<h1 style="text-align:center;">Summer 2016 Travels and Connections</h1>The past several weeks have been full of summer travel and connections for Matt and Laura Davis, partners of RENEW. The two made their way back to the North America mid-July and have since been on the road visiting members of the Impact Angel Network (IAN), local investors, potential partners, friends and family during the summer 2016 investor roadshow. The trip started on the West Coast and the partners slowly traveled back East, from Los Angeles to Chicago, Ottawa to Montreal, Boston and finally returning to Washington D.C. Here are just a few highlights from their time in these cities:<figure class="image"><img src="/uploads/summer_2016_roadshow1_c9905cea5b.jpg"></figure>Los Angeles: With the help of IAN Chapter Chair <a href="http://connectinggrowthglobally.com/">Jodi Morris</a> and her good friends, Steve and <a href="https://www.linkedin.com/in/teri-carcano-5a05528">Teri Carcano</a>, RENEW co-hosted one of our favorite events to date. The evening’s enlightening and lively discussion revealed many interesting and unexpected linkages, and shed some light on the motivations that brought people together that evening (read about the happy hour in our blog: <a href="what%e2%80%99syourstory.html">#What’sYourStory?</a>). RENEW also enjoyed meeting and speaking with local family offices, philanthropic advisors and other potential partners, including the team over at Los Angeles City Incubator (<a href="http://laincubator.org/">LACI</a>).Chicago: The team had a stellar visit to the windy city at the end of July - meeting old friends, developing new connections, and even some team planning time. The partners had great conversations on impact investing with several groups, including Brian Kasal and Laura Swanson of <a href="http://www.fourstarwealth.com/">FourStar Wealth Advisors</a>, Alesha Black and Louise Iverson of the <a href="https://www.thechicagocouncil.org/">Chicago Council on Global Affairs</a>, and Tasha Seitz of <a href="http://theimpactengine.com/">Impact Engine</a>.Ottawa: Matt and Laura had a great time in beautiful Ottawa, meeting with government stakeholders and new local partners alike. The team continued conversations with <a href="https://profile.rbcwealthmanagement.com/james.kinkaid">James Kinkaid</a> of Kincaid Wealth Management of RBC Dominion Securities. Matt and Laura first met James during the spring roadshow in April at the Berkshire Hathaway Annual Meeting (read about RENEW's experience in our blog: <a href="buffett-approach-investing-africa.html">A Buffett-Like Approach to Investing in Africa</a>.) They also enjoyed time with our new friends at the <a href="http://ccafrica.ca/">Canadian Council on Africa</a>, among others.Montreal: Partner Laura Davis had a wonderful opportunity to share about RENEW and the Impact Angel Network with Women Investing for Impact (<a href="http://www.wifi-canada.org/about/">WIFI</a>) in early August. Our gracious hosts convened mid-summer and had a great turnout, which led to some smart questions and dynamic conversation. A special thank you to Kathy Fazel and Fiona MacFarlane for pulling together such a great breakfast event!Boston: RENEW met with several individuals, families and advisors during their time in Boston. Matt and Laura also had the opportunity to present an information session for a Boston-area wealth management firm on the growing fields of angel and impact investing. A big thank you to Paul Lonergan and his firm <a href="http://www.congresswealth.com/">Congress Wealth Management </a>for hosting!It was a whirlwind, but all in all a wonderful trip filled with valuable dialogue with IAN members, potential investors and too many stakeholders and partners to count!

RENEW partners, Matt and Laura Davis, travel across North America during the summer investor roadshow.

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Summer 2016 Travels and Connections

