<h1 style="text-align:center;">Q&amp;A: RENEW in 2012</h1> The year 2012 is going to be about investment and growth for the RENEW team. We will continue to work with development partners to facilitate impact investing into small and medium enterprises (SMEs) in frontier markets, and we will be building a permanent presence in Addis Ababa, Ethiopia.<figure class="image"><img src="/uploads/ethiopia_pipline_diagram_1_6d9269073b.png"></figure>Our goals include opening our office in Addis, working with strategic development partners on our public-private-partnership model for impact investing, continuing to build our SME investment portfolio, and closing on an investment. We are keen on the following sectors: private healthcare, agriculture, manufacturing, transportation and logistics, ICT and construction.Below are some questions you may have about what we are doing, and our best attempt at concise answers.Why focus on SMEs? Short answer – because SMEs have the potential to create social impact and good financial returns.Social impact<ul><li>SMEs are the engines of growth in developing countries – the International Finance Corporation (IFC) indicates that formal SMEs contribute up to 45 percent of employment and up to 33 percent of GDP in developing economies; these numbers are significantly higher when taking into account the estimated contributions of SMEs operating in the informal sector. Thus, focusing on strategies to help SMEs grow is a social motivator for RENEW.</li><li>The greatest barrier to growth for SMEs in developing countries (second only to electricity) is access to affordable finance. Thus, there is significant demand for capital in developing countries.</li></ul>Financial returns<ul><li>SMEs are very risky, and foreign investors can’t just fly into a developing country, drop off a bag of money and expect it to go smoothly. But, if done well, investments in SMEs generate good returns, especially for angelic investors who have the right risk tolerance and skill to pick good early-stage ventures.</li><li>SMEs are a great entry point for foreign investors. They often require between $100K and $5M, which allows investors to explore developing countries before pursuing larger investments. SMEs also allow individuals, or a small group to make a few investments to hedge their risk.</li></ul>Why Ethiopia? Ethiopia will grow by 7.5% this year, without a drop of oil to export. Ethiopia’s projected GDP growth in 2012 makes it the 8th fastest growing country in 2012. Yes, the government can be bureaucratic, but doesn’t have the corruption issues seen in other countries. And, we just like it there.What is your public-private-partnerships model? Our model takes a different approach from most development projects. Our model focuses on the investor and the SME, where other projects mainly focus on the SME. The model significantly reduces the barriers preventing high net-worth individuals (HNWIs) from becoming active impact investors by walking them through the investment process, step by step. We do this by working with development organizations like USAID, DFID and the World Bank to establish a platform to increase the number of impact investments being made into SMEs in frontier markets like Ethiopia, Libya and Afghanistan. Once the platform has been established, and enough investments have been made, it becomes sustainable through private funding much like a traditional equity fund.Who are your investors and where do they come from? In short – our investors come from a network of people we have developed relationships with over the years. We continue to invest in our network and meet almost all of our prospective investors through word-of-mouth.What’s unique about what you are doing? We focus on serving the investor. We act as an outsourced fund management team for HNWIs who want to experience their investment by visiting the country, meeting with businesses, reviewing the financials, and making their own decisions about where they will invest; but they don’t want to move to the country to oversee their investment. We offer them a platform to do this.Why private healthcare, agriculture, manufacturing, transportation and logistics, ICT and construction? First, because we are most familiar with these sectors, having investigated them for years. Second, we feel these are growth industries as Africa’s population continues to expand and require basic infrastructure and health needs.How do you mitigate your risks? By partnering with strong, innovative development organizations that are seeking to implement new partnership models with the private sector; finding and working with great local partners; and sourcing SMEs with exceptional management teams.

This year is going to be about investment and growth for the RENEW team.

