GreenTec Capital GmbH
Award winner 2017 Category B
Innovation for Development
THE RECIPIENT
GreenTec Capital is a young company based in Eschborn, Germany, that gives start-ups and small and medium-sized enterprises (SMEs) in developing and emerging countries a helping hand as they enter the business world. It is already operating in Ghana, Nigeria, Rwanda, South Africa and Uganda.
The project
The investment company uses an approach specifically tailored to developing countries to support African entrepreneurs in their work to establish strong and sustainable businesses. As an investor, GreenTec Capital provides the financial foundations for a successful market launch while also offering inexperienced entrepreneurs technical assistance in actively shaping their business. GreenTec Capital is also an ‘impact investor’, which means that, when selecting the start-ups to support, it takes account of the impact and influence they will have and also their potential to become market leaders in their particular sectors.
The company’s distinctive approach and project results
The standout feature is the interdependency between the African start-up entrepreneurs and GreenTec, and the close collaboration between them. As GreenTec invests in the African businesses as a shareholder, it has a say in setting objectives and in the implementation process during the initial start-up phase. Its constant presence and support during difficult or tricky periods is crucial: GreenTec plays an active part in the business and is involved in both the financial and organisational side. Thanks to this distinctive approach, investment in African companies has already created 1,500 jobs across all sections of society and provided 40,000 people with access to clean energy.
An additional factor is that GreenTec only makes money from its investment if the strategies take root and the desired outcome of adding value is accomplished. This keeps risk levels low for the African companies and makes cooperation more attractive.
How the prize money is used
GreenTec Capital has set out to expand its business activities to include at least 50 companies by 2020, by offering a variety of services such as consulting, local operations, mentoring and funding, but also active shareholding. The EUR 25,000 prize money is used to further this ambition – with 10 companies to be added to GreenTec’s portfolio in the near future.
Receiving this award in February 2017 was an important milestone in GreenTec Capital’s corporate history. Being awarded the prize money and garnering the accompanying publicity was a boost for the sustainable development of our investment approach and therefore of our company itself. The prize money was used to source new investment targets – in other words we were able to use it to pay for travel expenses and other costs arising from checks on new investees and concluding contracts with them. It is helping us to produce a portfolio that will have grown to about 20 companies by the end of 2018. The companies that are already part of our portfolio have also benefited because we were able to include them during our trips and find new partners and/or co-investors in the process.
Farmcrowdy (www.farmcrowdy.com) is one of the companies in our portfolio that has made excellent progress. This agritech platform supports farmers in Nigeria, not only acting as an intermediary for investment and crop insurance but also providing expertise. It has helped several thousand smallholder farmers increase their turnover and expand their activities, leading to the creation of new jobs in rural areas. At the same time the company plays a part in securing access to local food supplies. Farmcrowdy has generated more than EUR 1 million in growth capital from international investors.
ARED before
ARED (www.a-r-e-d.com) has been expanding its activities from its base in Rwanda to include Uganda as well. By working with us, the company was able to develop its business from a solar kiosk that was used just to charge mobile phones to setting up Africa’s first street WiFi. The Shiriki hub (shiriki is Swahili for ‘take part’) not only enables the agents to participate in the world of work but also and in particular gives people at the base of the pyramid access to the infrastructure that today is quite probably the most important of all: the digital world. Cooperation with German technology companies and engineers (such as tech-solute in Karlsruhe) led to the development of a modern digital platform providing access to a full range of digital services that is sustainable and scalable.
ARED after
Another prime example of an award-winning enterprise is Agrocenta in Ghana (www.agrocenta.com). This digital platform, which connects smallholder farmers to the market and also provides transport options and useful information, came first in the Seedstars World competition, which has significant investment attached.
And lastly, let’s take a look at a German company that has launched activities in Kenya: Boreal Light (www.boreallight.com) has developed an off-grid solar-powered water desalination system specifically geared to the African market which can desalinate and purify high-saline sea water and brackish water. The system is marketed worldwide as a standalone solution both for producing drinking water and for irrigating agricultural land. It is currently being touted in Kenya as part of a water kiosk subsidiary scheme with other value-added services. This approach has already won Boreal many prizes and helped the company to attract investors. Together, we intend to scale up the concept to include many other regions so that this sustainable business model will enable as many people as possible to access water.
In addition to growing the operational side of our business we have further professionalised our processes and documented them in detail with the aim of disseminating our innovative investment approach across Africa using a form of licensing model in cooperation with local investors.
We have already opened two new offices, one in Nigeria and one in Ethiopia, and plan to open at least two more over the coming year. This strategy will allow us extend our approach to the entire African continent, so that we can reach a large number of companies and provide them with our support. By this method we aim to invest in more than 400 enterprises by 2023.
Follow the link to watch an interview that CNBC Africa conducted with Erick Yong about our company:
The German Entrepreneurship Award for Development has given us the opportunity to scale up our approach even further and develop a model that enables us to make a contribution to sustainable development in Africa. BMZ and GIZ continue to be excellent partners, and we regularly discuss other avenues of cooperation in order to generate synergies on the path to reaching our goals.