<h1 style="text-align:center;">IAN Introduction Yields New Bakers at Mama Fresh</h1>IAN member and advisory board chair <a href="https://www.linkedin.com/in/davidgrizzle">David Grizzle</a> recently introduced the RENEW team to Julie Baker over email. Julie was headed to Ethiopia, on one of her regular trips to the country as part of her work with Connect Education Innovators (<a href="http://www.connectei.com/">ConnectEI</a>). ConnectEI supports educational projects in partnership with several NGOs in Addis, including <a href="http://hopeforkorah.atticdoorstudios.com/">Hope for Korah</a> - an organization that works to better the lives of those who live in local community called Korah. This community is located next to the city’s largest trash dump, Koshe. Korah is notorious for illness and extreme poverty, and many who live there scavenge the dump for a living.Laura Davis, partner of RENEW, met with Julie Baker during her time in Addis and the two discussed educational programming and work opportunities for clients of the Ethiopian NGOs she works with in-country. Out of that conversation, staff from Hope for Korah brought several women to interview to be bakers at Mama Fresh. Five women are now busy baking injera, given meals during each shift, financially supporting their families, and enjoying many other benefits of full-time employment.<figure class="image"><img src="/uploads/img_1223_4ef6bbb5d6.jpg"></figure>RENEW’s Laura Davis recently visited Mama Fresh’s manufacturing facility in Addis Ababa, and was introduce to the new bakers. Mama Fresh’s operations manager, Rajesh Dahiya, reports that the new employees are all doing very well.We love this example of the positive impact that all members of the Impact Angel Network can have in frontier markets, such as Ethiopia.And of course, a special thank you to David and Julie for making this success story possible! RENEW is so excited to make more of these happen in partnership with the IAN.

How a conversation in Washington, D.C. led to new job opportunities in Addis Ababa.

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IAN Introduction Yields New Bakers at Mama Fresh

<h1 style="text-align:center;">The Collection</h1>SHOP AND SHAREWe are excited to unveil <a href="http://thecollection2015.myshopify.com/">The Collection</a>, a curated selection of products from the Impact Angel Network's portfolio. The Collection is designed to enable network members and friends of RENEW to share the IAN cheer - and impact - this holiday season. Enjoy select spices from Mama Fresh, finely roasted Arabica coffee from METAD, and Color Cloud Hammocks from the textile company we are planning to invest in next.<figure class="image"><img src="/uploads/hompage_favorite_final_0_0c14bc428d.png"></figure>Mama's Spices Add a touch of Ethiopian flavor to your life with spices from <a href="https://thecollection2015.myshopify.com/products/mamas-berbere">Mama Fresh</a>. Though typically used in Ethiopia as a seasoning for stews that accompany injera, Mama's spices are versatile enough to be a staple in the American kitchen. Try them sprinkled on salad, roasted walnuts, french fries or roasted sweet potatoes, or as a seasoning on burgers, chicken or steak on their way to the barbecue.Hambela Holiday Blend Enjoy a cup of specialty coffee from <a href="https://thecollection2015.myshopify.com/products/hambela-holiday-roast">METAD's</a> Hambela farm in Ethiopia’s world-renowned Oromia region, a region in southern Ethiopia that produces distinctive coffees from traditional varieties of Arabica coffee. This delicious cup of coffee is freshly roasted in the U.S. and is sure to delight all coffee lovers.Color Cloud Hammocks 'Adventure-in-a-bag' <a href="https://thecollection2015.myshopify.com/products/color-cloud-hammock">Color Cloud Hammocks</a> are the perfect gift for your friends and loved ones who are on-the-go. Made in Addis Ababa by the IAN's upcoming investment, an Ethiopian textile company, the hammocks are easy to transport, can be hung in minutes and will be sure to elicit a smile with their bright and fun color combinations.<figure class="image"><a href="http://thecollection2015.myshopify.com/collections/all"><img src="/uploads/shop_the_2015_collection_67d282b8fe.png"></a></figure>Every bag of coffee you purchase employs an Ethiopian for three days.* Every bag of spice you purchase employs a baker for one day.* Every hammock you purchase provides wages for a skilled textile worker for eleven days.*<a href="http://thecollection2015.myshopify.com/collections/all">Shop The Collection</a> and share in the IAN's story of impact in East Africa.

A curated selection of products from the Impact Angel Network's investments in Ethiopia.

