A New Social Venture: Incubating Infrastructure PPPs in the Developing World Spring 2009

A World of Increasing Economic Disparity – Opportunities to Help Co-ordination of Aid Effort Governance Models & Corruption Domestic Public Finance Removing Barriers to Trade Water & Sanitation Infrastructure Agricultural Productivity Infant and Maternal Mortality Rates Gender Parity in Education Transport & Communications Infrastructure Dynamic of Macro Trends in Developing Countries and LDCs Primary Globalisation Factors Increased Resources Constraints Growth in Emerging Market Consumers War for Talent New Pockets of Innovation Multi-directional Capital Flows Credit Constraints and Policy Responses Commodity Price Volatility and Cost-Push Inflationary Risk Asset Devaluations (e.g. Equities, Real Estate) USD Currency Devaluation and Monetary Implications Slowing Economic Output Unemployment Growth Slowdown of Global Trade Current Economic Disruption Continuing Development Challenges Public Sector Reform Infrastructure Investment Sources: Accenture, The Economist , IMF, OECD, United Nations, World Bank. Complexity of Country-Specific Change Drivers Economic Demo- graphic Geo- political Socio- cultural History of Aid Dependency Tribal and Community Norms Pockets of Armed Conflict Religious & Spiritual Beliefs Population Profile & Growth Rate Democracy Progress Waning Growth in ODA at Risk Illustrative Rural to Urban Migration Constraints on New Inward FDI Growth in outward FDI to Developed Countries Increasing Diversification of Export Base Climate Change Vulnerability Lack of Wealth Redistribution Commodity-led Output Growth Food Crises Under-Employment Broad Poverty Reductions Improvements in Agricultural Yields Improvements in Macro-economic Stability Variability in Fiscal Health and Current Accounts Attitudes Shaped by Disaster Survival Health & Education Levels Emigration / Immigration Trends Life Expectancy National Identity

Co-ordination of Aid Effort

Governance Models & Corruption

Domestic Public Finance

Removing Barriers to Trade

Water & Sanitation Infrastructure

Agricultural Productivity

Infant and Maternal Mortality Rates

Gender Parity in Education

Transport & Communications Infrastructure

Credit Constraints and Policy Responses

Commodity Price Volatility and Cost-Push Inflationary Risk

Asset Devaluations (e.g. Equities, Real Estate)

USD Currency Devaluation and Monetary Implications

Slowing Economic Output

Unemployment Growth

Slowdown of Global Trade

Integrated Development Venturing Integrated Development Venturing National governments and inter-governmental organisations. Primary Activity Execute Programmes Mobilise Effort Plan Development Governments & multi-national corporates. How can we best assist those in the developing world address these challenge areas? Initiate and plan reform programmes. Execute programmes and manage delivery. Public Sector Reform Assist in the prioritisation of development objectives, utilisation of resources, and establishment of initiatives. Form and incubate JVs to undertake highest-priority projects. Advise and share in the ownership of the design, build and operation of new infrastructure. Infrastructure Investment Customers Public Sector Reform Infrastructure Investment Organisation Public Sector Reform Infrastructure Investment JVs funded by private equity and credit markets. Social venture subsidised by public sector grants and private donations, as well as financial returns from venture ownership interests.

East Africa Infrastructure Example – Tanzania Ministry of Finance & Economic Affairs Example Five year development plan re-fresh in Tanzania, including public sector finance improvements. Validation of priority in water and sanitation infrastructure to enable recycling of water to promote agricultural productivity. Secure relationship with corporate partners (e.g. Cargill, ADI International, NTR). Formation and launch of a PPP to design, fund, build and operate the required pipelines, pump facilities, waste water treatment plants and redistribution networks. Infrastructure Investment Implementation of the PPP plans, and realisation of infrastructure improvements. Tanzanian department of finance delivers reporting capabilities to capture benefits achieved. PPP captures financial returns through improved billing capabilities deployed by Tanzanian government. Venture Capabilities Required Infrastructure Investment Policy and economic consultancy – specialising in East Africa. Public sector strategy consultancy. Programme management. Water & Sanitation and Agriculture SMEs. Incubator to structure, plan and launch PPP. Relationships with multi-national corporate(s) to form PPP. Programme management to plan public-sector initiative. Relationships with creditors (e.g. IMF) to fund development. Programme management to deliver required capabilities. Strategic advisory to guide PPP infrastructure delivery.

Five year development plan re-fresh in Tanzania, including public sector finance improvements.

Validation of priority in water and sanitation infrastructure to enable recycling of water to promote agricultural productivity.

Secure relationship with corporate partners (e.g. Cargill, ADI International, NTR).

Formation and launch of a PPP to design, fund, build and operate the required pipelines, pump facilities, waste water treatment plants and redistribution networks.

Implementation of the PPP plans, and realisation of infrastructure improvements.

Tanzanian department of finance delivers reporting capabilities to capture benefits achieved.

PPP captures financial returns through improved billing capabilities deployed by Tanzanian government.

Policy and economic consultancy – specialising in East Africa.

Public sector strategy consultancy.

Programme management.

Water & Sanitation and Agriculture SMEs.

Incubator to structure, plan and launch PPP.

Relationships with multi-national corporate(s) to form PPP.

Programme management to plan public-sector initiative.

Relationships with creditors (e.g. IMF) to fund development.

Programme management to deliver required capabilities.

