investment

Finally, the innovations and direct investment group select companies that they want to hand-hold through every step of the capital raise and growth process. So far, I-DEV has helped 350 companies in 45 countries raise more than $80 million.

Success Stories

Patricia mentions a few larger companies IDEV has worked with and talks about working with all sizes of companies. I-DEV worked with “Green Mountain Coffee on supply chain transparency,” so that the company could implement best practices and increased sustainability from coffee farm to store shelf. She also mentions working with Grupo Bimbo, a large Latin American bakery company that owns Sara Lee, where they were“Looking at microfinance payments and the tech platform they used, to provide loans and other products to the mom and pop shops they work with.” In other words, I-DEV helps large companies support the small guys selling their products to the public.

Patricia mentions working with Google.org and the UN Foundation, and then highlights four different categories of companies that I-DEV focuses on Clean energy, agriculture and ag tech, mobile and digital technology, retail and fast moving consumer goods (hint: impact investors are looking in these industries to provide direct support).

Twigga Success

Twiga foods is a large food distribution company in East Africa. I-DEV helped them raise the largest tech seed round in East Africa in 2015. Twiga will soon be that largest grocer in Africa without opening a single grocery store. And how did they do it? With an app.

In Kenya, 86% of retail is done through mom and pop shops (an “informal market”). The store owners will spend a lot of time going to secondary markets to buy products that they then resell locally.

“Twigga has an app that allows these shop owners to order their bananas, their potatoes, and their mangoes through the app so that the company can go to the secondary markets, buy products in bulk at better rates.” They are also able to buy more in volume from the farmers at the secondary markets. The app saves time and money for the shop owners.

Most importantly, Patricia mentions the following impactful side outcomes to this one effective mobile solution: With the data from the app, I-DEV can find out:

• How can they scale their offering to neighboring countries
• What products consumers are buying, and the demand for those products
• The pricing and spending in each region
• Market trends and timing for introducing new products
• How to build trust in new large-scale brands

Mobile First

Kenya growing in mobile tech growth. Surprisingly, the country has better mobile coverage than California! Also, because of the popular mobile money app in Kenya, 96% of adults have mobile money. Before, “They didn’t have bank accounts and they didn’t trust brands to put their money behind.” Suddenly, tech innovation is more available in a massive way now that this adoption has happened.

 

Here’s the tech hack: most transactions can be done through SMS, so the digital commerce is not dependent on smartphone adoption.

“The mobile market is the access to innovation in developing countries.”

The more data that becomes available on consumer habits in developing countries, the more strategic and microfinance support can pour in. Before, developing companies were a black box for economic growth and innovation, simply from a lack of insight on the buying habits of the locals. Now, it’s possible to pull rich data on commodities and trends in the country, on market demand, prices, and habits of shop owners, so those owners can move into loans.

The companies I-DEV targets to support are the ones using that data to build a scalable business model.

“It’s often a volume play,” she says, “we’ve really seen this critical tipping point in the last few years, where… now you have companies that really from their DNA are thinking about how they can get to massive scale.”

Get on the Ground

Patricia talks about establishing trust and building partnerships to make a difference in a new area. In order to make any headway in building an economy, the tribe needs to okay a new product or service. 

“When we first moved to Africa, we got a lot of pushback…Yes, every country is different and every region. But I would say, if you are sensitized to the things that commonly change, you can figure those differences out pretty quickly.”

Patricia says the biggest differentiators within markets are socioeconomic status and income, rather than cultural differences. Though Latin American and East African markets are different from each other and from western markets, there are definitely transferable concepts. Patricia says the choice to get involved in those emerging markets specifically was strategic: “We think that they can learn from each other.”

Recommended Resources and Takeaways

After hearing so much about an unfamiliar region, Chandler asks how to plug in and find resources when starting a venture in an emerging market. Patricia says, “I would recommend you go wherever you think you’re going to launch.” She also recommended reaching out to venture capital associations in those areas to find out their goals and interests. On the same note, Chandler shares a favorite quote:

“If you’re building something for me without me, it’s not for me.”

Takeaway 1: Solve Locally

“One of the best ways to tackle problems globally is to solve locally. I love that they work with businesses on the ground in the countries that are still in the process of developing to help them get the resources they need to scale.”

Takeaway 2: Ensure Access

“Also, I-DEV’s model challenges those of us with super tech-focused companies to say, ‘okay great you want to tackle poverty… but do the people you really want to impact even have access to a phone? Let alone on the internet? And if they got access, would they actually use it? Why or why not?’”

Takeaway 3: Get Clear on Your Impact

“This is the Global Goals Project so we talk a lot about tech. It all comes down to the impact and the difference that you want to make.”