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The Collection

<h1 style="text-align:center;">Ready for an Adventure?</h1>RENEW strives to provide members of the Impact Angel Network (IAN) with an unforgettable investment experience. One such element of the investor experience is the opportunity to travel to Ethiopia and participate on an Econ-Tourism trip. What is an Econ-Tourism trip? Each trip is unique, but the following information provides a general overview of the adventure.WHAT:RENEW encourages all members of the IAN to travel to Ethiopia and participate on an Econ-Tourism trip, during which they meet with entrepreneurs, tour their facilities, see the current state of the businesses first-hand, and help choose the next set of investment opportunities for the IAN.WHERE:Addis Ababa, Ethiopia.WHEN:RENEW hosts trips for members several times throughout the year.AGENDA:Econ-Tourism trip participants usually arrive on a Sunday to rest, relax, and sightsee around Addis. The team will plan several meetings with various prospective businesses from Monday to Wednesday, and many participants will leave on Thursday for a cultural trip around Ethiopia. Participants also enjoy one-on-one meetings with the entrepreneurs of RENEW's portfolio companies to learn more about their experiences building successful businesses in Ethiopia.OUTCOME:Econ-Tourism trip participants are usually surprised to see so much development, growth and opportunity in Ethiopia. They notice signs of a rising middle class and are encouraged by the people they meet who want to work and build their country into an economic powerhouse. Our investors see first-hand the desires of Ethiopians to work and partner with U.S. investors, and the wide range of sectors in which to invest, from manual labor to technology.As Econ-Tourism trip participants speak with Ethiopian entrepreneurs, they often comment about the positive attitudes and drive of the management teams they meet, the signs pointing to growth in the agriculture, healthcare, energy, and technology sectors, and the work of the companies to improve the lives of employees.DETAILS:The RENEW team prepares members for the trip by suggesting flight and hotel options, planing side trips to exciting destinations around Ethiopia, advising on cultural and business customs, and creating an agenda filled with meeting entrepreneurs, seeing business opportunities and getting to know the unique culture of Ethiopia.SIDE TRIPS:Trip participants can also take side trips to beautiful and historic spots around Ethiopia, such as the monolithic rock-cut churches of <a href="http://whc.unesco.org/en/list/18">Lalibela</a>, the lake district of <a href="https://en.wikipedia.org/wiki/Lake_Awasa">Awassa</a> in the Great Rift Valley, or <a href="https://en.wikipedia.org/wiki/Bishoftu">Debre Zeit</a>, a resort town known for its crater lakes. Our in-country team takes care of all of the logistics and planning for these side trips.UPCOMING TRIPS:The RENEW team will be hosting an Econ-Tourism trip from February 18 to 24, 2017. If you have any questions regarding the IAN, Econ-Tourism trips in general, or about the upcoming trip in February, please feel free to reach out. &nbsp;

Participate on a RENEW Econ-Tourism trip and visit the unique and exciting country of Ethiopia.

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Ready for an Adventure?

<h1 style="text-align:center;">Ethiopia: Then &amp; Now</h1>Matt and I often reflect on how we would like to better document and share the changes we have seen in Ethiopia since we first arrived to open our office in February 2012. The changes are almost beyond comprehension, and we often wish we had installed time-lapse cameras at various points around Addis Ababa to capture the exceptional growth this city has experienced over the past few years.I was part of the “advance team” in January 2012, coming several days before Matt and a group of brave investors arrived in Addis Ababa. Now, we have six investments and will soon be the largest private equity (PE) investor in Ethiopia by volume of deals. Since then, RENEW has come a long way, as has the country in which we reside. We are thrilled to participate in and observe the incredible story that is Ethiopia’s growth.<figure class="image"><img src="/uploads/then_now_855e40e184.jpg"></figure>Infrastructure – Trains, planes and automobiles Matt knows a time before there was even a ring road in Addis Ababa. Now, there is not only a ring road (a highway of sorts), there are also stoplights throughout the city, a six-lane highway connecting Addis Ababa to Adama (the busiest corridor for transporting goods), a light rail system to transport city residents, and a railway will soon be commissioned to take containers from Addis Ababa to the Port of Djibouti. We still become concerned when we see people walking their livestock on the ring road, but then again, change takes time.Private Equity – They said it was impossible When we first came to the country, RENEW was the second foreign PE group to open an office in Ethiopia. Now, there are several additional firms working alongside RENEW. We still receive the occasional question from investors about whether private equity is really possible here, but in general, viewpoints have evolved and investments are being made. As more investors come, desk officers at related government organizations are starting to understand the needs and terminology of the private equity community. We do our part to educate businesses, banks and other stakeholders in the investment community about private equity through seminars and one-on-one conversations. Shark Tank Addis anyone?Real Estate Development – Scaffolding, scaffolding and more scaffolding If you leave Addis Ababa for even a couple of days, you’ll likely come back to a new building (or ten) going up. Every day, it seems like a new hotel or apartment building or corporate office is constructed and opens its doors. I would never pretend to be an expert on the real estate industry in Ethiopia, where the government owns the land and leases it for residential and commercial use. But, by all accounts, there has been incredible growth since we arrived four years ago, and it does not seem like it will be slowing down anytime soon. One of our investors recently commented that she thinks we should start a scaffolding business. Not a bad idea!Quality of Life: On the up and up The quality of life becomes better each month we are here. Last month, we spent some time in the rural coffee region of southern Ethiopia, and I was astonished to find that there was an operational 3G cellphone network throughout the area. Even a year ago, this wouldn’t have been the case. Ericsson has done an incredible job of implementing said networks in locations where they’ve been asked to do so by the government of Ethiopia. Other areas we see progress in include the addition of upscale restaurants and infrastructure present in cosmopolitan cities around the world.As 2015 comes to a close, I'm sure that we will see even more exciting development and change in the coming year - Matt and I can't wait to see what's in store.

