GBF

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What We Do

We use Business Rigor

Our mission is to grow viable, sustainable and inclusive businesses that generate earnings or cost savings for people in Africa, Asia and Latin America

Please check out our recently released 2017 Annual Report for a summary of our past year here.

Our History

2004: GBF began as an initiative of the International Finance Corporation (IFC) which piloted grassroots business investments and field-tested capacity-building approaches.

2008: GBF split from IFC and became an independent non-profit which continued investing in – and providing advisory services to – high-impact businesses in Latin America, Asia and Africa. GBF also wins the G20 SME Challenge.

2011: GBF further evolved its model by establishing a $49M for-profit private investment fund, GBI-I, for patient capital investment, and raising additional funds for the non-profit arm, GBP, to be used for business advisory services to the fund’s portfolio companies. Together the fund and non-profit make up GBF and provide powerful financial tools and business acumen to help strengthen and grow viable businesses that create lasting impact for low income people around the world. For contributing to the creation of solid, sustainable and responsible financial systems, GBF wins the IDB Beyond Banking award for best action in socially responsible and/or impact investment.

2017: GBI-I completes its investment period, and fully commits all of its capital, totalling more than $40 million invested in high impact businesses across Africa, Asia, and Latin America.

Read our 2017 Annual Report for more

Hybrid Model

A for-profit private investment fund: The capital structure of GBI-I, GBF’s for-profit private investment fund, allows it to make equity, mezzanine equity, mezzanine debt and straight debt investments. These customized investments help align GBF’s overall portfolio performance with each investee’s performance. This allows GBF to achieve most of its exits through company cash flows, while still receiving upside returns linked to the company’s success, and addressing investees’ liquidity concerns.

A donor-funded non-profit organization: The Grassroots Business Partners, GBF’s non-profit arm, provides fund management services for GBI-I, provides business advisory services to the fund’s investees, and works to build the field of impact investing by providing insights on lesson learned, impact measurement methodologies, and its model.

The fund and non-profit combine to deliver a blend of capital and support suitable for long-term investment in businesses that provide opportunities to under-served communities.

Portfolio

Small and medium businesses play a key role in improving the lives of the poor, but there remains a shortage of enterprises in developing countries that are both ready for long-term investments and can generate high social impact.

GBF invests in High-Impact Businesses, which we define as those generating sustainable economic benefits for large numbers of people from vulnerable communities. They tend to have complicated business models and supply chains, but are generally underdeveloped in management, operations and planning.

Our model of providing long term, appropriatelytailored mezzanine financing capital and Business Advisory Services (BAS) as a hybrid investment helps address the issues facing these businesses by providing long term flexible capital for investment and supporting skill building to improve business growth and increase lasting social impact.

Investment Criteria

GBF focuses on for-profit companies that have the potential to achieve significant social impact

Business Criteria: Growth stage companies with a strong track record & competitive advantage with high quality products/services.

Finance Criteria: Investments range from $500,000 to $2.5M with expected exit within 5 to 7 years of initial investment.

Mission Criteria: Companies with strong commitment to bringing sustainable social and economic impact to low income communities.

Impact Criteria: Companies that directly impact 500+ individuals, with potential to increase 5 to 10 times over the period of investment.

See complete Investment Criteria

Portfolio Performance

As a group, our investees are profitable, improving business management, and growing fast. Challenges remain, and it is difficult to say which improvements are due to specific GBF activities. GBF’s ultimate success will only become clear when the outcomes of our investments come to fruition and we can judge the resulting social impact.

Already, there are signs that our model of risk sharing capital, BAS and high-touch engagement help our clients improve their operations, build stronger businesses and create sustained social impact, As of December 31, 2017:

$43.4M capital committed
$18.8M principal & interest received

Learn more in our 2017 Annual Report

Business Advisory Services (BAS)

Businesses in emerging markets face big challenges, and oftentimes, investment alone is not enough to help scale a business. Our Business Advisory Services (BAS) are core to GBF’s model and have proven valuable to investees.

All of our investees receive customized BAS support, mostly concentrating on strengthening financial management, operations, and strategy. GBF provides BAS for a limited time during the early stages of our engagement with investees. We try to support catalytic BAS projects that help our clients grow to scale, become commercially sustainable, and create social impact. GBF designs, executes, and monitors BAS in conjunction with our investment work. Our regional offices lead the efforts to manage and deliver BAS both directly and through third-party consultants.

We have a strong, growing network of senior experts and advisers in each of our regions working closely with our investees to build internal capacity and drive high-level change programs. These advisers include agribusiness supply chain experts, financial managers, entrepreneurs, investors, and other business experts. In addition to our advisers, each region has at least one full time portfolio-level consultant working closely with investees on narrower issues such as cash flow management, environmental certification and risk mitigation.

Learn more about BAS projects in our BAS factsheet

BAS Results & Impact

BAS has helped ensure achievement of client growth potential by focusing on business fundamentals, anticipating and mitigating key risks, and taking advantage of key opportunities. In addition to showing healthy financial performance, investees have also, on average, improved along key business capability dimensions that aid investment success. As of March 2016:

83% of investees now have a skilled manager producing and monitoring operating indicators (a 43% increase for investees in GBF’s portfolio over two years)
64% of investees have increased revenues
61% of investees have increased profitability
89% of investees have implemented E&S management plans

GBF’s portfolio includes many types of beneficiaries and businesses spread throughout developing countries. This makes for challenges in assessing our impact. GBF’s impact measurement methodology is pragmatic and tries to assess our achievements, learn from our experiences and improve where needed. GBF’s approach is to collect self-reported metrics, confirm impact through surveys, and generate economic value calculations based on the information provided to calculate the long term potential impact of GBF’s investees on vulnerable communities.

To remain conservative, GBF does not quantify secondary or indirect benefits, but rather focuses on measurable outcomes to determine impact. For more, see Our Approach to Measurement.