USAID CATALYZE Promotes Private Investment in Women-owned/led Enterprises and Funds
A new capital grant mechanism will allow the USAID CATALYZE Women’s Empowerment (WE) initiative, implemented by Palladium, to promote private sector investment to close the gender financing gap at scale in the near term. The grant mechanism is designed to influence the behavior of investors to invest in women-owned and women-led funds and small and medium-sized enterprises (SMEs), including first-time women fund managers and women investors. It will also provide critical insights about the gender financing gap.
After an extensive evaluation process, two grant winners were selected on June, 2021, among 94 applicants in the CATALYZE WE Competition — a call for innovative ideas to close the financing gap for women.
Sarona Asset Management, headquartered in Canada, has $300 million in assets under management in private equity and private debt across emerging markets, both through local funds and directly in growth-stage companies. Sarona is committed to strong financial returns while creating deep and lasting impact. Sarona’s forthcoming private equity fund, supported by a $4.3 million USAID grant, will add a special focus on empowering women in business through provision of impact services to business leaders and investment sector leaders in emerging markets, including adding gender-lens investing expertise to address investment committee biases against women-led business opportunities.
Lendahand is a crowdfunding company based in the Netherlands that brings together retail investors to lend operating capital directly to SMEs in emerging and frontier markets. About 70% of the small businesses in its portfolio are situated in Sub-Saharan Africa, and 35% of its portfolio has been invested in women-led businesses. That share of the portfolio will increase with a USAID capital grant of $1.2 million, which allows for upgrades to the company’s digital platform. Lendahand will invest in women-led SMEs both directly and through its partners, offering loans of $10,000 to $300,000. Lendahand expects to lend $120 million to over 2,000 women-led SMEs by September 30, 2024.
There is a stark financing gap when it comes to women-owned businesses. According to an IFC report, in 2018, startups in emerging markets with a woman on their founding team received on 11% of seed funding and 5% of later stage capital. This cannot be easily attributed to the quality of start-ups and are more likely linked to investor bias and perceived risk. The CATALYZE Women’s Empowerment capital grants are an attempt to influence finance sector behavior and correct this market failure.
For more information about CATALYZE, visit the USAID website or contact Nadia Afrin (nadia.afrin@thepalladiumgroup.com).
