<h1 style="text-align:center;">Part 3: Angels Going Global</h1>A New Strategy for Africa and other Emerging Economies (Part 3): Angels Going GlobalIn search of the next Peter Thiel, Reid Hoffman and Mike Markkula...If you’re asking “who are those guys?”, don’t worry. Unless you spend your evenings rubbing elbows with some of Silicon Valley’s elite, you may not realize that these are some of the most famous <a href="part-2-rise-angel-investors.html">angel investors</a> in U.S. history. They made pretty smart investments in a few companies that have become very big names. Here’s the rundown:<ul><li><a href="http://en.wikipedia.org/wiki/Peter_Thiel">Peter Thiel</a> made a $500,000 angel investment in Facebook for 10.2% of the company.</li><li><a href="http://en.wikipedia.org/wiki/Reid_Hoffman">Reid Hoffman</a> made an angel investment in both PayPal and LinkedIn.</li><li><a href="http://en.wikipedia.org/wiki/Mike_Markkula">Mike Markkula</a> invested $250,000 in Apple, became a 33% owner and employee #3.</li></ul>So we see how angel investing is not only a multi-billion dollar industry, we also see, if done well, it can have multi-billion dollar payouts.The lead up to our next trend, begins when we look beyond Silicon Valley to places like Mumbai. Have you heard of <a href="http://www.vccircle.com/500/news/deepak-shahdadpuri">Deepak Shahdadpuri</a>? How about <a href="http://theglobalindian.com/?p=554">Naveen Tewari</a>? No? That’s OK too. They are tycoons from India who have become aggressive angel investors. Remember how we said angel investing is on the rise in the U.S., and is now a $20B a year industry? Well, it’s on the rise in countries like India too.<figure class="image"><img src="/uploads/table_angel_1f80ea5c31.png"></figure>We also see angels in developing countries taking on different angel characteristics from U.S. angels. They are not simply investing in their own country. They are investing along the economic continuum in India, the U.S. and U.K., and virgin markets like Africa.What does this trend mean? I believe it means that, not only is angel investing growing, but it is also going global. I find myself asking why? Why are angels from India investing in Mumbai, Addis Ababa, and San Francisco? Especially when angel investors traditionally invest close to home (within driving distance from their house) so they can oversee their investment and coach the entrepreneurs.I believe the answer may be a combination of three answers: (1) Angel investors from emerging economies have more risk tolerance than angels from developed countries, and are becoming “development-risk agnostic.” (2) The world is becoming flat. Old story, but the Internet and global travel allows angels to Skype with their investees from 3,000 miles away, and have global offices on Flight 611, seat #15C. And finally, (3) I believe global angels have a network of people they trust in the foreign countries in which they invest.I believe #3 is important. Reports say 70% of foreign investors in agricultural lands in Ethiopia today are Indians. Presently, the Indian community in Ethiopia numbers approximately 1,500 nationals, around a hundred of which are businessmen, many of which occupy key positions in the UN and in Ethiopian Government. This is actually a common story across much of Africa.So what I believe this means is:<ul><li>Angel investors are behind some of the greatest companies of our time.</li><li>Angels from emerging economies are “development-risk agnostic” and invest along a continuum of economically developed countries.</li><li>To become global, angels require people they trust in the country in which they are looking to invest.</li></ul>Our next blog will begin to explore Impact Investing; and how this industry could help U.S. investors become global angels.&nbsp;

If you’re asking “who are those guys?”, don’t worry.

