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PHILANTHROPY


ƒ Investment will typically need to be supplemented with management support and capacity-building. ƒ Financing models are chosen to suit the organization and its ambitions. ƒ A longer term commitment of around three to seven years is usually required. The appropriate exit scheme should be agreed by all parties at the outset. Local entrepreneurs should be assisted to locate diversified funding sources and develop a self-sustaining revenue source beyond the initial investment. ƒ Ongoing monitoring and performance measurement are critical. Investment can take the form of grant financing,


debt financing or equity investment, in any combination. Grant financing should be used judiciously to avoid distorting local markets. Debt financing should replace the more expensive and less palatable loan choices available to the entrepreneur in the local market. Equity investment is a higher risk strategy given the likelihood of the business failing or at least taking several years to generate a profit. But irrespective of the form of investment, the philanthropist should be seeking a reliable long-term return to allow the capital to be subsequently invested in other businesses.


less than1%


OF INDONESIA’S 250 MILLION PEOPLE ARE ENTREPRENEURS BUILDING SCALEABLE INNOVATIVE COMPANIES, COMPARED TO AROUND 13% IN THE USA AND 7% IN SINGAPORE


Venture philanthropy funds Philanthropists may provide capital to enterprises in developing countries directly, or alternatively, they can invest in venture philanthropy funds. These funds serve as intermediaries that channel financial resources from the philanthropist to selected enterprises. The funds provide advisory and capacity-building services to the entrepreneurs. There is a growing number of venture philanthropy funds focused specifically on stimulating growth in developing countries. These include the New York-based Acumen Fund, focusing on enterprises that deliver services to low-income consumers; the India- based Aavishkaar, the world’s first micro venture capital fund; E+Co, focused exclusively on providing capital for enterprises that provide access to clean energy; and Root Capital, which links small farmers to big buyers and global markets.


Non-financial assistance Lack of access to affordable capital is only one of many challenges facing would-be entrepreneurs in poor countries. Lack of business knowledge is also a major hurdle. Marginalized groups such as women or young people face unique barriers of


96 FAMILY OFFICE: ASIA TOMORROW


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