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Q&A: RENEW in 2012

<h1 style="text-align:center;">Chapter Chairs Named in Wilmington, Washington, D.C., and Charlotte</h1> The Impact Angel Network named chapter chairs for the Wilmington, Delaware, Washington, D.C. and Charlotte, North Carolina chapters in July.This year’s chairs are Jeff and Donna Turi in Wilmington, Dr. Andrew Umhau in Washington, D.C. and Alan Gardner in Charlotte. Members of each chapter meet regularly to review investment opportunities and take trips to Africa to look at investments and advise on the growth of their portfolio companies. Members of the chapters have invested in three businesses in Ethiopia within the past year: Metad Agricultural Development PLC, an Ethiopian specialty coffee company, Mama Fresh Injera PLC, an Ethiopian commercial manufacturer and exporter of fresh-baked injera, and <a href="../2013/renew-facilitates-investment-dventus-technologies.html">dVentus Technologies PLC</a>, a clean energy company.In addition to the three current chapters, network members live in Texas, Georgia, Minnesota and California. Network members are accredited investors who believe in using market-based solutions for wealth creation in Africa. Members have exclusive access to RENEW’s investment pipeline, and take regular, guided trips to Africa to assess opportunities, attend board meetings, consult with companies, meet with diplomats and government leaders and experience new cultures.<figure class="image"><img src="/uploads/photo_d_c_chapter_june_2014_9368f86f7a.jpg"></figure>

The Impact Angel Network names chairs for 2014 - 2015 in three cities across the U.S.

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Chapter Chairs Named in Wilmington, Washington, D.C., and Charlotte

<h1 style="text-align:center;">A Case for Impact Investing, Cont.</h1>What if the solution to global poverty didn’t rest in the hands of a few Harvard economists, or executives from the World Bank, or some leading development experts on retainer in Ghana? Not in a massive government building, nor within the ivy-laden walls of a university, nor at the podium of the United Nations. What if the solution is in the mind of a Ugandan seed producer and a business-savvy American? RENEW believes that a significant piece of the poverty puzzle can be solved when such a tourist meets a passionate, hard-working entrepreneur — particularly when this happens 100,000 times over.In our January 23, 2009 post, we met the Ugandan entrepreneur. Now let’s meet our tourist. Keep in mind, it may be you or someone you know. They’re your neighbor down the road, your friend Tom. The one that just took that safari last summer. If you were traveling with him, this is what you may have seen…After an amazing journey through some of the most rugged and beautiful land on the planet, and seeing a spectacular range of wildlife, Tom was convinced that he and his family had truly experienced Africa. On his way back from the reserve, his kids got thirsty, so Tom stopped by a small store on the roadside to get some drinks. Stepping out of the Land Rover, he was immediately surrounded by a group of children begging for money. Because Tom’s a compassionate person, and because he just spent $5,000 on a safari, guilt causes him to hand over some spare change from his pocket. The four children scuffle to divvy up the loot.As he walked into the store, three vendors immediately surrounded him trying to get Tom to buy from them – “all the stores are the same,” Tom thought. Trying his best to drown out their pleas, he finally found what seemed acceptable and bought four warm Cokes. After he handed off a few bills from his wallet to the lucky vendor, he noticed the other two peacefully turn away and return to their respective perches, waiting for the next tourist to come by. As Tom climbed back into his SUV and headed for the airport, he was noticeably distant, gripped with cognitive dissonance — Africa is beautiful and full of potential, and yet gripped in poverty.You watch Tom contemplate this dilemma in his head, idly staring out the window at the distant city skyline. You notice that Tom seemed troubled during the entire flight home. After what seemed to be hours of squirming in his seat, Tom leaned over to his wife and started with his famous “what if.” You’ve seen this before — Tom starts in: “What if those were our kids on the street?” “What if I was that vendor and that was my business?” “What if I hadn’t been raised on Elm Street, but in a back ally of Nairobi?” “What if I didn’t get an education, or have that amazing teacher?” He asks these, not expecting an answer, but searching for resolution.His thoughts wander back to what it was like growing up in America. He went to high school, fell in love and graduated from college. He worked for a good company, and after a few years of making a name for himself, he and some friends had an idea. They wrote out a business plan, moonlighted for a few months, scrounged up some money from friends and family, and went full-time to work on their dream. They got the business going, and then got a loan from a local bank. Ten years later they sold the company, made a few million and went their separate ways. Tom was now trying to spend some much deserved time with his family. His kids had been talking about Africa ever since they saw some movie in school about the civil war in Sudan, and they pleaded with him to take them on an adventure. Just excited to see his children interested in something other than Xbox or American Idol, Tom jumped at the opportunity; he was ready for an adventure too. So he contacted his travel agent, booked a flight and there they were in Africa…Now we get to ask “what if.” What if Tom had a way to deal with his dilemma? What if he were able to shift his association of Africa with poverty to Africa with opportunity? What if he were able to zoom out, and see the economic development that could occur if provided the right support? What if Tom had not gotten out of his Land Rover, and instead, driven to the industrial park on the outskirts of the city? What if Tom would have met the business owner in need of capital and support (<a href="company-profile-case-impact-investment.html">Read that story</a>)? After all, she had employed the mothers of the children Tom had met that day. What if they had a conversation, and the owner told a story of a vision she had to start a company that employed women and supported a growing industry in her country, one that would provide seeds and jobs to thousands of small farmers?But instead: she sadly explains that she had to let some of her workers go last month. The interest rates on the bank loan she had to take to meet the demand of a contract that didn’t yield the profit she needed to keep the employees on once the contract was over.Here’s the secret that the scholars, economists and experts haven’t grasped: The solution to poverty will become clear when Tom, and the thousands of others who have had similar experiences, meet the business owner and begin a business relationship; one that unlocks the vision and potential within the entrepreneur, and addresses the dilemma within Tom. The interaction, and thousands like it, will shift the way that we in the West see Africa. But first, Tom must encounter the entrepreneur.Stay tuned…