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Part 3: Angels Going Global

<h1 style="text-align:center;">Part 2: The Rise of Angel Investors</h1>We continue our series on "A New Strategy for Africa and other Emerging Economies" with a focus on angel investors.In the coming posts we will try to answer the following questions: What is angel investing? Who are angel investors? What do they do? What are they motivated by? What role could they play in economic development? How can this role influence U.S. diplomacy and strengthen our global competitiveness? What is preventing angel investors from investing in developing countries? How is RENEW addressing these challenges?So let’s begin with some short, simple answers that we can build on.What is angel investing? Angel investing has significantly grown over the last two decades in the U.S., Europe and other developed countries, and now rivals the venture capital industry in size. It is a form of investing that occurs at a critical stage in a company’s life, between founders, friends and family (FFF) and venture capital. Investments are generally $25K - $500K in size, and are categorized as “early stage investments.” If you are interested, the following five-page executive summary of OECD’s report titled <a href="http://www.oecd.org/dataoecd/48/19/49310423.pdf">Financing High Growth Firms – the Role of Angel Investing</a> is an excellent read.Who are angel investors? Angel investors are high net worth individuals (HNWIs) who invest their time and capital in early stage, growth companies. Angels are often seasoned entrepreneurs and executives who invest as individuals or groups, in industries they know.What do angel investors do? In the U.S. in 2010, angel investors invested over $20 billion into 61,900 companies, compared with venture capital funds, which invested approximately $23 billion in only 1,012 companies (<a href="http://www.unh.edu/news/docs/2010angelanalysis.pdf">University of New Hampshire Center for Venture Research: The Angel Investing Market in 2010</a>)What are angel investors motivated by? Angel investors are motivated by many things – seeing companies grow, mentoring entrepreneurs, shaping an industry, risk, making a return, creating an impact, etc. For the purposes of this series we focus on a motivation that combines the desire to create social and/or environmental impact with the more traditional motives: this is known as impact investing. A recent Aspen Network of Development Entrepreneurs (ANDE) survey found that a significant number of HNWIs are looking to make impact investments between $25,000 and $100,000, equating to a total market value of $35 billion (<a href="http://www.jpmorgan.com/pages/jpmorgan/investbk/research/impactinvestments">Impact Investments: An Emerging Asset Class</a>).So to summarize several takeaways:<ol><li>Angel investing is a huge industry that fuels the economy in developed countries by financing early stage growth companies (avg. 27 times more investments than venture capital).</li><li>Angel investors have many skills they like to offer alongside their invested capital.</li><li>Angel investors could invest up to $35B in impact investments.</li></ol>Next week we will explore how angel investors could make investments in development countries and play a significant role as a new actor in diplomacy and development.

What is angel investing? Who are angel investors? What do they do?

Part 2: The Rise of Angel Investors

<h1 style="text-align:center;">Part 1: Angel Investing, Impact Investing and SMEs</h1> This is the first blog in a series entitled "A New Strategy for Africa and other Emerging Economies."Over the coming weeks and months, RENEW will be presenting a series of blogs and articles outlining ideas for a new strategy for how the U.S. and the West can engage Africa and other developing countries. Many people, in the fields of economic development, foreign diplomacy and international business, have begun voicing a need for something new.Our proposed strategy begins to address this need, and is shaped by three trends we see taking shape in the sectors of finance, development and philanthropy. These trends are:<ol><li>The rise of angel investors</li><li>The potential of SMEs in developing countries</li><li>The formalization of impact investing</li></ol><figure class="image"><img src="/uploads/SM_Es_Angels_and_Impact_59824fdb16.jpg"></figure>This blog kicks off a series of thoughts that will show how these converging trends could provide a new model for the U.S. and the West to catalyze growth in Africa and other developing countries, and strengthen our global competitiveness. Accompanying these thoughts will be perspectives from the field about the growing need for the U.S. to expand its role in Africa’s private sector; what we can learn from China’s strategy in Africa; and the changing perspective of Africa from a land of poverty to one of opportunity.

RENEW presents a series of blogs outlining a new strategy for how the West can engage Africa.

