WHY INNOVATE?
There exists a global $3trillion gap in financing for businesses that do not meet venture capital requirements nor have enough assets to meet collateral requirements of traditional lending.
The agriculture, clean energy and climate sectors are hardest affected by this gap in sub-Saharan Africa, representing a $132 billion funding gap. Women are the backbone of these sectors and whilst the sectors are growing exponentially and provide many opportunities, women are lagging behind in access to both opportunities and financing for growth.
Founded in 2020, the Empress Fund invests in high-potential, early-stage women-led companies operating in the agriculture, clean energy and climate ecosystem in Eastern and Southern Africa. While investing in the entrepreneurs, we aim to test new financial instruments to understand the extent to which, they can support the scale of the businesses and enable a more gender-equitable ecosystem.
The Innovation
The Empress Fund offers innovative financing instruments to early-stage women-led/owned businesses in agriculture, climate, clean energy and tertiary industries that support these three core sectors. Our aim is to build more gender-equitable ecosystems by offering and testing financial instruments that are better suited to context and culture.
Convertible Revenue-Based Financing
The Problem: Research shows that in Africa, women tend to be more averse to taking on equity investment due to the perception that this may result in ‘loss of control’ of their businesses and the pace at which it is required to grow. This is particularly problematic in a cultural context where women still carry the heavier burden of family care whilst juggling growing a business.
The Solution: The convertible revenue based instrument gives the entrepreneur the flexibility of paying back investors and a long term path to ownership whilst not requiring exponential growth. The benefit for the investors who are taking equity like risk is that they have a clear exit and have an opportunity to benefit from any upside if the business gets additional funding or experiences a liquidity event.
Opportunity-Based Financing
The Problem: It has been noted that women entrepreneurs are at the forefront of identifying opportunities for creating impact both at business and community level. However due to cultural norms where women are less likely to have assets in their names, they are often unable to access traditional loans that require capital and take advantage of these opportunities to grow their business and communities.
The Solution: The opportunity based financing instrument is a non-asset backed instrument that is offered when the business presents a clear opportunity for growth that can be catalytic both financially and impact wise. The instrument is revenue based and modelled according to best assumptions and has a less rigorous due diligence which makes it more cost effective for investors with a smaller ticket size. Consequently, the entrepreneurs have a clear repayment schedule and get to keep ownership of their business.
Incentive-Based Financing
The Problem: It is not unusual for traditional lenders to have punitive penalty costs for early settlements of debt. This tends to be a deterrent for women entrepreneurs wishing to access financing as research points to women entrepreneurs being more risk ‘aware’ (rather than ‘averse’) than their male counterparts and are thus more inclined to consider financing that has flexibility.
The Solution: The incentive based financing instrument consists of variable repayments based on revenue and key milestones with an incentive for early settlement. Similar to the Opportunity Based Instrument, it has a less rigorous due diligence process which makes it more cost effective for investors with smaller ticket sizes . Consequently, the entrepreneurs can pay as slowly or as quickly as they prefer to take advantage of the incentive and get to keep ownership of their business.
Drawdown Account
The Problem: Working capital is the lifeline of any business. Businesses in the agri, clean energy and climate sectors particularly, tend to have higher working capital needs due to longer supplier payment cycles. However, access to facilities like overdrafts from traditional banks are still reserved for the more established businesses than the early stage ones.
The Solution: The drawdown instrument takes a similar structure to an overdraft, but having a variable payment based on the amount outstanding rather than the full facility. This allows the entrepreneurs to utilise only what they need and paying fees only on what they have used. It has a less rigorous due diligence which, makes it more cost effective for investors with smaller ticket sizes. Consequently, the entrepreneurs can pay as slowly or as quickly as they prefer to meet their working capital needs and get to keep ownership of their business.
Our Approach
Our unique capabilities are highlighted in a 3-pronged approach
The fund utilises innovative, non-asset backed, revenue-based instruments that are better suited for purpose and context into early-stage women-led / owned businesses in agri, clean energy and climate.
