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Entrepreneurs play a vital role in driving economic growth, creating jobs and innovating to improve people's’ lives through market-based solutions. Impact investors are looking for a pipeline of businesses to invest in that generate both financial and social returns.
Yet impact investors are often unable to connect with the early-stage entrepreneurs due to the "pioneer gap" that exists between high-risk, promising early-stage enterprises and impact investors looking for enterprises to invest in.
Partnering to Accelerate Entrepreneurship Initiative
The Partnering to Accelerate Entrepreneurship (PACE) Initiative aims to catalyze private-sector investment into early-stage enterprises and identify innovative models or approaches that help entrepreneurs bridge the pioneer gap – thus unlocking the potential of thousands of promising enterprises around the world.
Working in partnership with over 30 incubators, accelerators, and seed-stage impact investors, USAID’s U.S. Global Development Lab (the Lab) has created twelve public-private partnerships dedicated to testing ways to bridge this gap and foster entrepreneurship. The partnership are expected to leverage $64 million in combined public and private investments over the next five years.
PACE Initiative Partnerships
Since September 2014, the Lab has announced the following partnerships formed under the PACE initiative:
Catalyst for Growth: Catalyst for Growth is an NGO created in 2014 in Johannesburg, South Africa, out of commitments from JPMorgan Chase Foundation, Dalberg Global Development Associates, and the Lab to increase the transparency and effectiveness of business development service (BDS) providers in South Africa. Through this partnership, Catalyst for Growth will gain a deeper understanding of what leads to "effective" BDS and what an “investment ready” enterprise looks like by collecting data from thousands of businesses over the course of the partnership. Additionally, they will connect early-stage enterprises looking for BDS to investors looking to build a pipeline of businesses.
Open Capital Advisors: Open Capital Advisors and the Lab have formed a partnership to deliver an innovative new form of tailored technical assistance to accelerate growth and investment for early stage small and growing businesses in Kenya, Tanzania, Rwanda, and Uganda. The partnership will work closely with four proven impact investors in the region - Blue Haven Initiative, Eleos Foundation, Montpelier Foundation, and Fondazione Opes – and will review 60 small and growing businesses identified through local referrals and provide intensive support for 15 of them over two years. Open Capital Advisors provided support to 65 small and growing businesses, which led to more than $43 million in capital raised.
Shell Foundation: Together with Shell Foundation, the Lab is supporting three complementary models to accelerate the innovation of affordable energy solutions for low-income consumers. This will help energy innovators test game-changing technology, prove the viability of new business models, and unlock further social investment to support their scale-up. Shell Foundation is an independent charity that creates and scales new solutions to global development challenges linked to energy and mobility by identifying underlying market failures and working with entrepreneurial pioneers to solve them. With its partners, Shell Foundation has provided grant funding, administered business support and market links, and removed barriers for growth, to deliver large-scale impact across Africa, Asia and Latin America.
Shujog ACTS: Together with JPMorgan Chase and the Rockefeller Foundation, the Lab is supporting Shujog Assistance for Capacity-building and Technical Services (Shujog ACTS) to provide tailored technical assistance to nearly 100 social enterprises in Asia, unlocking up to $50 million in follow-on investments in five focus sectors: agriculture, health, education, energy, and water. This partnership will enable Shujog ACTS to provide early-stage social enterprises the business development services they need to become investment ready, allowing businesses to retain liquidity early on and repay interest-free after they become stable. Through this innovative system, Shujog ACTS helps social enterprises across Asia prepare for investment so they can expand their operations and impact more lives. In its first year of implementation, Shujog ACTS has catalyzed $1.5 million in impact investments in social enterprises and reached over 54,000 beneficiaries.
Unitus Seed Fund (USF): The Lab is supporting Unitus Seed Fund in its efforts to build a more robust entrepreneurship ecosystem in South Asia. This support will allow Unitus to connect with high-impact entrepreneurs in India, improve the quality of start-up business incubators, and strengthen its advisory and support services to help grow early-stage impact businesses. By enabling exceptional entrepreneurs to accelerate their businesses’ growth, Unitus seeks to create sustainable and scalable opportunities for large, underserved populations. Unitus’ portfolio companies enhance economic self-reliance, improve health and education, optimize agriculture, and provide basic necessities. Unitus has already made 13 investments to date, making it the most active seed-stage impact investor in India.
