Angel investors and venture capitalists from Silicon Valley to Shanghai are finding ways to invest in food accelerator programs that have the potential to kick-start small- and medium-sized food business that focus on nutrient density or improving access and affordability of healthy foods. This is a unique way for corporations and business to support the work of small and midsize for-profit companies that are trying to improve nutrition.
The Global Alliance for Improved Nutrition (GAIN) has pioneered one such model for channeling private-sector entrepreneurship in low- and middle-income countries towards the elimination of global malnutrition through their Marketplace for Nutritious Foods. Through three pilots developed in Mozambique, Kenya, and Tanzania, the Marketplace has helped local entrepreneurs bring nutrition-enhancing innovations to market by providing networking, knowledge sharing and technical and financial assistance.
With the goal of improving access to nutritious foods for low-income consumers, the project serves as a catalyst for innovators and provides donors, investors, and GAIN with investment opportunities. Technical support and initial seed funds help reduce the risks associated with investing in new small- and medium-sized enterprises (SMEs), making them more viable candidates for donor and private-sector investment.
As part of the Marketplace, the Innovation Accelerator program draws on private-sector investment to help budding nutrition-oriented SMEs overcome financing and other barriers to profitability and nutritional impact. Each country’s accelerator requests applications, and winners receive intensive coaching as they develop business plans, which, if accepted, are then brought to life through privately funded grants and loans. Similarly, GAIN works with larger companies to support outgrower schemes that provide technical support and financing to smaller rural producers, allowing them to sell through the large company’s network.
A second component of the Marketplace involves the development of a Community of Practice that brings together a larger group of SMEs with government officials, investors, donors, and academics. This helps build an enabling environment for SMEs to succeed, providing opportunities for networking, additional investment, and training on issues such as food safety, marketing, financing, and quality control.
“The Community of Practice gives us the opportunity to learn more about how to improve and make our business grow,” according to Octávio Muchanga, who is the managing director of a local peanut butter–producing company, Xikhaba, in Mozambique. “We learn about new approaches to position our product and about the importance of nutrition and how we can contribute to improving the nutrition of Mozambicans.”
Through the Marketplace, GAIN has demonstrated the potential for accelerator programs to spur innovation and solve malnutrition issues. The initial programs have been funded by each country’s USAID mission, and the Marketplace teams collaborate to provide entrepreneurial and technical assistance in support of relevant USAID programs. In addition to the potential for donor investment, these accelerator programs also provide significant opportunity for private-sector investment by reducing the risk of investing in SMEs. With the provision of business services, investment opportunities, and informal networking, successful SMEs emerge as sustainable firms with high-growth potential.
References:
- Global Alliance for Improved Nutrition (GAIN). “Community of Practice.” Accessed May 6, 2015.
- –––. “Giving Mozambicans Access to Locally Produced Nutritious Foods.” Accessed May 6, 2015.
- –––. “Innovation Accelerator.” Accessed May 6, 2015.
- –––. “Marketplace for Nutritious Foods.” Accessed May 6, 2015.
- Good Food Business Accelerator. “Learn About Us.” Accessed May 6, 2015.
- Phillips, Erica E. “Food ‘Accelerators’ and the $10 Bag of Pasta.” Wall Street Journal, January 6, 2015.