What if the solution is in the mind of a Ugandan seed producer and a business-savvy American?

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A Case for Impact Investing, Cont.

<h1 style="text-align:center;">When People are in Need, Charity is Tempting</h1>Charity is tempting, but ultimately unproductive. Today’s Washington Post has a story titled, “World Bank Cuts Growth Forecast for Developing Nations” (some regions, like Sub-Saharan Africa, are still growing though, unlike the West). A headline like this sends people immediately into a scramble for foreign aid and charitable giving to offset the pain these countries are feeling. Not so fast, writes the Post:“The assumption is that just mechanically pouring money and credits into poor countries makes them have higher growth,” [William Easterly] said. “We have 60 years of evidence against this proposition — lots of money pouring in without discernible growth effects.”"Perhaps the best way for wealthy countries to help the rest of the world is to get their own economies back in gear," said Harry Broadman, a former World Bank official and now managing director of the Albright Group.“First and foremost, the engine of growth is not going to be aid,” he said. “It’s going to be the boost in external demand from growth occurring in the industrialized countries.”All the better if that growth in rich countries is directly fueled by the success of businesses in developing countries. Concerned individuals in the US and other Western countries need to approach the need in developing countries as a business problem, not a charity problem.

Charity is tempting, but ultimately unproductive.

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When People are in Need, Charity is Tempting

<h1 style="text-align:center;">Application for Online Marketplace</h1>By completing RENEW’s application, business owners and managers can activate eligibility to be represented in RENEW’s virtual marketplace. The application should only take a few minutes to complete, and will provide potential investors with relevant information on your company.UPDATE (December 2011): This application is no longer available. To be considered for RENEW's portfolio, please <a href="https://www.renewcapital.com/contact">contact us.</a>

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Application for Online Marketplace

<h1 style="text-align:center;">Part 1: Impact investing: Transferring wealth, wisdom and values between generations</h1>Parents, let’s begin with a quiz: Have you heard of impact investing (#impinv)? How about social entrepreneurship (#socent)? How about Ashoka, GIIN, ANDE, Kiva or Acumen? If you know what impact investing is, or of any of these organizations, your cool status with your kids may be higher than you think. If you're scratching your head right now, you’re not alone.<figure class="image"><img src="/uploads/2014_februrary_ean1_7e50a8b81a.jpg"></figure>The impact investment movement is happening...it’s a hot new field of finance that blends social and environmental impact alongside financial returns. J.P. Morgan predicts that the impact investing market will equate to more than a trillion-dollar by 2020. J.P. Morgan also says the industry size has jumped 20% from last year to $46B under management.* You can bet big firms like Goldman Sachs are working hard to design impact investment products for their wealthy clients. The popularity of impact investing is also growing on college campuses around the country. Thousands of students at top tier universities are enrolling in impact investment and social entrepreneurship courses, attending conferences and seeking careers in the impact investment space.* Impact investing is heating up in Washington, D.C., too, where earlier this month a group of heavy-hitting philanthropists and investors met at the White House to pledge $1.5B to impact investing, and USAID, OPIC and SBA all pledged to support impact investing.* The trend and related industry is clearly growing.So what is impact investing? There are many definitions related to the many types of impact investments and investors out there. But, here's my definition: impact investing is Warren Buffet meets Indiana Jones meets Mother Teresa. RENEW investments are made into high-potential, fast-growing companies in Africa where capital is scarce but opportunity is ripe. This is not like the billions being thrown into tech companies solving first-world problems. These investments are addressing real challenges around the world; think of a bread company in Ethiopia that employs 200 people and makes a good profit margin. Our investors use their capital to unlock growth in these companies, create jobs and generate financial returns. The social problems we are addressing lead to “healthy” economic development – growth in the middle market. It’s risky and deeply fulfilling. More formal definitions typically say something to the effect that impact investing is a field of finance that seeks to create measurable financial and social and/or environmental returns for investors.In the U.S. we are about to experience the greatest transfer of wealth in history; roughly $30 trillion is going to pass from retiring Baby Boomers to their children during the next 30 years.* Yet from discussions I have had with parents and wealth managers, it is often difficult for the generations to connect around shared values and a vision for how that wealth should be managed. And from what I’ve seen firsthand, impact investing has the potential to be a powerful bridge between generations.