Village Capital: In collaboration with the Sorenson Impact Fund and Chilton Capital, the Lab is supporting the VilCap Investment impact fund to dramatically increase Village Capital’s entrepreneurship programming in the agriculture, education, energy, financial inclusion, and health sectors. Since 2009, Village Capital has supported 400 enterprises in 27 business assistance programs in the U.S., East Africa, India, China, Brazil, and Europe. Village Capital’s signature innovation in these programs is the peer-selection process—a democratic approach that empowers entrepreneurs to participate in allocating capital to the most promising ventures among them.. To date, Village Capital has facilitated $2 million in investments in 41 peer-selected companies that address marginalized populations and global environmental challenges. These companies have raised nearly $40 million in follow-on capital, have served nearly 600,000 customers and beneficiaries, and created over 5,500 jobs.
Jibu: Along with a range of impact investors and foundations, the Lab is supporting Jibu to set up financially sustainable potable water franchises aimed at underserved urban populations in East Africa. Jibu’s innovative model integrates two key services—franchising and banking— and provides the financing, tools and support that entrepreneurs need through its “business in a box” solution. This allows Jibu to fill a key gap in the clean water market for underserved urban consumers while providing a low-cost franchise start-up model to aspiring entrepreneurs. Jibu's approach aims to support a virtuous cycle of wealth generation through the delivery of a wide range of human needs services and products designed to be scalable and replicable.
Variable Payment Obligation Program: Enclude, Agora Partnerships, Banco de America Central (BAC) Nicaragua, and Santa Clara University's Miller Center for Social Entrepreneurship, are launching the Variable Payment Obligation (VPO) program to expand small and growing businesses' access to finance. The VPO program will initially target women-owned or led enterprises, providing access to cash flow-based credit and capacity building. The VPO structure will also enable third-party investors and local banks to jointly lend to small and growing businesses. The concept will be piloted in Nicaragua, and will scale-up regionally to allow businesses to access credit and grow.
Intellecap: In collaboration with Shell Foundation, USAID is supporting Intellecap to replicate its proven ecosystem-based approach for accelerating small and growing businesses in Ethiopia, Kenya, Rwanda, Tanzania, and Uganda. Intellecap currently takes this approach to provide early-stage ventures the support they need to grow, addressing systemic barriers at the industry level in India. Over the past 12 years, Intellecap’s work has resulted in over 900 small and growing businesses connecting with 300 investors, over $200 million in equity investments, and more than 50 private sector firms committed to strengthening the entrepreneurship and innovation ecosystem. Intellecap aims to bring its approach to East Africa by bringing together capital, advice, and networks to provide technical assistance and direct investment facilitation to high-growth social enterprises. In addition, USAID is supporting the replication of this effort in Southeast Asia through Intellecap’s launch of its flagship Sankalp Forum. USAID’s support will target female-owned or -led enterprises, giving them the support they need to scale.
Association of Savings and Investment in South Africa (ASISA) and Edge Growth: In April 2016, USAID announced a partnership with ASISA and Edge Growth, in conjunction with the Africa Private Capital Group (APCG), to more effectively mobilize institutional capital towards small and growing businesses (SGBs) in South Africa. This partnership aims to close a critical gap in the South African market by combining hands-on business development support with access to ASISA’s SGB investment fund and integration of small and medium enterprises into ASISA corporate member supply chains.
Global Accelerator Learning Initiative: In order to ensure that PACE not only tests innovative acceleration models but also contributes significantly to the sector’s knowledge base, the Lab is partnering with the Omidyar Network, The Lemelson Foundation, the Argidius Foundation, the Aspen Network of Development Entrepreneurs (ANDE), and Emory University to launch the most comprehensive research project to-date on the efficacy of accelerator programs. As a result of this Global Accelerator Learning Initiative (GALI), accelerator programs will have statistical data and market insight to better inform their own decision-making as they train the entrepreneurs who create the goods and services that benefit all sectors of society. This data will also be made available to researchers and practitioners for their own analyses, providing greater understanding to all involved in the entrepreneurial ecosystem, from managers to policy makers.
The President’s Spark Global Entrepreneurship Initiative challenges our government’s premier entrepreneurship programs the goal of generating over a billion dollars from private investment for emerging entrepreneurs by 2017–with over half raised by women and youth. They commit to generate at least $10 million dollars over three years for emerging entrepreneurs. Spark is about connections. Connections between disparate government programs. Connections with the private sector and outside organizations. Connections between entrepreneurs and the resources, opportunities, and networks the need to succeed.
Last updated: June 16, 2016