Part 1: Angel Investing, Impact Investing and SMEs

<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;">A Few of My Favorite Things: Some Facts About Africa</h1> As 2011 draws to a close for RENEW and the rest of the world, I wanted to take a few moments to remember some of my favorite things…about Africa:<ul><li>Thirty-six out of 46 African governments made things easier for business in in 2011.</li><li>The International Monetary Fund expects Africa to grow by 6% this year and nearly 6% in 2012, about the same as Asia.</li><li>Africa's combined consumer spending in 2008 was $860 billion, and it is expected to grow to $1.4 trillion by 2020.</li><li>According to Standard Bank, around 60 million Africans have an income of $3,000 a year, and 100 million will in 2015.</li><li>Africa’s enthusiasm for technology is boosting growth. It has more than 600 million mobile phone users—more than America or Europe.</li><li>Ethiopia has grown by about 7.5% this year, without a drop of oil to export.</li><li>Trade between Africa and the rest of the world has increased by 200% since 2000.</li><li>Inflation dropped from 22% in the 1990s to 8% in the past decade.</li><li>In 2010, private-equity firms raised $1.5 billion for projects in Africa.</li><li>In 2010, total foreign direct investment was more than $55 billion—five times what it was a decade earlier, and much more than Africa receives in aid.</li><li>Foreign investors are no longer just interested in oil wells and mines. They are moving on to medium-sized investments.</li></ul><figure class="image"><img src="/uploads/recycledafricamap_0_1c5d67af95.jpg"></figure>﻿In the midst of all these great signs of growth in Africa, RENEW is also growing. Highlights from 2011 include:<ul><li>Implementing a project in Afghanistan, including an investor conference in Washington, D.C. and an investor trip to Afghanistan.</li><li>Conducting surveys on the investment climate in nine countries in Africa.</li><li>Running due diligence on opportunities in East Africa</li></ul>Wonder what the future holds for the RENEW team? Stay tuned for more information about what’s ahead in 2012… &nbsp;

As 2011 draws to a close for RENEW and the rest of the world...

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A Few of My Favorite Things: Some Facts About Africa

<h1 style="text-align:center;">It Takes Heart, Head...and Grit</h1>The <a href="http://online.wsj.com/article/SB10001424052970204630904577055663749586298.html">Wall Street Journal</a> recently published an excellent article highlighting the trends and growth in the impact investing space. With <a href="http://www.eurosif.org/">Eurosif</a> projecting that HNWIs will be investing 1.2 Trillion Euro in impact investments by 2013, wealth managers and financial advisers need to find creative ways to satisfy the blended appetites of their clients.I want to discuss a statement made by Klaus Tischhauser, CEO of <a href="http://www.responsability.com/site/index.cfm?id_art=66199&amp;actMenuItemID=21178&amp;/id_site/428/id_corp/428/vsprache/EN">responsAbility Social Investments.</a> He states that "the 'hottest' area of impact investing is small-business finance," and I completely agree with him.One of the challenges in the impact investing market, especially funding directed to frontier markets, is that most of it is going into microfinance institutions (MFIs), or MFI funds. But as Mr. Tischhauser also notes, the microfinance sector is well established; and I would say oversubscribed. Many working in the field actually call microfinance: "sustainable poverty." Although I don't agree with this sentiments, I do believe local small and medium enterprises (SMEs) have been an overlooked asset class that hold the potential (albeit risky) for strong financial returns and local impact.My only concern from the article was this statement "A typical holding is Silicon Valley-based Driptech, which has developed a novel drip irrigation system for poor farmers in India and China." Although this is an amazing technology, my hope is that these business innovations, and subsequent investments, are being looked for in-countries like Kenya, Ethiopia and Ghana. Understandably, this requires a considerable leap of faith from investors that many not be willing to travel around Africa searching for deals. And investing in an irrigation company in Silicon Valley is less concerning than an IT company in Uganda. Yet, in my opinion impact investing needs to get to this place soon - financing local firms in frontier markets. Why? Because of the multiplier effect: Local firms buy and sell locally, hire locally, and pay local taxes. <a href="http://seaf.com/index.php?option=com_content&amp;view=article&amp;id=159&amp;Itemid=178&amp;lang=en">SEAF</a>, one of the leading SME investment organizations, claims that every $1 invested in a frontier market creates $13 of benefit in the local society.

Why the future 1.3 T Euro impact investment industry should consider SMEs.

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It Takes Heart, Head...and Grit