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Part 1: Impact investing: Transferring wealth, wisdom and values between generations

<h1 style="text-align:center;">Part 2: Impact investing: Transferring wealth, wisdom and values between generations</h1> After more than two years of managing impact investments in Ethiopia, one of the things I find most interesting is how impact investing is not only creating a bridge between economies; it is creating a bridge between the Baby Boomer generation and their Gen X and Y heirs. Here’s what I’ve learned.<figure class="image"><img src="/uploads/ethiopia_sesame_trip_march_april_2014_59157096ae.jpg"></figure>Impact investing combines desires and values that both generations share. Baby Boomers, now moving into retirement, have worked hard to provide for their families, plan for a comfortable retirement, leave some wealth to their heirs and leave the planet better than they found it. As they enter their second phase of life, they focus on answering the question “What will be my legacy?” Their parents, what Tom Brokaw refers to as “The Greatest Generation,” believed that philanthropy was how to use the spoils made during the hard-working years of your life. The Greatest Generation would say -- give it away. And many wonderful elements of society have resulted from this charity. But I have noticed that the Baby Boomers have a different view. They are more concerned about sustainability, asking questions like “What if I cannot write a check next year, will this charity be able to continue on?” And they believe in creating a culture of empowerment versus dependence saying things like “Does the world always expect the U.S. to provide a bailout?" Baby Boomers see impact investing as a way to create a legacy that aligns with their values.Twenty years younger, their Gen X and Y children are graduating with degrees in business from top-tier schools, but don’t want to spend their lives behind a computer, earning a paycheck and pushing paper around. They want it all - both money and meaning. They are even willing to take a pay cut in order to work on challenging problems in the world.* Many Fortune 500 companies are scrambling to create programs to attract these best and brightest. Members of Gen X and Y care more about doing something meaningful, something they are proud of, than just amassing wealth that they will give away once they retire. This generation sees impact investing as a career choice.There are already some great examples of impact investing creating a bridge between generations that enables the transfer of shared values and wealth. Take Ron Cordes, who sold his company AssetMark Investment Services to Genworth Financial (NYSE:GNW) and set up the <a href="http://www.cordesfoundation.org/">Cordes Foundation</a>. The foundation champions bold, innovative solutions to the world's toughest problems by “connecting, equipping and supporting social entrepreneurs, and by catalyzing new sources of capital for impact investments in social ventures.” Sounds like a man that wants more sustainable ways of creating impact. Ron’s daughter Stephanie, who I had an opportunity to meet with in New York, is a sharp young woman who gave up a promising career in the fast-paced fashion and advertising industry <a href="http://www.nytimes.com/2014/02/11/your-money/family-foundations-let-affluent-leave-a-legacy.html?_r=2">to work with her father at their foundation</a>. She is absolutely fired up about impact investing, and just recently returned from a tour around Africa to look at potential investments. This is a great example of impact investing aligning two generations.I have also seen it firsthand here in Ethiopia, where we manage a portfolio of investments for <a href="https://www.renewcapital.com/investing" target="_blank" rel="noopener noreferrer">the Impact Angel Network</a>, a network of investors around the U.S. dedicated to making investments in high-potential companies in Africa. When the IAN comes to visit with their families on <a href="../../impact-angel-network/events.html">Econ-Tourism trips</a>, I see more than just another family trip: I see appreciation. I see fathers teaching sons and daughters how to review an income statement. I see wealth, wisdom and values passing between generations.I make the case then, that impact investing is not only a new industry that blends the better elements of philanthropy and investing, but is also a platform to connect two generations that could greatly benefit from some new connection points around wealth and values.

