<h1 style="text-align:center;">Part 1: Angel Investing, Impact Investing and SMEs</h1> This is the first blog in a series entitled "A New Strategy for Africa and other Emerging Economies."Over the coming weeks and months, RENEW will be presenting a series of blogs and articles outlining ideas for a new strategy for how the U.S. and the West can engage Africa and other developing countries. Many people, in the fields of economic development, foreign diplomacy and international business, have begun voicing a need for something new.Our proposed strategy begins to address this need, and is shaped by three trends we see taking shape in the sectors of finance, development and philanthropy. These trends are:<ol><li>The rise of angel investors</li><li>The potential of SMEs in developing countries</li><li>The formalization of impact investing</li></ol><figure class="image"><img src="/uploads/SM_Es_Angels_and_Impact_59824fdb16.jpg"></figure>This blog kicks off a series of thoughts that will show how these converging trends could provide a new model for the U.S. and the West to catalyze growth in Africa and other developing countries, and strengthen our global competitiveness. Accompanying these thoughts will be perspectives from the field about the growing need for the U.S. to expand its role in Africa’s private sector; what we can learn from China’s strategy in Africa; and the changing perspective of Africa from a land of poverty to one of opportunity.

RENEW presents a series of blogs outlining a new strategy for how the West can engage Africa.

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Part 1: Angel Investing, Impact Investing and SMEs

<h1 style="text-align:center;">Ethiopia Angel Trip 1: Overview and Photos</h1>The Ethiopia Angel Trip 1 (ETAT 1) is underway. From February 26 to March 4, 2012 a group of five angel investors from around the United States are with the RENEW team visiting small and medium enterprises (SMEs) in Ethiopia. So far the ETAT 1 group has visited with six entrepreneurs (seen or learned about more than 15 potential investments), toured the city, visited the Ethiopian Commodities Exchange, eaten at several local establishments (injera anyone?) and enjoyed too many macchiatos to count. Here are some photos of several of the businesses the group has visited. More photos coming soon...Housing Project<figure class="image"><img src="/uploads/2012_Ethiopia_b23dc80814.jpg"></figure>Project Overview: On the outskirts of Addis Ababa, this project meets a growing need for housing among returning Diaspora, expatriates and local Ethiopians. The project includes plans for the first 18-hole golf course in Ethiopia, shopping, a school, a medical facility and more.Medical Diagnostic Facility<figure class="image"><img src="/uploads/2012_Ethiopia1_478f27c5f0.jpg"></figure>Project Overview: Providing diagnostic medical services since 2009, this 24-hour clinic continues to add service offerings for patients and doctors in Addis Ababa. The clinic currently provides computed tomography (CT) scans, digital X-ray, ultrasound, laboratory diagnostics and several other services.Sustainable Farm<figure class="image"><img src="/uploads/2012_Ethiopia2_79e194aeae.jpg"></figure>Project Overview: This 20 hectare farm outside of Addis offers small vegetables to several European markets and fresh tilapia to the Ethiopian market. Additionally, chickpea trials are underway to improve the production potential of Ethiopian small holder farmers.

From February 26 to March 4, 2012 a group of five angel investors from around the U.S....

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Ethiopia Angel Trip 1: Overview and Photos