Strategic advisory to guide PPP infrastructure delivery.

Model for the New Social Venture Fundraising Development Economic Consultancy Venture Incubation Board-level Venture Steering Organisation Administration Public Sector Strategy Thought Leaders Programme Managers Public Sector Relationships in Target Countries Industry Sector Specialists Region-specific Policy Specialists Core Team Corporate JV Partners Company Founders & Corporate Executives Applied Development Economists Advisors & Key Relationships Delivery Partners Holders of Western Aid Budgets Venture Incubation Specialists & VC Stakeholders Inter- Governmental Organisations NGOs & FBOs Impacted Communities Impacted Private Sector Businesses Neighbouring Countries National Trade Partners Suppliers of Required Materials

Fundraising

Development Economic Consultancy

Venture Incubation

Board-level Venture Steering

Organisation Administration

Key Comparable – Not For Profit Incubator of Developing World SMEs Scale of Business Non-profit founded in 1997 by two Stanford MBA graduates Generated over $3M in grants and donations received in 2006 Key Activities Provide strategic consultancy and access to growth capital to existing developing world entrepreneurs Identify those ventures with $0.5M to $15M in sales, and have “high-growth potential” Conduct 18 month assessment plans, including access to mentors, on-site fellows, and VC road show support Run multi-step selections processes to screen for target ventures Conduct activities in the developing world to re-shape more positive views of entrepreneurship Advisory Panels Global Board of Directors – 14 C-Level Executives and Founders, including the Former President of the World Bank Eight Country-level Boards of Directors Results Achieved – over 10 year history Screened 15,551 candidates, and selected 272 entrepreneurs Conducted 23,334 hours of one-on-one mentoring Supported ventures have: Created 79,386 formal jobs that average 10x the local minimum wage Generated $1.9B in revenues, and have raised $904M in private equity funding 80.8% of supported ventures are giving back to the Endeavour programme Over 10 years attracted $6.87M in donations, and used it to help create $1.9B in venture revenues. Our Difference: We will identify the most critical development improvements required, and then support those ventures that can make it happen.

Scale of Business

Non-profit founded in 1997 by two Stanford MBA graduates

Generated over $3M in grants and donations received in 2006

Key Activities

Provide strategic consultancy and access to growth capital to existing developing world entrepreneurs

Identify those ventures with $0.5M to $15M in sales, and have “high-growth potential”

Conduct 18 month assessment plans, including access to mentors, on-site fellows, and VC road show support

Run multi-step selections processes to screen for target ventures

Conduct activities in the developing world to re-shape more positive views of entrepreneurship

Advisory Panels

Global Board of Directors – 14 C-Level Executives and Founders,

including the Former President of the World Bank

Eight Country-level Boards of Directors

Results Achieved – over 10 year history

Screened 15,551 candidates, and selected 272 entrepreneurs

Conducted 23,334 hours of one-on-one mentoring

Supported ventures have:

Created 79,386 formal jobs that average 10x the local minimum wage

Generated $1.9B in revenues, and have raised $904M in private equity funding

80.8% of supported ventures are giving back to the Endeavour programme

Venture Launch Process B C A. Concept Vision & Core Team Business planning team identified and formed. Core values, mission and goals agreed amongst team. Business planning process and responsibilities agreed. Milestone Activities Outputs A DRAFT Networking Research Execution B. Business Plan Completed Business planning team identified and formed. Core values, mission and goals agreed amongst team. Business planning process and responsibilities agreed. C. Funding & Project Secured Pilot funding secured. Key relationships established for project, and sale agreed. Organisation structure and processes established. Project kick-off. Initial buy-in for the vision with key advisors and planning team Identify key areas of development challenge, and critical success factors for programmes that work. Complete an initial networking presentation to describe the challenges and the venture vision. Establish contact with advisors, sources of subsidies, customers and (then) delivery partners. Conduct market research of other aid organisations, national development need, and gap analysis. Formulate market entry strategy, service offerings, and functional-level planning and budgeting. Prioritise funding sources and customers Address advisory gaps Build delivery team Clarify national and regional priorities / dynamics for high probability opportunities Develop preliminary systems and processes to monitor and control venture activity.

A. Concept Vision & Core Team

Business planning team identified and formed.

Core values, mission and goals agreed amongst team.

Business planning process and responsibilities agreed.

B. Business Plan Completed

Business planning team identified and formed.

Core values, mission and goals agreed amongst team.

Business planning process and responsibilities agreed.

C. Funding & Project Secured

Pilot funding secured.

Key relationships established for project, and sale agreed.

Organisation structure and processes established.

Project kick-off.

Initial buy-in for the vision with key advisors and planning team

Identify key areas of development challenge, and critical success factors for programmes that work.

Complete an initial networking presentation to describe the challenges and the venture vision.

Establish contact with advisors, sources of subsidies, customers and (then) delivery partners.

Conduct market research of other aid organisations, national development need, and gap analysis.

Formulate market entry strategy, service offerings, and functional-level planning and budgeting.

Prioritise funding sources and customers

Address advisory gaps

Build delivery team

Clarify national and regional priorities / dynamics for high probability opportunities

Develop preliminary systems and processes to monitor and control venture activity.

Next Steps Networking with senior advisors for feedback Build venture launch team Agree vision refinements Launch business planning processes

Networking with senior advisors for feedback

Build venture launch team

Agree vision refinements

Launch business planning processes