Examples of multi-generational impact investing.

Part 2: Impact investing: Transferring wealth, wisdom and values between generations

<h1 style="text-align:center;">Part 3: Impact investing: Transferring wealth, wisdom and values between generations</h1> <a href="part-1-impact-investing-transferring-wealth-wisdom-and-values-between-generations.html">Read Part 1</a> and <a href="part-2-impact-investing-transferring-wealth-wisdom-and-values-between-generations.html">Part 2</a> of the series. If you’ve read my first two blogs on the topic of impact investing, you hopefully agree with me that impact investing can provide a much-needed bridge between generations, and you may be asking, “How do I go about it?”<figure class="image"><img src="/uploads/2014_februrary_ean2_a8decfc876.jpg"></figure>We recommend families work with their wealth managers to create an impact investment plan that both generations are part of building. Here are a few steps to get the process started:1) Talk about it: Ask your parents or your children if they are interested in impact investing.2) Create an impact investment plan: This may sound like an investment plan, because it is, but with twist. In addition to defining things like geographic focus, industry focus, risk and return objectives and timeline, you can also define impact targets related to jobs, environment, health, etc. that will help you construct your impact investment portfolio. You can also talk with your wealth manager about whether they offer impact investment options.3) Take an impact investment trip: The Bahamas can wait another year. If you have a geographic focus, find an on-the-ground partner and plan a trip to the country you are looking to impact to begin gathering data and learning about the culture. We have hosted a number of families on investment trips in Africa and find them to be wonderful times of bonding, sharing war stories and cross-generational learning. Be sure to work with a vetted, trained professional team that knows the countries you are visiting. This is still the Wild West, so be cautious.4) Set up the infrastructure: Consider using a foundation, trust or LLC to make your impact investments. Again, work with a trained professional.5) Commit and get started: I hear of people dedicating a portion of their portfolio (e.g. 5%) to impact investments, or they pledge a certain amount each year. This can make the investment process become a tradition for your family (such as one impact investment trip and one investment per year). Then, begin exploring opportunities.As we enter this period in history - the greatest transfer of wealth of all time - I believe families can leverage impact investing as a bridge to connect two generations. Impact investing has the potential to offer a platform to transfer more than wealth between generations. It offers Baby Boomers a way to leave a legacy; it offers Gen X and Y heirs the meaning they are looking for; it offers companies access to capital to tackle challenging problems; and it creates a bridge for wealth, wisdom and values to pass between generations.

Part 3: Impact investing: Transferring wealth, wisdom and values between generations

<h1 style="text-align:center;">Thoughts from the ANDE Meeting</h1>This past Friday I attended a small portion of the 3 day extravaganza that is the <a href="http://www.aspeninstitute.org/policy-work/aspen-network-development-entrepreneurs/">Aspen Network of Development Entrepreneurs (ANDE)</a> annual meeting in Glen Cove, NY. ANDE is a membership organization that is bringing structure and something like a shared agenda to the new and uncertain field of SME (ANDE calls them “SGBs - small and growing businesses”) investment.This is sorely needed. The ANDE meeting was perhaps the only gathering I’ve attended where I felt that everyone there understood exactly why SMEs/SGBs are important and shared a common goal: help them succeed. The field spends so much time explaining itself that it’s important that organizations that do already “get it” can sit down and talk about where they are stuck, where innovation needs to occur and figure out who might have some good ideas.I also appreciated the fact that ANDE spans a range of nonprofit and for-profit approaches, and the <a href="http://www.aspeninstitute.org/sites/default/files/content/upload/ANDE">stellar roster</a> of participants mostly recognizes that this spectrum is necessary to move the SME field toward self-sufficiency. To me, some of the most exciting stuff to come out of this meeting has to do with how and where, exactly, nonprofit organizations can supply the sort of technical assistance that entrepreneurs need in order to prepare themselves to attract private capital. That is the sort of discussion that makes ANDE’s convening work exciting and of great value to the work that RENEW does.

Investing in Africa