Early Stage Financing
The Topic Early Stage Financing addresses the needs of entrepreneurs and their SMEs (small and medium size companies) in need of seed and venture capital/VC financing in order to grow their companies and position them in the markets. The topic has the following three agendas.
Venture Capital (VC) ecosystems
The objective of this Agenda is to catalyze seed and venture capital ecosystems in LAC to promote early stage investment.
The Agenda will support small and medium-size enterprise (SME) development in Latin America and the Caribbean (LAC) by building adequate ecosystems for early stage financing, namely seed and venture capital.
The Agenda will combine projects and activities in four core areas: (i) Channeling technical assistance and advice to governments seeking to implement regulatory reforms or initiatives promoting early stage financing; (ii) Building capabilities of catalytic institutions such as venture capital associations, seed financing networks, and capital markets; (iii) Promoting deal flow quality through business incubation and entrepreneurship; and (iv) Disseminating knowledge and reference cases on early stage financing.
The expected outcome indicators for this Agenda include at least three countries improving their regulatory frameworks and developing specific initiatives to enable early stage financing and three countries showing improvements in their seed and VC ecosystems by moving significantly upwards in their ranking in the LAVCA-VC scorecard.
Seed and VC funds
The objective of this Agenda is to catalyze and/or support the development of new seed and VC funds in countries with adequately enough developed ecosystems. The Agenda will support the development of entrepreneurship and small and medium enterprises (SMEs) in Latin America and the Caribbean (LAC) by expanding access to seed and venture capital (VC) financing.
The Agenda will comprise projects and activities in two core areas: (i) direct equity investments in seed and VC funds' and (ii) active promotion of the seed and VC industry through the dissemination of knowledge and the engagement of key players.
The systemic change sought through the implementation of this Agenda is a higher level of development of the seed and VC industry in LAC. The extent of the systemic change can be determined by measuring the increase in the level of seed and VC financing provided to entrepreneurs and SMEs in LAC throughout the life of the Agenda. Attractive returns generated by seed and VC funds will be critical to attracting investors and to convincing governments that they need to provide an environment conducive for this type of investment. Access to seed and VC financing will also be important in the formalization process of SMEs. An increased presence of private sector investors in this space would bring the sustainability that ultimately leads to systemic change. The expected outcome indicators for this Agenda include 25 new seed and VC funds and at least USD 550 mm in additional funding leveraged.
Green and Base of the Pyramid (BoP) funds
The objective of this Agenda is to catalyze and/or support the development of new alternative seed and VC funds targeting clean technology, and BoP in countries with adequately enough (maybe we should say this, otherwise, it may be too restrictive) developed ecosystems. The Agenda will support alternative equity funds that invest in small and medium-size enterprises (SMEs) in Latin America and the Caribbean (LAC) by promoting venture capital (VC) financing for green technologies, and basic services and products attending the BOP.
The Agenda will combine projects and activities in two core areas:(i) Direct equity investments in seed and VC funds; and (ii) active promotion of the VC industry targeting those sectors through the dissemination of knowledge and the engagement of key players.
Although MIF and other players have invested in this type of funds through the years and learned first lessons, alternative VC financing in LAC is still incipient vis-à-vis other regions and needs to be further promoted. The expected outcome indicators for this Agenda include 10 funds specialized in green technologies and/or basic services and at least 100 mm in additional funding leveraged.