The vehicles are invested over a short-medium term (3 - 60months) to catalyse early-stage growth and position the businesses for follow-on investments from ATG's larger funds and/or other investors within the ATG network - thus providing the Empress Fund investors with a sure exit.
Leaders set the tone, pace and culture of an organisation. Therefore, ensuring that the entrepreneur is developing both their personal leadership capacity and business skills is cardinal to creating a growing enterprise that can scale and remain relevant in dynamic market environments.
Our partner education platform pranary.com helps entrepreneurs to build commercially viable businesses and provides them guidance and access to a network of like-minded entrepreneurs and investors.
Visit the platform here
In order to scale financing solutions that work for women entrepreneurs in these critical sectors in Africa, the Empress Fund has a team of experts and researchers that are on the cutting-edge of practice and academia to provide advisory services in the areas of:
- Gender-lens investing
- Intersectionality of race and gender in investing
- Climate financing- including instruments and incentives
Contact us to access our research.
Sectors We Support
Climate change is said to be affecting life in Africa more than in many other parts of the world as livelihoods and food security get disrupted by changes in weather patterns. It has been recognised that the causes and impact of changes in climate disproportionately affect women and that climate change is not gender neutral. Women are at the forefront of holding traditional and evolving knowledge and skills relating to food preservation and rationing, water harvesting and storage, and natural resource management. Thus a focus on sectors that directly contribute to climate change mitigation and adaptation is key and it would be amiss to not include a gender lens in the conceptualisation and implementation of climate solutions, financing instruments and incentives.
Empress Portfolio
Mo's Crib - South Africa
Mo’s Crib are the pioneers, in South Africa, of sustainable homeware that is environmentally friendly, functional and high quality. Their products are highly sought after in South Africa’s top retail outlets, such as Woolworths and Mr. Price Home, as well as key international retailers like Crate & Barrel USA.
The problem: Mo’s Crib had an exciting opportunity to stock their products in a large international retailer but had working capital constraint when it came to meeting the high shipping and freight costs.
The solution: The Empress Fund extended the Opportunity-based Financing instrument to Mo’s Crib as they had a clear opportunity with a good track record of communication between themselves and the shipping agency, as well as the international retailer.
The outcome: Mo’s Crib is now fully established in international retailers in United States, Canada and United Arab Emirates.
The status: The facility with the Empress Fund has been fully repaid and Mo’s Crib has since then been able to access equity financing from another investor within our network.
The impact: Following the investment, Mo’s Crib has opened an additional production site in Rwanda (in addition to their existing production site in South Africa) and they have added 9 artisans to their team.
Umgibe
Umgibe Farming Organics is a small-scale agricultural development enterprise that works with women small-holder farmers to sustainably farm and produce food. They then aggregate the products and process them for retail.
The problem: Umgibe was experiencing high food wastage as a result of insufficient processing and food storage capacity. They needed an additional food storage facility to extend their product shelf life but did not have the collateral to access traditional Bank loans and required capital that could allow for the flexibility they needed.
The solution: The Empress Fund extended Revenue-based Financing instrument with a 6 month moratorium to allow for a planting and harvesting season that would unlock additional cashflows.
The outcome: Umgibe utilised the facility to setup additional cold storage capacity which has reduced food wastage and increased their product output.
The status: Umgibe is on schedule with making their repayments in-spite of experiencing extensive product loss due to the massive flooding that occurred in the Kwazulu – Natal region where they are based.
The impact: Umgibe has since been able to onboard an additional 300 farmers into their aggregator process and trained an additional 90 women farmers under their incubation program.
Thola
Thola has created a platform that connects small suppliers and producers of organic produce to potential investors. The platform allows the investor to purchase a share of the future revenue of the commodities.
The problem: Thola needed funding to upgrade the client side of their platform that would allow the small producers and suppliers to seamlessly create their own profile .