RENEW's Laura Davis reflects on the tremendous change Ethiopia has experienced since first arriving in 2012.

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Ethiopia: Then & Now

<h1 style="text-align:center;">UHNW Millennials and Impact Investing</h1>The impact investing movement is gaining popularity across generations, and none more so than with millennials (individuals who were born in the early 1980s to 1995). Impact investing combines the best attributes of philanthropy and traditional investing. It operates under the philosophy of “doing well, by doing good”, wherein investors seek a double bottom line - financials returns and positive social impact.&nbsp;Impact investing covers a broad spectrum of financial offerings, from Environmental, Social and Governance (ESG) screened securities, to donor-advised-funds, to angel investing. While the current impact investing market is growing - with more than one out of every six dollars under professional management in the U.S. invested according to sustainable, responsible and impact investing strategies - this number is expected to exponentially increase in the near future.*We are on the verge of history’s largest transfer of wealth between generations. According to Boston College’s Center on Wealth and Philanthropy, an estimated $59 trillion will be transferred generationally in the U.S. between 2007 and 2061.** As younger generations take control of this wealth, impact investing will continue to grow in prominence, as suggested by the recent publication of several millennial-focused financial studies and reports.Proving Worth, one such study conducted by OppenheimerFunds, focused on answering several core questions concerning the world's (soon-to-be) wealthiest generation: 1) what ultra-high net worth (UHNW) millennials value most, 2) how wealthy millennials influence family decisions, and 3) what UHNW millennials want from a financial advisor.WHAT UHNW MILLENNIALS VALUE MOSTMillennials are dreamers and doers - they not only seek to make the world a better place, but also pursue activities that positively impact the world around them, be it philanthropy or value-based investments. It should come as no surprise then that “ninety-six percent of UHNW millennials who participated in the [OppenheimerFunds] study were interested, or very interested, in philanthropy. A respective 70% and 64% were interested, or very interested, in socially responsible investing (SRI) and impact investing.”***So, what do millennials value most when evaluating the impact of their philanthropic or investing efforts? According to Proving Worth, rather than focusing on the “feel good” factors, millennials are instead results-driven and look to the long-term. “When assessing different approaches, 96% of participants identified long-term returns as important/very important, while a respective 95% and 91% ranked accountability and sustainability as important/very important.”***As for millennials’ preferred areas of interest for impact investing, it comes down to basic human rights: education, gender equality, economic justice, water and the environment. Now, in terms of deciding which of the aforementioned areas to pursue, it seems that family and parents still have a considerable influence.<figure class="image image_resized" style="width:99.22%;"><img src="/uploads/millennial_blog_7bc91fb94c.jpg"><figcaption>Millennials from the Impact Angel Network</figcaption></figure>MILLENNIALS &amp; THEIR FAMILIESMillennials, both from the Proving Worth study and RENEW’s own Impact Angel Network, have noted the influence of parents and grandparents in shaping their viewpoints on the importance of preserving wealth and creating a positive legacy. Impact investing has therefore become a natural segue from the traditional charity of older generations, by combining the family values instilled in millennials at a young age with what they in turn value most - results and sustainability.That being said, millennials are not yet making the key decisions regarding their family’s wealth and investment strategies. While 59% are a committee or board member for their family’s wealth management, “only 18% of the study’s respondents make strategic decisions for their family’s overall wealth management.”*** The reason? Millennials lead extremely active lives that are typically centered on their careers. They are more likely to pursue their own interests before becoming heavily involved the family finances. It won’t be long though until millennials are running the portfolios of today, wherein we will see a dramatic shift towards impact investing.MILLENNIALS &amp; THEIR ADVISORSMillennials are some of the world’s most technologically driven individuals. So, when looking for sources of information on impact investing, many would naturally assume they would turn to social media or the Internet. Instead, topping the list of the most trusted sources of information are family, research, professional colleagues, business contacts, and advisors. According to the Proving Worth study UHNW millennials view advisors as “a source of knowledge and advice”, especially when a personal relationship has been established and the advisor demonstrates an understanding of their family and wealth goals.***The flip side to this coin is that the study also revealed “there is a considerable disconnect between the services millennials want from their advisors and the offerings that are currently available.”*** Millennials are looking for advisors who focus on wealth transfer and deal generation. They are not interested in cookie cutter financial solutions. Rather, as expressed by several participants in the study, millennials seek customized and high-touch financial solutions, a framework within which they can test out their ideas, and a partner that helps educate and develop said frameworks. Financial advisors and wealth management firms of today will need to quickly evolve in order to retain the assets of families that will soon be run by this next generation.RENEW recommends millennials work with their families and with their wealth managers to create an impact investment plan that all generations are part of building. Follow this <a href="../2014/part-3-impact-investing-transferring-wealth-wisdom-and-values-between-generations.html">LINK</a> for guided steps on how to get the process started.<hr><a href="http://www.ussif.org/sribasics">*U.S. SIF: SRI Basics</a> <a href="http://blogs.barrons.com/penta/2016/01/15/a-rising-tide-of-impact-investing/">**Barron's: A Rising Tide of Impact Investing</a>. <a href="https://www.oppenheimerfunds.com/private-banks/doc/Proving_Worth_The_Values_of_Affluent_Millennials_in_North_America.pdf?dig_asset_metrics=done">***OppenheimerFunds: Proving Worth: The Values of Affluent Millennials in North America</a>.

