Investisseurs & Partenaires
Incubating local SME funds across Africa through IPDEV2
Investisseurs & Partenaires is an investor exclusively dedicated to African small and medium-sized enterprises (SMEs). To scale up African private equity and support a growing number of investment initiatives, I&P has designed IPDEV2, a unique program to build investment capacity in Africa. Small Foundation has been an investor in IPDEV2 since 2015
IPDEV2 works in hard-to-reach markets in sub-Saharan Africa, finding and training local fund managers to develop and invest in small companies with high potential.
IPDEV2’s mission is to share I&P’s best-practice approach to equity investment with newly-formed African-based investment teams. IPDEV2 forms in-depth partnerships with each fund management team to help them launch their funds and address their challenges.
IPDEV2 provides a wide range of support, including anchor investment, tools, technical assistance, networking and grant funding. It created and cultivates a network of African and international mentors, investors and entrepreneurs, while also raising African capital to fuel the growth of its local funds.
Through the five impact funds launched by IPDEV2 to date (in Burkina Faso, Cote d’Ivoire, Madagascar, Niger and Senegal), 63 team members have been recruited and trained in SSA. The funds have supported 38 SMEs so far, with 34% of these SMEs founded by women, and more than 11,900 small producers involved with the business activities.
Sparking investment in local producers
Agroserv Industrie, led by Siaka Sanon, sources maize from 6,000 smallholders in rural Burkina Faso and produces flour, semolina and grits for local sale and consumption.
Five years ago Sinergi Burkina, one of IPDEV2’s local fund managers, invested in Agroserv. Since then, sales have increased tenfold, while Agroserv has grown and increased its impact. Sinergi Burkina provided strategic and technical support and helped structure the company, and has recently exited their investment with a multiple of 7x on its equity stake.
“Some may find it easier to import agricultural products from large international multinationals abroad, but I am convinced that Africa must feed itself.
Producing in Africa for Africans is definitely a challenge, but it is also a fantastic opportunity. One of the challenges is funding, and the opportunity is to identify strong partners who understand the importance of supporting us.” – Siaka Sanon, Agroserv Industrie
Le Lionceau is a young company that specialises in food and infant nutrition, launched in 2020 by Senegalese-French agri-food engineers Siny Samba and Rémi Filastò. It produces baby purées of high nutritional quality, made entirely from local ingredients and inspired by Senegalese recipes. It is one of the first companies to benefit from I&P Acceleration in Sahel, a special programme implemented by IPDEV2 focused on supporting seed stage companies.
“One of our major projects is the development of new products for the most vulnerable children in rural areas. The idea is to create a multi-actor collaboration between state agencies and NGOs to offer these products to children suffering from malnutrition and to help them improve their nutritional health” – Siny Samba.
What we’ve learned
Small Foundation partnered with I&P in 2015, giving us time to learn alongside IPDEV2 and the team. We have seen the time, dedication and patience that is required to set up new fund investment teams, especially in jurisdictions in which SME investing is a new sector. As IPDEV2 combines investment capital and grant capital in their model, we have also been learning about the effect of an investment strategy that strategically employs subsidy. We were particularly engaged in learning about IPDEV2’s use of grants to fund a repayable TA support programme (financed by USAID PACE).
IPDEV2 was imagined as an experiment to see if it was possible to develop and replicate a model for incubating local investment funds across sub-Saharan Africa. It identifies fund managers, provides training and anchor investment and mobilises local investors, enabling the local funds to finance local SMEs. This results in growing SMEs, job creation and increased supplier engagement and service delivery. Through its work, IPDEV2 has also shown the potential for raising fund investment capital locally by working with corporates, banks and individuals in each fund locale. Local investors have proven to be powerful partners for IPDEV2 funds, and IPDEV2 fund teams are leaders in their fields. We are hoping to see a knock-on effect throughout the ecosystem as others look to this example. Over time, there is the potential to shift power dynamics surrounding raising investment capital and making investment decisions.