The Dutch Good Growth Fund part Investment funds local SMEs is a 'fund of fund' investment initiative by the Dutch Ministry of Foreign Affairs, to improve financing for the missing middle – i.e. entrepreneurs who have outgrown micro-financing but do not yet have access to conventional capital markets.

The DGGF aims to reach out to underserved countries, foster innovative financing products and invest in specific target groups (young entrepreneurs, female entrepreneurs, and entrepreneurs in fragile states that face high barriers to attracting capital). By doing so, the DGGF contributes to promoting knowledge transfer, increasing employment and production capacity and thus becomes a driver of economic growth.

Up to € 1 million for innovative SME finance initiatives

In order to spur innovation in SME finance and move the finance frontier to underserved SME markets, the DGGF has a long term Seed Capital and Business Development (SCBD) facility to support promising early stage SME finance initiatives with up to € 1 million per initiative.

The SCBD facility offers a variety of instruments and services to kick start your SME finance initiative: Seed Capital, technical assistance, cost-sharing services.

… that successfully confront the following challenges

The SCBD facility is especially interested in supporting initiatives that have an innovative approach to combat one or more of the following – interrelated – fundamental challenges of SME finance:

• High information asymmetry – the difficulty to get access to reliable performance data, track records, money multiples, etc.
• Lack of collateral – limited possibility to secured lending due to absence of registered collateral
• Transaction costs – high transaction costs due to small investment tickets
• Limited deal flow/growth potential – limited deal flow and growth potential of entrepreneurs due to the lack of access to markets and talents.

For example, the innovation may build on, but is not limited to ,integrated service models, automated valuation approaches, post-seed finance initiatives, P2P/crowd-funding communities, non-traditional sources of long-term capital, smart partnerships, psychometrics, supply chain models, big/lean data initiatives, etc.

The DGGF is especially interested in innovative, sustainable and scalable proposals that make SME finance work for female entrepreneurs, young entrepreneurs and entrepreneurs in fragile states.

Application & selection process

Interested parties are invited to send their pitch-book to dggf@nl.pwc.com with the subject line 'Early Stage SME finance Initiative'.

The pitch-book should provide insight on:

• the business opportunity;
• proposed business solution or investment strategy;
• the sustainable competitive advantage;
• the specific target group & location;
• investment & support proposition;
• team & track record.

The most compelling ideas and proposals will be selected and their applicants will receive further instructions to elaborate on their pilot proposals for funding support.

Selection will be conducted by an independent expert committee based on strategic fit and feasibility of the proposals.

Strategic fit

• Initiative is based in one or more DGGF countries;
• Innovative solution that confronts typical SME finance challenges;
• Good complement to the DGGF investment portfolio;
• Target group (missing middle; target groups, underserved market);
• Early Stage.

Feasibility

• Team has relevant experience;
• Track record in (adjacent) or comparable markets;
• The proposed solution is scalable;
• Other sponsors are willing to support.

Current clients

• Africa Health Infrastructure Fund (AHIF) (pdf)
• Financial Access Commerce & Trade Services (FACTS) (pdf)
• Vakayi Capital (pdf)
• iungo capital (pdf)
• Ankur Capital Fund (pdf)
• SMEcorner (pdf)
• Ibtikar Fund (pdf)
• Sempli (pdf)
• Liwwa (pdf)