<h1 style="text-align:center;">In the Field with RENEW</h1>We are going to take a brief pause in our series on a New Strategy for Africa, to share some things we’ve learned about being in Ethiopia. Many have written to us asking “What exactly are you looking for?” and “What have you learned?” So, we thought we would try to answer some of these questions.<figure class="image"><img src="/uploads/Ethiopia_Feb_26_to_Mar_4_2012_036_2_8c0b5f780f.jpg"></figure>Question: “What exactly are you looking for when you are working in Ethiopia?”Answer: There are a number of things we look for when we are working in a country like Ethiopia. Overall, we try to create a system and network that allows us to find good businesses. Here’s what we look for, the reasons why, and some helpful hints:<ul><li>Trusted friends/partners: The term “partners” is probably too formal for what I need in emerging economies. Friends are key. Without a network of people you trust, working in emerging economies would be nearly impossible. You cannot rush this. You’ll need to invest your time (often years), and show you are serious (i.e. open an office). Flying in for a week is good, but not enough. And even if you do make the commitment to move, get comfortable with being the new kid for awhile. I often remind myself to “keep my mouth shut and my eyes and ears open.” Hint: Try to reserve your opinion about something related to the country – even if you have one. Chances are that will change as you learn more. And try to withhold judgment. Mannerisms and customs in foreign countries are unique and different.</li><li>Helpful tips: A helpful tip like, “shop here for this,” or “I wouldn’t necessarily go to them for that” can come from anyone at any time. Write these tips down and read through them at the end of every week. It’s often hard to find a single point of truth related to investment law, upcoming policy changes, market changes, etc. Even asking the bellman at a local hotel “How’s business this week?” will help you find out who is in town, whether the electricity may be diverted away from your area of town to another, and which roads to avoid. Hint: If you have a bad short-term memory, carry a small notebook and pen in the lapel of your jacket.</li><li>Relevant documents: “The recent version of this is on-line” is not something you often hear in an emerging economy. But getting the recent version of a relevant document is invaluable. Hint: If I’m in a meeting and someone says they have an updated version of something and they are willing to make a copy…I happily wait.</li><li>Quality entrepreneurs: This will be the subject of another post, but the bottom line here is we are looking for good entrepreneurs. Once I find a solid entrepreneur, the market opportunity they are pursuing and the business they are running are generally well thought through. I’ll spend 75% of my due diligence on an opportunity speaking with people about them. Hint: Always trust your “gut” over the numbers. If you don’t have a good read on people, hire someone that does. Intuition is critical for opportunity hunting. Also, be a good questioner – meaning, learn the art of getting information about someone without asking direct questions. Direct questions and direct answers are not common practice in many developing countries.</li><li>Bright spots: I am always looking for success stories: Who has succeeded in this country? Why? What did they do? How did they do it? What’s their story? Just as important as finding the next market leaders in a country is learning from the current ones. Since RENEW began, we have had the pleasure of meeting with some of the most successful business leaders in the developing countries we’ve visited. Hint: I’ve gotten more from a three-hour dinner with someone that has already succeeded in a country, than all the businesses courses I’ve taken.</li><li>Numbers: I love numbers. The price per square meter for office space, someone’s average monthly electricity bills, the current price of a kilo of sugar, the annual cost to run a 52-bedroom hospital. All of these numbers must live in a spreadsheet because they help me with projections, and vetting financials. Hint: Another good thing to jot down in that wonderful pocket notepad of yours.</li><li>Recommendations: Always ask – “Do you have anyone you’d recommend for X?” Whether you're looking for a good dry cleaner, or if you are doing your due diligence on someone (see above about asking good questions), I am always looking for good recommendations. Hint: Triangulate recommendation. Use the ‘Colombo approach’ – “One more quick question. Have you every heard about this person?” Listen closely to their answer.</li><li>Landmarks: Landmarks are used to describe where people are vs. an actual address. I, or my copilot, am always looking for big landmarks – these become your navigation tools. “We are close to Edna Mall.” Hint: You better know where Edna Mall is.</li><li>Restaurants, vendors, and hotspots: When the power goes out, where do you go to recharge and connect? Continuity of operations is critical. Those that have a rolodex of options will succeed in emerging markets. When I am at a new restaurant I pull out my iPhone to see if there’s a WiFi signal. Then I check how fast it is. Hint: If the food is good and the wall outlet works, it’s an office!</li></ul>Now, here is the general rundown about the actual opportunities we’re looking for:<ul><li>An established business: SMEs should be existing business that have been running for no less than two years, with an annual turnover greater than $100,000 – start-ups are just too risky.</li><li>An experienced entrepreneur: Ideally they have worked at a large company in the same industry.</li><li>A growing business: We’re looking for companies that need expansion/growth capital and are projecting no less than 20% growth.</li></ul>We are generally sector agnostic, but we like businesses in:<ul><li>Agro-processing</li><li>Manufacturing</li><li>Logistics</li><li>Healthcare</li><li>Information and communication technology (ICT)</li></ul>Next week we will answer “What does a typical week look like for the RENEW team in the field?” Until then, please don’t hesitate to contact us with any questions <a href="mailto:renew@renewcapital.com">renew@renewcapital.com</a> or follow us on Twitter @RENEWLLC.

Some things we’ve learned about being in Ethiopia...

