Strategy
Beyond Microfinance: SME Venture Capital
A number of factors make emerging market SMEs attractive development vehicles and competitive investments:
- They encourage competition and entrepreneurship
- They fuel innovation, employment, and productivity growth
- They provide a breadth of investment opportunities
- They generate “Private Equity” returns
- They produce tremendous social dividends
Benificiaries
1. Entrepreneurs
- Access to the capital they need to grow their business
- Access to the networks they need to grow their markets
- Access to the strategic advice they need to become local, regional, and eventually global business leaders
2. Employees
- Two thirds of SME staff are poor or low-skilled workers
- Investments in SMEs, on average, lead to salary increases of 28%
- Since SMEs usually don’t have access to top talent, large investments are made in training their employees
- Stable employment in SMEs has generational knock-on effects:
- allows employees to pay for their children’s education and health services
3. Emerging Economies
- Important tax source for local governments
- Important connection between informal and formal sellers and buyers, and between rural and urban markets
- Encourages critical infrastructure investment to facilitate public goods growth
4. Investors
- Competitive Private Equity returns
- Professional asset management
- Portfolio diversification
- Philanthropic dividends