Expansive OppenheimerFunds study reveals what matters most to millennial investors.

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UHNW Millennials and Impact Investing

<h1 style="text-align:center;">We Used to Give to Africa?</h1>Recently, RENEW’s own Matt Davis sat down with <a href="http://www.forbes.com/sites/devinthorpe/2016/01/13/impact-investor-in-ethiopia-fills-financing-gap/#6836aaf850b3">Forbes contributor Devin Thorpe</a> to discuss how RENEW and the Impact Angel Network (IAN), one of the largest U.S.-based angel networks for Africa, are “filing the financing gap” in East Africa. The following is a summary of some of the topics covered during Matt and Devin's live chat, so be sure to watch the entire interview below.Since 2012, the IAN has invested in seven small to medium-sized enterprises (SMEs) in East Africa, making it one of the largest investors in Ethiopia on a deal volume basis. In doing so, RENEW and the IAN are not only addressing a development challenge, but a market challenge as well.Considered too large for micro-financial institutions, and too small for larger venture capital firms, SMEs make up what is commonly known as the “missing middle” of emerging economies. Investing in SMEs addresses the serious financial constraints these types of companies face in developing countries. It also addresses a market challenge commonly experienced by private equity firms - sourcing a pipeline of quality companies. By mentoring and shaping the SMEs of today into the market leaders of tomorrow, RENEW is able to provide larger venture capital firms with a steady stream of companies that are run by ethical and vigilant leaders.So, what is the ultimate goal of RENEW and the IAN’s work in Ethiopia? That one day our grandchildren will look back and ask us in bewilderment, "we used to GIVE to Africa?”<figure class="media"><oembed url="https://youtu.be/4olNft2kudM"></oembed></figure>

RENEW’s Matt Davis sits down with Forbes contributor Devin Thorpe to discuss filling the financing gap in Ethiopia.

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We Used to Give to Africa?