<h1 style="text-align:center;">West Africa: Photos and First Impressions</h1> As part of consulting project, the RENEW team recently traveled to Niger, Senegal and Ghana. Here are a few photos and first impressions: Niger<figure class="image"><img src="/uploads/Collages_45a8dd87b7.jpg"></figure>Impressions of Niger: On the edge of the Sahara Desert, Niger is dry, dusty and in many ways it feels forgotten by most everyone (except the Chinese and <a href="http://www.boston.com/news/world/africa/articles/2011/12/04/candy_cash____al_qaida_implants_itself_in_africa/?page=3">al-Qaida</a>). USAID is not even active there. But there are bright spots including one of our key contacts who said "Niger is not poor. We are just acting poor." The country has a variety of natural resources and though not evident upon first glance...there is great potential for economic growth in certain sectors including <a href="http://www.state.gov/r/pa/ei/bgn/5474.htm#econ&quot;">oil, uranium and onions</a> of all things. Senegal<figure class="image"><img src="/uploads/Collages2_10e3a50ee3.jpg"></figure> First impressions of Senegal: The international airport is in the heart of Dakar (it will be moved to the countryside in 2012) and as you fly across the city the vibrancy is immediately apparent. Signs of <a href="http://www.state.gov/r/pa/ei/bgn/2862.htm#econ">economic growth</a> include the many buildings under construction, a decent highway system, and malls with things like pet shops and an Apple distributor. It's impossible not to notice the many people exercising on the beaches and roadways. All signs that the middle class is definitely growing in Dakar. And the great folks at USAID - Senegal seem open to public private partnerships to encourage the SME space. When you go to Dakar, do try to overlook the bad smells/pollution and trash though and don't forget to visit <a href="http://www.tripadvisor.com/Restaurant_Review-g293831-d810749-Reviews-Chez_Loutcha-Dakar.html">Chez Loutcha</a> a great, affordable restaurant downtown. Ghana<figure class="image"><img src="/uploads/Ghana_c06bbb0bdf.jpg"></figure>First impressions of Ghana: Grasscutter anyone? Across West Africa, a giant rat is considered a delicacy more expensive than beef or chicken. I am not sure what that has to do with my first impressions of Ghana, except that we saw our fair share of the not so little guys. The infrastructure, organization and growth in Accra is impressive. Traffic is quite bad and the city is spread out, but there is definitely good SME investment opportunities to be found in Ghana. For more information read the <a href="http://www.state.gov/r/pa/ei/bgn/2860.htm#econ">State Department's economic outlook for Ghana.</a>

The RENEW team recently traveled to Niger, Senegal and Ghana.

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West Africa: Photos and First Impressions