The solution: The Empress Fund extended the Incentive-based Financing instrument to incentivise Thola to quickly launch the platform that would allow the small suppliers and producers to access financing.
The outcome: Thola have since onboarded 58 small suppliers and producers of organic products onto their platform and they have received 1,000 investor applications..
The status: The facility is still within the 6 month moratorium and is on-going.
The impact: Thola has enabled 4 small suppliers and producers of organic foods to access financing and, they are in the process of enabling more.
EVNOIA
Evnoia is an agri-processing company that works with smallholder farmers to grow and process their produce into spices and herbs with a local twist.
The problem: Evnoia had a working capital challenge when it came to the supplier payment cycles from the big retailers in which they had been given the opportunity to supply. They could not access any short-term financing from traditional banks.
The solution: The Empress Fund extended the Drawdown Account instrument as an alternative working capital facility.
The outcome: Evnoia have since 6X-ed their production from 15,000 units to over 100,000 units and more than doubled their team from 10 to 25.
The status: Evnoia is on schedule with making their repayments and the facility is on-going.
The impact: Evnoia have enabled 5 farmers to setup and grow produce specifically for their uptake and; they have onboarded 33 independent female sales agents as part of their value chain.
MAHLASELI ENERGY
Mahlaseli is a clean energy company that works with small-holder farmers in water-scarce regions of Lesotho to supply them with solar powered irrigation systems. They also train farmers on the use of the solar powered equipment.
The problem: Mahlaseli had a clear opportunity to work with the government of Lesotho to supply 100 villages in 10 districts with solar powered irrigation systems. They needed to setup one solar powered irrigation system in the first village of choice as a proof of concept.
The solution: The Empress Fund extended Opportunity-based financing instrument to allow them to them to purchase the solar powered equipment for the proof of concept.
The outcome: Mahlaseli has since purchased the proof-of-concept solar powered irrigation system that supports 10 villages in one district in Lesotho.
The status: The facility is on schedule for repayment and is on-going.
The impact: The proof-of-concept has enabled 10 villages with approximately 10,000 people to have access to water for farming purposes.
TSEHLA HOLDING
Tsehla Holdings is an agri-enterprise that uses hydroponics in their farming processes. They also train women and youth on how to set up a hydroponics system to overcome climate challenges in their region.
The problem: Due to changing weather and climate patterns that significantly and, negatively impacted their produce; quality and output, Tsehla identified hydroponics as a weather-proof and more environmentally method of farming for the region but could not access traditional financing due to lack of collateral.
The solution: The Empress Fund extended a Convertible Revenue-based instrument to allow them to setup the hydroponics system.
The outcome: Tsehla has since setup the first hydroponics system and is training neighbouring farmers on the setup and use of hydroponics for better sustainable farming.
The status: The facility is on schedule for repayment and is on-going.
The impact: Tsehla has trained 5 women farmers to setup hydroponics systems.
OUR TEAM
Lelemba Phiri
Principal & fund manager
Gender, development finance, angel investing, public & private sector experience, marketing. PhD Candidate
Mary-Ann De Wet
Chief Financial Officer
Finance & strategy, modelling and investments, M & As, tax, compliance and due diligence, regulation MCom. International Tax.
Trish Nelson
Chief Compliance Officer
Commercial legal advisor, attorney of the high court, contracts law, compliance management, mediator, disputes resolution. LLB
Kaleo Nakazwe
Portfolio Manager
Portfolio & project management, clients & contracts management, key stakeholder relations, marketing MBA (GIBS)
OUR ANGEL INVESTOR NETWORK
Strategic partnerships
The Shell Foundation UK, is supporting Africa Trust Group (ATG) through a learning grant invested into the Empress Fund. The investment is aimed at:
- Furthering ATG’s learnings on alternative financial instruments into early-stage women-led agri and energy businesses
- Helping build a more gender-equitable agriculture ecosystem
- Growing stronger value chains of small farmers through the investments