Evaluation: Access to Capital for Rural Enterprises (ACRE)

Access to Capital for Rural Enterprises (ACRE) was a consortium of INGOs including Christian Aid, Challenges Worldwide, Practical Action, Traidcraft and Twin, which aimed to overcome time and cost barriers to impact-first investing in inclusive enterprises in developing markets by a) supporting enterprises from the INGOs’ network and footprint b) strengthening the business capacity of rural enterprises c) supporting them in accessing investment, and d) facilitating investments by providing a consortium of investors with pre-screened and well-presented opportunities. Target enterprises were those seeking $100k – $1M in financing. The revenue of participants in the year prior to participating ranged from €10k to €6M. By 2018, 32 enterprises had been supported at a cost of €46k per enterprise. One raised investment through the syndicate, and two raised investment elsewhere, to bring the total investment to $10.1million. In 2018 an evaluation was commissioned to capture lessons from the programme.

Key findings:

  • The missing middle definition is very expansive and requires segmentation. It is difficult to manage that range without proper segmentation of both enterprises and impact investors.
    • Many of the investors in the syndicate were only interested in enterprises that could absorb over $500k, whereas some enterprises had capital needs of less than $100k.
    • Even when ticket sizes met, it was still difficult to meet investor preferences for sectors, geographies, business models, and type of financing.
      • Such programmes need both a large number and diverse breadth of investors, and an effective way of managing them.
    • Customised technical assistance is incredibly valuable and helps to optimise revenue and impact.
    • Managing expectations of entrepreneurs/management teams is crucial. Many if not all of the supported enterprises had high hopes and expectations of accessing capital, with some feeling they did not get a fair shot to pitch directly to the investors.

Executive Summary