South African incubator and consulting firm Impact Amplifier has revealed to Disrupt Africa it had catalysed over ZAR55 million (US$4.5 million) in investments into early-stage startups, and aims to close over ZAR100 million (US$8.2 million) of capital deployed in 2015.
Impact Amplifier, which was launched in 2011, describes its mission as accelerating the growth and capital provision of high impact, innovative businesses in Africa.
Partner Pascal Frohlicher told Disrupt Africa Impact Amplifier had been founded with the “strong belief” business can provide solutions to social and environmental issues, with impact investing gaining traction and money being deployed aimed at achieving both financial and social returns.
“There was huge potential for Africa to be part of this powerful movement, but a major hurdle was – and still is – that most exciting socially and environmentally impactful businesses are not ready to absorb growth capital into their business,” he said.
“Filling this gap would be a game changer for accelerating and supporting innovation on the continent. Since then we have been instrumental in supplying investment-ready projects and companies to investors, all of which have had measurable socio-economic impacts.”
The figures speak to the company’s success, while Frohlicher said the company is also proud of the impact of its Enterprise Elevator accelerator programme, which launched in 2012. One major ongoing commitment is the Green Pioneer Accelerator, which is being delivered in South Africa and Kenya through partnerships with GrowthAfrica, VC4Africa and Hivos.
Participating companies are being assisted in scaling their businesses and offered the chance to earn EUR100,000 (US$116,000) in funding. The 16-week acceleration programme is well underway and startups will receive dealmaking support for the rest of 2015. Classes end at the end of April and a final pitch event to a select group of investors will take place in early June.
Frohlicher said there were many exciting and valuable companies in the green economy that have been unable to access funding, but the main issue is in fact the lack of readiness of the entrepreneurs’ businesses to absorb capital.
“The Green Pioneer Accelerator seeks to address this issue by providing a four-month group acceleration programme in both South Africa and Kenya,” he said. “In South Africa, we leverage a combination of in-class sessions, an adapted curriculum and technology platform provided by the University of Santa Clara’s Global Social Benefit Incubator (GSBI), and virtual one-on-one mentorship sessions by Impact Amplifier’s partners.”
Though the programmes are currently only being piloted, Frohlicher said the ambition is to expand it to other countries in future.
Expansion is on the agenda more generally for Impact Amplifier as well. Frohlicher said it is planning on rolling out additional two-group programmes this year in South Africa through a partnership with the DOEN Foundation, and is also planning expansion to “another country” within a year.
Frohlicher believes Impact Amplifier has been active in shaping the growing impact investing ecosystem in South Africa and beyond.
“We invest our skills and time in startups in a very targeted way. We do occasionally take equity stakes in our entrepreneurs, but we don’t currently manage capital,” he said.
“Our key value add is our strategic and operational support and the network of investors we have access to. We believe that financing alone will not solve the issues facing the impact investing space right now. While we do believe that there is a funding gap in early stage equity finance, there is also a shortage of investable ventures with solid financial and social returns. Our job is to invest in the capabilities of Africa’s entrepreneurs.”
Tech hub sustainability has rapidly become a serious issue over the past year, with Tayo Akinyemi, director of AfriLabs, a network of 36 technology innovation hubs in 18 countries across Africa, saying last year African tech hubs were fragile and had no clear path towards long-term sustainability.
Frohlicher, however, is convinced of Impact Amplifier’s sustainability even as other hubs across Africa are less sure of their own.
“We are a for-profit business and would not be working in this space if we didn’t believe in the sustainability of what we do,” he said.
“In fact the business case for our work will become stronger and stronger over time as business-as-usual is replaced with the need for innovation.”