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In the Field with RENEW

<h1 style="text-align:center;">In the News... The Africa Beats</h1>Welcome to RENEW's In the News…The Africa Beats. The following post includes highlights on topics such as Investing in Africa, Impact Investing and more:Invest in Africa Voice of America - At the World Economic Forum in Davos, Switzerland, South African President Jacob Zuma and other African leaders discussed what is currently being done to make Africa more attractive to foreign investors. The panel, titled 'De-risking Africa' discussed perceptions that foreign investors have regarding investment in Africa and how to address and change those perceptions. <a href="http://www.voanews.com/content/world-econd-forum-africa-24jan13/1590036.html?utm_source=voaafrica&amp;utm_medium=twitter&amp;utm_campaign=en&amp;utm_content=twitterfeed">Read full article</a>Sports Pro - The Africa Cup of Nations, Africa's leading football tournament, kicked off last week in South Africa. One of the shirt sponsors, Invest in Africa, works to promote Africa as a credible business destination and is using the Africa Cup of Nations as a way to promote and celebrate the continent's potential. Invest in Africa sees the football tournament as a great way to showcase some of the world's fastest growing markets, as evidenced by 6.6 billion cumulative television viewers who tuned in for the competition last year. <a href="http://www.sportspromedia.com/guest_blog/how_the_africa_cup_of_nations_can_help_promote_africa_as_a_leading_business/">Read full article</a>Impact Investing Huffington Post - A look at some lessons that impact investors can learn from the struggles and successes of microfinance in the last 30 years, including how impact and returns are measured. <a href="http://www.huffingtonpost.com/tilman-ehrbeck/lessons-impact-investing-_b_2569243.html">Read full article</a>

Read highlights on topics such as Investing in Africa, Impact Investing and more...

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In the News... The Africa Beats - Part 3

<h1 style="text-align:center;">In the News... The Africa Beats</h1>Welcome to RENEW's In the News…The Africa Beats. The following post includes highlights on topics such as Investing in Africa, Impact Investing and more:Invest in Africa Africa Mentor - More signs are continuing to point to Africa's growing investment climate. Commentators are noting several trends: the growing middle class has more disposable income than the last generation, there is increased investment from the 30 million African diaspora who have migrated from Africa, and there are a significant number of technology incubators popping up all over Africa. <a href="http://africamentor.com/african-investment-climate-heating-up/">Read full article</a>Impact Investing Forbes - The University of Utah recently announced the opening of an impact investing center, created with a gift from technology entrepreneur James Lee Sorenson. The center's goals involve allowing students to gain real-world experience with investing and to study impact investing. Unlike other universities that have a focus on social entrepreneurship, the Center will focus on hands-on investing. <a href="http://www.forbes.com/sites/annefield/2013/02/14/impact-investing-gets-a-university-center/">Read full article</a>SMEs in Africa BusinessTech - Microsoft recently unveiled its 4Afrika Initiative, through which it aims to engage in Africa’s economic development to improve its global competitiveness. The initiative's goals involve making smart devices available to millions of Africa's youth by 2016, helping bring small and medium-sized businesses online, and boosting job skills for Africa's workforce and recent graduates. <a href="http://businesstech.co.za/news/it-services/31170/microsoft-targets-africas-smes/">Read full article</a>

More signs are continuing to point to Africa's growing investment climate.

In the News... The Africa Beats 

<h1 style="text-align:center;">Why Are Angel Investors Important?</h1>On June 30th, RENEW provided a private equity training for the World Bank’s Ethiopia Climate Innovation Center (ECIC), an initiative that “supports Ethiopian small and medium enterprises (SMEs) that are developing innovative solutions to address climate change challenges”. The training provided an introduction to private equity, with the goal of familiarizing ECIC entrepreneurs with equity mechanisms for raising funds.<figure class="image"><img src="/uploads/img_1970_e405ad70c7.jpg"></figure>One such mechanism is through angel investing. Private equity angel investors (like members of RENEW’s <a href="https://www.renewcapital.com/investing">Impact Angel Network</a>) provide SMEs much-needed access to investment capital and business expertise, as well as access to new markets and foreign partners. This in turn allows companies to scale at a much faster rate than they would be able to do on their own. And while changes to the structure and management of the company are to be expected (such as the implementation of an advisory board), the relationship aims to ultimately provide long-term growth potential and stability to the company.Overall, the training was a success with around 20 entrepreneurs in attendance. At the end of the training, participants came away with a better understanding of private equity, why it is important for entrepreneurs who are looking to expand their company’s operations, and the essential role of angel investors.If you are interested in additional information about RENEW or an upcoming private equity training, please contact us at <a href="mailto:renew@renewcapital.com">renew@renewcapital.com</a> to learn more.