<h1 style="text-align:center;">Ethiopia and the Entrepreneurial Dream</h1><figure class="image image-style-align-left image_resized" style="width:37.99%;"><img src="/uploads/sadura_temp_logo_0_dea9ed0c09.png"></figure>The latest installment in our Q&amp;A series with the employees of RENEW’s portfolio companies takes a closer look at the entrepreneur who is behind the Impact Angel Network’s sixth investment in East Africa - an Ethiopian food and beverage company.Isaias Lemma was born in Addis Ababa and has lived in this city for almost his entire life, except for a brief interlude in London during his college years. Isaias sat down with me to talk about how his experiences and education to date have inspired him to pursue his dreams of running his own business in Ethiopia.When you were a child, what did you dream of doing for work or as a career, and how did this influence your decision to become an entrepreneur? As a child, I was always guided to follow the conventional career routes (like doctor, engineer, etc.) However, I was always fascinated by the entrepreneurial history of my grandfather and the transformation of my parents (particularly my mother) from professionals to business people. The accomplishments gained from creating a business from inception to fruition, the creation of job opportunities at different ranges and the freedom to make my own decisions are the main reasons I wanted to pursue entrepreneurship.What education and/or training have you received to date, and how has it helped you with your career? I have an MBA and have taken several entrepreneurial and management courses. My education has helped me to view business in a structural and conceptual method and that my business needs to be developed through a standardized system. Some of my trainings have also helped me understand my stakeholders and my environment more intimately.<figure class="image image_resized" style="width:99.68%;"><img src="/uploads/sadura_qa_2015_0_82895d31cd.jpg"></figure>Could you provide the background story of your family’s company - The Twins PLC? The Twins PLC started as a small business and has grown into a medium-sized business consortium in Ethiopia. It started with a small children’s shop and had expanded into the supermarket business, import and distribution, and now has a paper production factory. Our steady growth in the business environment has helped us become a successful production and distribution business here in Ethiopia, with a significant market share in our selected business sectors.As an entrepreneur, what inspired you to go out and create an entirely new business venture? It is evident that Ethiopia is one of the fastest-growing economies in Africa and that growth is creating a society with increasing disposable income. The manufacturing business environment here is at an infant stage and most products are imported. Thus, I am constantly inspired to create quality products that add value to raw materials available here and reduce the dependency on imported goods. Additionally, I believe through a new venture we can create jobs for the youth and directly contribute to the growth of the nation.What is your new Ethiopian Food and Beverage Company trying to achieve at the local, regional and international levels? My new business venture will focus on the production of food and beverage products. We will aspire to produce superior products for the local market, with potential growth in the East African region. Gradually, we would like our new business venture to become the leading fast moving consumer goods (FMCG) products company in Ethiopia and Africa.What will your new role be at the Ethiopian Food and Beverage Company? And, what life experiences have prepared you to take on this new role? I will be the General Manager of the company and will be managing the overall business, and guiding the company to achieve its goals and objectives. Since this project was one of my ambitions, I believe I have the passion, drive and experience to achieve the success I had envisioned.Why do you feel that the Ethiopian Food and Beverage Company will be a successful business venture? My family’s prior experience at The Twins PLC in importing related products, our current experience in the manufacturing process, our efficient distribution network, our close relationship with large and small local distributors and strategy to produce superior products gives me the confidence that our business venture will be successful.What do you hope to accomplish in partnering with RENEW LLC and working with members of the Impact Angel Network (IAN)? By partnering with RENEW LLC and the IAN, we hope to gradually grow our business and accomplish our goal of becoming one of the leading FMCG producing companies in Ethiopia. We also seek to vertically integrate into the supply chain to source our own raw materials through local farms, diversify into other products beyond the food and beverage industry sector, achieve major market share with our products, and export our products to neighboring African countries. With our experience in the local business environment and IAN’s support we believe we will accomplish these goals.

RENEW continues our Q&A series by speaking with the entrepreneur behind the IAN’s sixth investment.

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Ethiopia and the Entrepreneurial Dream

