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Audaces Africa Impact Fund I (the “Fund”) is a €10 million venture fund, focusing on decentralised economic development and urbanisation opportunities in Sub-Saharan Africa (“SSA”). The Fund works in parallel with Audaces Impact Club, our innovative crowdfunding platform for impact investing.
Audaces invests in businesses that use technology to drive decentralised economic development across several sectors, and improve the livelihoods and productive activities of growing urban populations.
Our strategy aims to address the urbanisation and emerging consumer opportunity in SSA. With its current population set to double to 2 billion people by 2040, and its urban population projected to grow at 3.9% for the forthcoming years, Africa faces substantial social challenges, with urban centres hosting an increasing and poor population. At the same time, African urban areas offer the greatest potential impact returns on capital, because of its emerging middle class and increasing purchasing power. It is expected, by 2030, that Africa’s top 18 cities may reach a combined purchasing power of $ 1.3 trillion.
Audaces will invest in technology-driven scalable business models delivering decentralised economic development across a vast array of business sectors and activities. Unburdened by sunk costs in legacy infrastructure, SSA has skipped over entire technological development stages, and its institutions have proved to be over-centralized and inadequate to address the region’s needs. Therefore, Africa is now a greenfield opportunity for innovative private enterprises using technology to offer core infrastructure and services in a decentralised fashion, and enabling a leapfrogging prospect for industries such as fintech, cleantech, edtech, and consumer mobile.
Audaces will adopt a “Frontier Capital Movement” investment style, aimed at filling the gap between mainstream traditional venture capital focused on development capital and later-stage deals and philanthropic approaches targeting seed capital opportunities and start-up projects. We will focus on early-stage opportunities, offering financial, operational, strategic and business development support to rapidly scale-up operations and geographical footprint of our investees.
The Fund will target deals with a focus on the large cities of SSA, being the primary target countries Nigeria, Ethiopia and Angola.
SECTOR FOCUS AND VALUE CREATION THEMES
The Fund will pursue investments in fintech, cleantech, edtech, and consumer mobile/internet. For these sectors, we have identified six value creation themes, which are identified in the target prior to investing, and will help focus portfolio
operations on areas that matter for value creation:
Most of the 100-day plans for each investment will be known prior to committing.
WHY AFRICA AND WHY NOW?
MORE DOLLARS FOR IMPACT: Africa is a popular target market for impact investors globally. This has led to an increasing demand for allocation in most impact investors’ portfolios.
MORE IMPACT FOR YOUR DOLLAR: Your investment will provide affordable basic services to millions, in a population which is growing from 1bn today to 2bn+ by 2050 (UN Population Division, 2017).
AN OPPORTUNITY FOR SUPERIOR RETURNS: Africa’s economy is expected to grow 4.3% p.a. from 2016 to 2020. E.g. A solar investment IRR is > 20% (vs. Europe 5-10%, LatAm10-20%).
INVESTMENT STRATEGY: Investing in technology-enabled businesses, which are contributing to the U.N. Sustainable Development Goals (SDGs) and with opportunities related to urbanisation in Sub-Saharan Africa.
WHY MEASURE IMPACT?
Audaces’ mission is to support pioneer social entrepreneurs tackling some of the world’s most pressing social and environmental challenges. We back innovative ventures that produce products or offer solutions in the education, healthcare, environment, finance and agriculture sectors, amongst others. Therefore the social or environmental impact generated by our Portfolio Companies must be intentional and measurable. Quantifying impact is one of the most important ways of determining the degree to which we have accomplished our purpose.
Audaces’ audacious impact objective is to positively impact the lives of 10 million people over the 10 year duration of the Fund’s life.
MEASURING IMPACT STRATEGY
We assess whether our investment target enterprise has the potential to solve or alleviate societal or environmental challenges. Does the company’s offering have the potential to improve access, affordability and suitability of products or services for their target underserved population? Do they have any beneficial impact on the environment? What is their contribution to the availability of quality jobs?
We develop a bespoke Enterprise Impact Program for each investee. Through this program we define and assess the direct impact of our investment, based on both short-term output indicators and long-term impact.
Enterprise Impact Program:
IMPACT MEASUREMENT TOOLS
Audaces considered multiple measurement models among various internationally recognised standards. The Global Impact Investing Rating System (“GIIRS”) was selected as the most suitable impact measurement system. Launched in 2011, GIIRS Ratings and Analytics are the gold standard for impact measurement in impact investing. They are rigorous, comprehensive, and comparable ratings of a company and a fund’s social and environmental impact. Today, 80+ funds are GIIRS rated, covering more than 700 companies in 50 countries and across 100 industries, representing $5.3 billion of committed capital.
The GIIRS fund rating is structured around three components – two related to the Fund’s portfolio companies (comprising 90% of the overall GIIRS fund rating) and one specific to the Fund itself (comprising 10% of the overall GIIRS fund rating):
The IBM and Operations Rating is measured by the B Impact Assessment, a cloud-based tool used by +40,000 businesses globally. This assessment gives a holistic measure – on a 200 point scale – of a company’s impact and is tailored to the company based on sector, geography and number of employees. It covers topics related to customers, community, workers, environment and governance.
Impact performance measurement, its consequent GIIRS rating and GIIIRS report will be carried out and made available to investors on an annual basis. Selected key impact performance indicators that are tracked more closely and frequently will be available on the Platform’s information dashboards.
Audaces will use B Labs’ tool B Analytics tool for every Portfolio Company. This cloud based software is designed to measure, report and improve Portfolio Companies’ impact. It has dashboard, charting and export functionalities for easy visualization and reporting. Benchmarking and customised improvement reports based on GIIRS will aid management in setting clear impact goals for improvement throughout the life of the investment.