RENEW provides private equity training in Ethiopia to discuss.

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Why Are Angel Investors Important?

<h1 style="text-align:center;">Benchmarking the Potential of Eight African Countries</h1>An interesting article entitled <a href="http://www.imf.org/external/pubs/ft/fandd/2008/09/pdf/fd0908.pdf">The Rise of Africa’s ‘Frontier’ Markets</a> appeared recently in the International Monetary Fund’s (IMF) quarterly magazine, Finance and Development. In it author David Nellor singles out eight African countries (Botswana, Ghana, Kenya, Mozambique, Nigeria, Tanzania, Uganda and Zambia) and benchmarks them against Asian countries that started to take off in 1980. The numbers (see table below) are pretty interesting. Nellor makes a strong, data-driven argument for why certain African countries are becoming “real” emerging markets.Here’s how the IMF determine whether a country is “emerging”:<ul><li>Has there been a takeoff in growth?</li><li>Is that growth led by the private sector, and has public policy embraced market-led growth?</li><li>Are there financial markets in which to invest?</li></ul><figure class="image image-style-align-left"><img src="/uploads/Benchmark_Photo_7ec72d93b9.jpg"></figure>

Here’s how the IMF determine whether a country is “emerging.”

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Benchmarking the Potential of Eight African Countries

<h1 style="text-align:center;">Want Encouraging News? Look to Africa.</h1>According to a recent article published in The Economist, Africa is expected to withstand the current economic decline better than many other parts of the world. Entitled “Opportunity Knocks,” the article appeared in the magazine’s October 9, 2008 print edition.The author comments that “Despite the litany of problems, the 48 countries of sub-Saharan Africa are, by several measures, enjoying a period of unparalleled economic success. And despite the turmoil in the world’s financial markets, international investors still think they can make money there.”“In 1990-94 annual GDP growth was a weak 0.9%; since then, growth has averaged closer to 5%. Before this autumn’s financial meltdown, the IMF was predicting GDP growth of 6.6% this year; now it is predicting only a slightly lower rate,” the article continues.

Africa is expected withstand the current economic decline better...

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Want Encouraging News? Look to Africa.

<h1 style="text-align:center;">Innovating Investor Options By Going Back to the Basics</h1>Last month, Warren Buffett, writing in the <a href="http://www.nytimes.com/2008/10/17/opinion/17buffett.html?scp=3&amp;sq=buffett&amp;st=cse">New York Times</a>, counseled investors to ”Be fearful when others are greedy, and be greedy when others are fearful. And most certainly,” Buffett continued, ”fear is now widespread, gripping even seasoned investors.”Investors’ new-found caution is an important corrective in overheated markets flush with capital but short on solid, grounded analysis. The flipside, of course, is that opportunities missed during the “greedy phase” come into focus when events force a re-valuation of the market. That applies to investors and businesses alike, says Steve Prokesch in his Harvard Business Review article, Recession: The Mother of Invention? Writes Prokesch:"I was astonished to learn how a number of enterprises outperformed competitors and actually grew during [the Great Depression] by excelling in understanding and satisfying customers’ changing needs… What lessons can managers glean from the 1930s? The main one, of course, is that the current wave of market upheavals and shifts are providing opportunities for innovations and growth."One of the areas Prokesch highlights as ripe for innovation is the ability to bring products and services developed for emerging economies to serve newly-felt needs in mature economies. (I’ll set aside for another blog post a discussion of how investors can create value in mature economies by investing in emerging ones - lots to explore there.)But RENEW’s approach to core services — the way we Find, Assess and Grow businesses in markets that are unaccustomed to thorough vetting – is itself an innovation, answering investors’ newly-felt need for rigorous, grounded analysis. As we work to establish RENEW’s Africa-based operations, our team in the field is designing systems and cultivating local networks that will reduce the cost of due diligence while improving its thoroughness.RENEW’s focus on overlooked businesses in unfamiliar markets means that we must find value in the fundamentals of each business we evaluate. RENEW sees no substitute for face-to-face, hands-on analysis. In fact, our business is founded on the premise that global investors will not engage seriously with small and medium enterprises in emerging economies until the need for quality information and clear, timely communication with these businesses is met.Our team sees the current economic downturn as an opportunity: the sooner investors in the West regain their focus on fundamentally solid businesses with significant potential to grow and change their communities for the better, the sooner these businesses will have a chance to prove their viability and gain the means to achieve their potential.

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