Send in local angels to bridge the SME finance gap in Uganda
“Local angels bring in local knowledge, experience, resources and networks that no investment team alone has,” says Roeland Donckers, founder of iungo capital. This innovative investment strategy convinced DGGF to be the first seed capital investor in iungo capital in 2016. By supporting iungo capital, DGGF is helping SMEs in Uganda to realise their growth ambitions and contribute to the creation of more than 200 jobs.
A co-investment strategy to accelerate the growth of SMEs in East Africa
Iungo capital invests in SMEs that otherwise would not have received the financial backing they needed. The type of investments they look for, companies with financing needs of between USD 50,000 and USD 500,000, are often seen as too costly and too risky. With his business partner Steven Lee, Roeland founded iungo (Latin for ‘to bridge’) capital in 2016, with the objective of bridging the SME finance gap in East Africa. To do so, iungo capital engages locally-based angel investors through a co-investment structure.
Their co-investment with angels has been successful: “They bring in 5-20% of the investment and do 5-20% of the work.” The angels do not only reduce the costs for iungo capital, but also the risks. “The companies we invest in are not only dealing with us, a foreign investor, but are also dealing with people who are respected in their local community.” This makes them more eager to meet their financial obligations.
Support by DGGF’s Seed Capital & Business Development (SC&BD) programme
To date, iungo capital has invested in eight companies, and expects to invest in 50 companies in Uganda, Kenya and Rwanda in the coming three years. “This would not have been possible without DGGF’s early support, which has helped us to start building our portfolio and track record”, says Roeland. Specifically, DGGF’s Seed Capital & Business Development (SC&BD) programme supported iungo capital to pilot its innovative co-investment model. The initiative graduated to a fully-fledged vehicle in mid-2018 and aims to raise USD 10 million by the end of 2019.
Want to know more about the way DGGF is enabling entrepreneurship in frontier markets? Read our new impact report here.