<h1 style="text-align:center;">Back to the Source: Coffee</h1>&nbsp;AN INTRODUCTION TO KAFFAKaffa, Ethiopia, from which the term “coffee” is derived, is the birthplace of coffee, according to many experts including <a href="http://www.ncausa.org/About-Coffee/History-of-Coffee">The National Coffee Association</a>. To this day, the Kaffa region in the southwestern part of Ethiopia remains one of the strongest coffee-producing regions in the country.The legend goes that Kaldi, an Ethiopian goat herder, first discovered coffee after he noticed his goats became energetic upon eating cherries from a certain tree. Kaldi shared this knowledge with the monks of a local monastery, who made a drink with the berries and enjoyed its invigorating properties. Soon, the findings of coffee spread from Ethiopia to the Arabian Peninsula and then on to Europe. The earliest credible evidence of either coffee drinking or knowledge of the coffee tree appears in the middle of the 15th century, in the Sufi monasteries of Yemen.(1) By the 16th century, coffee had reached the rest of the Middle East, Persia, Turkey and Northern Africa before spreading to Europe, Indonesia, and finally to the Americas.<figure class="image"><img src="/uploads/dsc_0854_4341a7fdef.jpg"></figure>As it has been since the 16th century, Ethiopia remains one of the largest producers of Arabica coffee beans in the world. RENEW and the Impact Angel Network (IAN) are proud to be a part of this important tradition through our investment in METAD Agricultural Development PLC (METAD), an Ethiopian specialty coffee company founded in 2012 by Aman Adinew. With a vision for crop-to-cup coffee, METAD aims to not only strengthen Ethiopia’s coffee reputation amongst sophisticated consumers in the international market, but also help local farmers improve the quality and value of their harvested crop. In pursuit of this vision, METAD seeks to become the leading specialty coffee brand by offering global and domestic consumers with the highest quality, 100% Ethiopian Arabica coffee.METAD’s coffee cultivation, harvesting and primary processing occurs at farm sites 75 kilometers beyond Yirgacheffe, deep in the heart of some of Ethiopia’s best coffee country. METAD’s 200-hectare Hambela and Gedeb farm and processing sites include washing stations, a dry mill, a huller, beds for sun drying, and warehouses for storage to handle all of the pre- and post-harvesting coffee activities.<figure class="image"><img src="/uploads/view_of_hambela_processing_site_0_5b205d80d6.jpg"></figure>COFFEE CULTIVATIONAs a whole, coffee's production process and value chain are very complex, much like viticulture. The two main species of coffee grown for coffee production today are Arabica and Robusta, with Arabica coffee being indigenous to the mountains of the southwestern highlands of Ethiopia.The Ethiopian coffee value chain starts with farms, like METAD, that grow and harvest red cherries - the coffee fruit and seed (see photo below). Farms either sell the harvested cherries to independent processors or process the crop themselves. A processor has two options: 1) select the highest quality red cherries and dry them on raised drying beds (what is called sun-dried, unwashed or natural coffee) and hull them on location, or 2) remove the pulp from the coffee cherries by using a wet mill and dry the coffee seeds, covered in their parchment. These two types of processing techniques, also known as primary processing, are crucial to the ultimate quality and character of the coffee.In Ethiopia, the processor then sells the dried coffee seeds (or beans) to exporters on the Ethiopia Commodity Exchange (ECX) platform. The exporter cleans, polishes, and bags the coffee beans for export shipping. Finally, an importer, broker or roaster imports the coffee beans into the consuming country, after which they will be roasted and be made ready for consumption.<figure class="image"><img src="/uploads/bts_metad_56d665a740.jpg"></figure>WHAT MAKES SPECIALTY COFFEE "SPECIAL"?Coffee can be broadly defined as specialty or commercial grade. Specialty coffee, a term first coined back in 1978 by Erna Knutsen of Knutsen Coffee Ltd., in the simplest definition refers to special geographic microclimates that produce beans with unique flavor profiles.(2) There is a fundamental understanding that specialty coffee beans will always be well prepared, freshly roasted, and properly brewed; one that the Specialty Coffee Association of American (SCAA) has standardized and enforced. The SCAA is considered to be the world’s coffee authority and the largest coffee trade association, with nearly 5,000 members located in more than 40 countries who represent every segment of the specialty coffee industry.The SCAA defines specialty coffee in its green stage as “coffee that is free of primary defects, has no “quakers” (under-ripe or under-developed attributes), is properly sized and dried, presents in the cup free of faults and taints and has distinctive attributes.”(3) In general terms, “specialty coffee is coffee from a known geographic origin that commands a premium price above commercial grade coffee due to its high quality and particular attributes that it possesses.”(4) In the case of METAD, the company produces Yirgacheffe specialty coffee, the quality of which METAD continually ensures at its coffee lab, the first and only private, state-of-the-art coffee quality control facility on the African continent that is <a href="http://www.prnewswire.com/news-releases/metadkabu-coffee-quality-laboratory-becomes-africas-first-private-specialty-coffee-association-of-america-certified-lab-208654311.html">certified by the SCAA</a>. Specialty coffee from this region is considered to be, by some, the highest quality in the world - an opinion that has been gaining popularity over the past several years.