<h1 style="text-align:center;">Are We Losing their Hearts and Minds…Because of our Wallets?</h1> For the past six years I have been traveling in Africa and South Asia. I have spent most of that time in East Africa, where the United States has long been the dominant “goodwill” country. With initiatives like PEPFAR and the Millennium Challenge Corporation, Africa fell in love with “Bushy,” and had high hopes for President Obama, with his paternal roots in Kenya. I have long enjoyed the strength of the American brand as a businessman traveling in Africa. But on my last trip, I noted a significant change.Our company does two things: One, we find and assess small and medium size enterprises (SMEs) investment opportunities in developing countries, and two, we connect those opportunities to angel investors. There’s a lot more technical stuff involved, and some amazing investor trips, but mainly we do transactions — brokering deals for "impact investors."Connecting investors to good investments in Africa and other developing countries has not been easy, seeing as most Americans hold an inaccurate perception about what is actually happening on the ground. Nonetheless, we are starting to see some interest from investors. We have even started to organize angel investors for investments in Afghanistan.Back to Africa…as I travel I always keep a close eye on who is making moves on the continent. If you have been reading the news from Africa for the past few years you understand why I keep a close eye on China. China’s presence in Africa is not new. They have been working in some of the hardest countries in Africa for years. The general sentiment in Africa, with its many different countries and cultures, is concern about China’s presence. I experienced a clear example of this three years ago at the Hilton in Addis. A group, who I believe were Chinese diplomats, walked into the business center in the hotel. One of them was confronted by, what appeared to be a disgruntled Ethiopian man in his mid-thirties. If you have met Ethiopians, you know that they are some of the gentlest people on earth. I was shocked by his outburst, and clearly so was the Chinese woman who was verbally assaulted. His attack was swift, direct and memorable: “Why are you in my country? I want you out!”So, on my recent trip to Ethiopia I assumed the sentiment would still be the same, even worse given the impressive advances China has made throughout the continent. I was wrong.The shock didn’t hit me at first, because I was still living in the memory of the scene from the business center. I’d ask question, like I always do, about the Chinese: Where are they investing? Why? Is it working? Who are they working with? What are the perks, etc.? The questions go on and on. For a long time I have been rewarded with scowling faces and answers like, “Roads, because they want to get mining consignments.” Or “They work very hard, but they treat us poorly.”For the first part of my recent trip around East Africa, this is exactly what I heard. I was even rewarded with a “They [the Chinese] are coming here by the thousands. You need to do something!” Now, I honestly think most of these were genuine statements from concerned friends, diplomats and entrepreneurs. But it wasn’t until Ethiopia where I was given a little dose of reality.I don’t know if it was irony given that I was back in Ethiopia, or that I finally spoke with someone that was not afraid to tell me the truth. Either way, the answers I was given did not tell the story I was used to hearing about China in Africa. The story is changing. And what’s more, so has Africa’s story about the United States.This is what happened: I was driving around with a successful Ethiopian entrepreneur looking at his stone crushing plant and a few other projects he is working on. Like most successful entrepreneurs in Africa, I am always fascinated and a little skeptical (hey, I get paid to ask questions) about how he “made it.” Nonetheless, I really liked this guy and he matched the profile we like to look for (I’ll save that for another post.). As I worked through my series of questions I finally got to the ‘China section.’ “What are your thoughts on China?” I asked. “Oh, they are great! We do tons of business with them. They are our largest trading partner, and we have been working with them on a number of projects.” His enthusiasm caught me off guard. I wanted to stop my questioning, afraid that if I scratched much deeper I would find out just how much sentiments towards China are changing.I am an American who encourages high net worth individuals (angel investors) to invest in SMEs in developing countries. It’s a new model for economic development, but it’s also a model for foreign diplomacy. In my humble opinion, diplomacy in Africa is more about business than it is policies or health initiatives, or aid.Entrepreneurs generally know what I do, and they know what to say about China to fire me up about the need for America to get involved with business in Africa. But this conversation ignored all of that. He didn’t sugarcoat his answer, or roll his eyes about the Chinese, or complain of their cheap goods, or talk about how they are corrupt, or throw his arms up asking why the Americans aren’t investing. He smiled and shot me a straight answer… “they are great!”I am not saying that everyone who has complained about what China is doing in Africa was lying to me, but maybe I have been getting some theatrics. The reality is that China’s economic success in Africa is dwarfing the U.S. — the international leader of capitalism. And these efforts on the part of the Chinese have begun to win the hearts and minds of the people. It’s not just about damns and roads and mining projects; it’s about trucking companies and textile factories and coffee farms. And yes, the Chinese do build nice hospitals, like the one they just constructed south of Addis. Ethiopia loves it. Read this from a newspaper:“The hospital is historical as it is named after the renowned athlete Tirunesh Dibaba, he said, adding it would further help to enhance the people to people relations of the two countries [China and Ethiopia].”There’s a whole <a href="http://et.china-embassy.org/eng/zagx/">website</a> on the China-Ethiopia relations. On the site are links to aid being given to Ethiopia alongside news of shoe companies wanting to invest, and investors interested in the cotton industry. The truth is that China has learned that the hearts and minds of the people can be won by working with them, giving to them, and investing in them.In the United States, we have taken a hard position on things like bribery, which we say the Chinese do almost blatantly. We are also doing amazing development projects all across the developing world that get little media exposure. Being an American visitor in these countries, I can imagine the frustration of our policy makers when the U.S. influence is so clearly diminished. As a Kenyan so eloquently put it, "we've turned our back to the West to face the rising sun." An outdated cliché but it still delivers a sting.So China is gaining favor in Africa and the U.S. is losing it. But thankfully, I don’t think it’s too late to try something new. It involves the U.S. Government doing what the Chinese are doing; taking a more active role in facilitating investments. And not just huge, massive infrastructure investments; I am talking about investing into SMEs—the backbone of any economy. I have had the honor of spending time with some amazing businessmen and women in the U.S. who know the value of entrepreneurship and the benefits that come from the investor/investee relationship. Our Government needs to get creative about how to efficiently facilitate these relationships.We’re missing out on a major opportunity for diplomacy through business, investing and good old-fashioned capitalism. China is winning in Africa by using this strategy and it feels like we’re stuck. Is it time for the U.S. to try something new?

For the past six years I have been traveling in Africa and South Asia.

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Are We Losing their Hearts and Minds…Because of our Wallets?

<h1 style="text-align:center;">Photos from Ethiopia</h1> Photos from our recent fact-finding trip to Ethiopia:<figure class="image"><img src="/uploads/2011_August_Ethiopia_f9549fda1a.jpg"></figure>