While entrepreneurs sometimes receive start-up capital through micro-credit, these businesses often struggle to find funding to allow them to expand, grow, and create jobs. To resolve this issue, Invest Africa recently launched a micro-investment platform (www.invest-africa.org) dedicated to helping micro and small enterprises (MSEs) in Africa get the funding they need to grow and fight poverty in their communities by allowing individuals across the world to invest in these businesses online.
Here's how it works:
1) Choose a business from our list of entrepreneurs/enterprises
2) Make a micro-investment through PayPal
3) Follow Along as your Enterprise Grows: our local field partners administer the funds and coach the entrepreneurs throughout the project. You will receive regular updates including sales numbers and expected profits
4) Get Repaid: as the business repays the original investment plus a percentage of its profit (the social profits), the money becomes available in your account. You can use the original amount invested to make another investment, or withdraw it and transfer it to your bank account through PayPal
5) Collect Financial Rewards: You can trade your social profits for points and redeem your points to collect rewards of an equivalent value on our rewards platform.
6) Repeat: You can reinvest the social profits generated by your investment in a new enterprise to help another entrepreneur.
In April, Invest Africa (IA) launched their first two entrepreneurs – Hellen and IA's local partner Volunteer Partnerships for West Africa (VPWA) in Ghana; and Jacqueline and the local partner ALIDé in Benin. VPWA will be working with rural farming communities in Akuapim South Municipal area in the Eastern Region of Ghana to provide a plant to process agricultural food stuffs for local consumption. Hellen Asebea is currently managing the farm and has over 20 years' experience in farming. Jacqueline, a yam retailer, is working with ADILé to expand her business in Benin and respond to the growing demands of her clientele.
With the launch of their pilot projects, I sat down with Sandra Ntsonde, the founder of Invest Africa, and learned more about her hopes for the future of Africa and Invest Africa, her setbacks, and how you can get involved!
RM: What inspired you to start this company?
SN: I believe that creating employment opportunities is one of the keys to generating economic growth in Sub-Saharan Africa. I realized that while micro-credit helped many entrepreneurs to start their individual businesses, there was no financing available for 1) the entrepreneurs who received micro-credit in the past and were willing to expand their businesses, or 2) larger businesses caught in the missing middle between microfinance and traditional banking. While micro-credits are a good solution for an individual entrepreneur starting its micro-enterprise, they do not meet the needs of entrepreneurs willing to expand and create job opportunities. That is the reason why Invest Africa offers micro-investments, allowing the entrepreneurs to repay their loan in a more flexible way since the amount they repay is based on their performance.
RM: What is the Coaching Program and why is it important?
SN: I believe it is important for investors to become actively involved in the businesses they support, which is why I started the coaching program. Through this program, investors can volunteer consulting services to the businesses they invest in. The coaching program enables connections to facilitate the exchange of knowledge between the local entrepreneurs and business professionals across the globe. Most economic development programs focus on providing access to capital but this is not enough to help the entrepreneurs face their challenges such as lack of vision and experience, inadequate technical and managerial skills. We hope to bring a community of volunteers' development consultants to collaborate with our local SMEs [small and medium-sized enterprises], learn from each other, and build successful businesses that will become a major source of job creations.
RM: What challenges does your organization face?
SN: Invest Africa is a very young organization and needs to raise awareness and build a large pool of online investors. Funding is a major challenge since the organization is entirely volunteer-run. The organization was self-funded and would need external funding in order to grow and scale our operations. Our legal status (Invest Africa is a for-profit benefit corporation) allows us to seek capital investment. We plan to create a linked non-profit in order to be eligible to grants and tax-deductible donations. This hybrid structure would help us fulfill our social mission by accessing various funding sources.
RM: What development, event, or new understanding since you started has had the most impact on your original plan? How has your plan changed in response?
SN: At first, the objective was that each online investor who made a micro-investment on the website would receive back its original investment plus a financial return at the end of the investment term. But an amendment to the JOBS Act in April stipulated that the SEC regulation did not allow us to do that, so we implemented a rewards platform offering a large selection of rewards from electronics to events or travel tickets. Now, when the entrepreneurs repay, the online investors receive back their original investment plus points corresponding to the financial return on their investment. As such, investors can reinvest their social profits with another entrepreneur or trade them in to buy rewards on our platform. Another new development is the creation of an affiliate marketing program. On our "IA Shop" page, we display links of socially-responsible merchants, especially those selling African-related products, and Invest Africa – as an affiliate – receives a sales commission for each sale made on our website. This program is an opportunity to promote these businesses while adding a source of income for Invest Africa.
RM: Is this your first company? What have you learned in starting this organization?
SN: I have learned that it is very important to do something you are passionate about because starting an organization can consume much of your life, especially with a volunteer-run organization like Invest Africa where we are all juggling our full-time jobs, Invest Africa, and our personal and social lives. I realized it is very helpful to receive advice from people who had similar experiences and I hope I will have the opportunities to network with women entrepreneurs and/or microfinance professionals. I also learnt that strategic partnerships are key and… I hope we will be able to establish partnerships with other organizations, corporations, institutions and media.
Learn more about us, our sponsors, and entrepreneurs by visiting our website at www.invest-africa.org
You can stay connected to Invest Africa by…
Public Relations Manager of the US,