<figure class="image"><img src="/uploads/dsc_0739_1_998d048eb3.jpg"></figure>Demand for coffee is poised to hit a record in 2017, as people around the world and in developed markets are increasing their java consumption. Global coffee consumption is expected to grow by 1.2% over the upcoming year, leading to higher prices for coffee beans. “The price for Arabica coffee futures was up 20% in June 2016, marking the biggest monthly gain since February 2014.”(5) Citigroup even estimates that Arabica coffee prices could reach $1.50 per pound by the second half of 2017. To meet this increasing demand for high-quality coffee, international roasters are seeking out traceable and single-source producers in smaller sub-regions of the world. Similar to wine, consumers are willing to buy coffee at a premium if it’s from specific regions, is certified fair trade or organic, is naturally sun-dried, etc. According to a survey conducted by the National Coffee Association, the retail value of the U.S. coffee market alone is estimated to be $48 billion dollars with specialty comprising approximately 55% value share.(6) It is these overall trends that suggest sustained momentum for specialty coffee growth.BRINGING IT BACK TO THE SOURCEIt’s no wonder that with Ethiopia being the epicenter of Arabica coffee, and it ranking among some of the fastest-growing economies in the world, the country is quickly becoming a target for foreign investors seeking attractive returns in the coffee value-chain, as well as domestic and export market opportunities. In fact, coffee is one of Ethiopia’s largest export commodities, with over 55% of the coffee produced in the country sent outside its borders.(7)According to a <a href="https://d3n8a8pro7vhmx.cloudfront.net/eatradehub/pages/860/attachments/original/1433149069/Ethiopian_Coffee_Industry_Value_Chain_Analysis_2010.pdf?1433149069">USAID analysis</a> of the Ethiopian coffee value-chain, coffee generates “70 percent of Ethiopia‘s foreign exchange earnings and provides livelihoods for 15 million Ethiopian smallholder farmers.” The industry employs several hundred thousand workers in processing coffee cherries across hundreds of washing stations and hulling mills around the country.In Ethiopia, government institutions are responsible for the state coffee plantations with approximately 8,000 permanent employees and an estimated 50,000 seasonal jobs.(8) Coffee generates a considerable number of employment opportunities on farms, in the processing plants and in the transport sector. In Ethiopia, coffee constitutes a very important source of seasonal employment for many poor people and most agro-processing employees are women. Altogether, METAD employs 38 permanent staff and several-hundred seasonal staff, 70% or more of which are women. Additionally, they have purchased from, partnered with and/or supported more than 3,500 out growers to provide best practices on growing, harvesting and selling coffee. METAD also creates further social impact in the community surrounding the farm sites by sponsoring a school with over 600 children, constructing new community facilities (such as a school and community center) and working with development partners to build and install new wells.<figure class="image"><img src="/uploads/used_b2a1709f7c.jpg"></figure>Smallholder farmers, those whose plots are less than five hectares (ha), account for 95% of the country’s coffee output.(9) In fact, “average plot sizes do not exceed two ha,” wherein coffee yields remain stubbornly low compared to that of Colombia (1/3 their yield) and that of Costa Rica (1/4 their yield).(10) The country’s remaining 5% of output is produced by plantations, which average more than 50 ha in planted area, and which have been privatized by the government in recent years.”(11) However, because of the predominance of smallholders, the average yield per hectare for all cultivated land is no more than 700 to 800 kg.(12)According to the USDA Foreign Agricultural Service’s <a href="http://gain.fas.usda.gov/Recent GAIN Publications/Coffee Annual_Addis Ababa_Ethiopia_5-12-2014.pdf">2014 Ethiopia Coffee Annual Report</a>, the major reasons for the low coffee production are:<ol><li>Ethiopian coffee farm management system and agronomic practices are traditional and fail to inject new technologies into the country’s coffee production system. In addition, extension services provided to smallholder farmers are inadequate.</li><li>Inadequate use of improved seeds as the supply is limited to areas located near coffee research centers and universities in the country.”</li><li>Historically, there has been a lack of a designated government institution to provide technical support for coffee production. At one time, there was a specialized government agency supporting the production and marketing of coffee. However, it was “dissolved many years ago, leaving the sector with little institutional and technical support from the government.</li></ol>The Government of Ethiopia, though, has recently noted this problem and plans to restructure the coffee development sector by making it a priority value-chain under its Growth &amp; Transformation Plan II - increasing yields from 700 kg/ha to more than 1,100 kg/ha.(12)Ethiopia truly has the potential to increase coffee production and productivity as it has all the necessary “ingredients” including suitable elevation, temperature, soil fertility and sufficient rainfall in coffee growing regions of the country. With the right financial support and guidance, the country could become the number one coffee producer in the world. And METAD, with its clear vision and passionate entrepreneur, is uniquely positioned to become a market leader in Ethiopia’s specialty coffee industry.&nbsp;

Developing Ethiopia’s specialty
coffee sector.

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An analysis and overview of one of Ethiopia’s oldest and most lucrative value chains.

Investment Insights