The Fund aims to invest between $1 million to $5 million in each investment. The investments would be made in tranches over the life to the portfolio company at various inflection points that will help it drive growth and expansion. This investment approach is necessary as it is very difficult for businesses to find growth or expansion capital in our target markets.
Each tranche of funding would be subjected to an Investment Committee approval to ensure alignment with the Fund investment objectives and the business plan of the portfolio company.
The Fund would be making investments in “greenfield” new ventures and existing businesses. The Fund would aim to balance the number of greenfield ventures to about 50% of its portfolio. This is because the number of opportunities to invest in existing businesses is very limited and greenfield opportunities would enable the Fund to better develop new businesses that it can grow and ultimately exit to meet returns and impact targets.
Each greenfield opportunity would go through a thorough assessment to determine if the opportunity is financially viable in the target market, the capital need is within the Fund’s target size, the management and technical expertise can be obtained to build and grow the business, and the regulatory and environmental factors necessary to be successful are favorable to the business. A business case and business plan would be created for opportunities that pass the assessment so that an investment memorandum can be completed and submitted to the Investment Committee. For greenfield investments, the business plan would include a project plan for launching and operationalizing the business. Similar assessments would be conducted on potential investment opportunities in existing businesses, given the business risks observed in the target markets.
The Fund would make direct equity investments in portfolio companies and aim to have controlling stake that can be weaned back to the management and entrepreneurs once the business hits certain milestones. The equity investments would be in the form of common shares and convertible preferred shares with certain investor rights. In growth capital investment opportunities that are in line with the Fund investment strategy, the Fund would consider convertible debt and other loan instruments with equity or revenue kickers.