In an effort to address the lack of access to funding faced by many African women entrepreneurs, Tokunboh Ishmael, Polo Leteka, and Anne-Marie Chidzero joined forces to launch the Alitheia Identity Fund (AIDF), a pan-African SME fund that invests in innovative, growth stage SMEs that are women-led or gender-balanced in the Sub-Saharan Africa region.
The joint venture sees two established women-owned fund management companies come together – Nigerian-based Alitheia Capital Limited, which focuses on SMEs in the finance, energy, and housing sectors and co-founded by Ishmael (CIO); and Identity Development Fund Managers (IDF), a South Africa-based equity firm co-founded by Leteka (principal partner and COO).
Managing partner Anne-Marie Chidzero is CEO of the new fund. She has over 20 years of experience in financial inclusion and private equity and has managed investments worth over $300 million.
High impact, high return
Globally, there continues to be a funding gap. Women entrepreneurs start businesses with less capital and are less likely than male entrepreneurs to get financing – despite research showing the economic benefits of doing so.
A McKinsey Global Institute report finds that $12 trillion could be added to global GDP by 2025 by advancing women’s equality.
In addition to the issue of access is the association of women-led enterprises with micro businesses rather than as startups with the ability to scale and dominate their markets.
This discrimination means women enterprises are often directed towards micro financing.
“This thin focus means growth-oriented businesses owned or managed by women are restricted to micro trading/services. Further, even when capital is available, women entrepreneurs are often not specifically or proactively targeted and are even less likely than men to seek external funding,” said Chidzero in a recent interview.
The founders have made it clear that unlike many “women” funds, they are focusing on high impact and high returns businesses.
“Convincing investors is always a challenge. We’ve noticed that people quickly categorize us as an impact investment fund, but we think of ourselves as a standard private equity fund capitalizing on a funding gap that will have an impact on Africa’s women,” she adds.
Here are 6 things we know about this new fund:
1. For women by women
The fund seeks to fill in the gap for opportunities for high-growth women-led businesses to scale their businesses through efficiency and regional expansion and for fund managers to back high-growth businesses.
2. Size of the Fund
AIF intends to raise $100 million in two closings to make equity investments in high-growth established SMEs with an emphasis on women-led and/or women-managed SMEs in 10 African countries (Malawi, Lesotho, Swaziland, Botswana, Namibia, South Africa, Zambia, Zimbabwe, Ghana, and Nigeria). AIF is seeded by the African Development Bank (AfDB), which has committed $12.5 million towards the first close.
3. The Sectors
AIF is expected to yield financial returns in high-growth sectors such as agriculture, agro-processing, and manufacturing across targeted countries.
4. Funding amounts
It will provide capital of between USD $2-5 million to high-potential mid-sized companies in target countries to transform them into local and regional market leaders.
5. Timing
“This fund is coming at an opportune time when many of our businesses are seeking to grow export earnings through regional expansion and greater positioning within and beyond the African continent,” says Leteka.
6. Collaborations and partnerships
The fund announced a partnership with Capria, a global impact investment firm that works with local fund managers to accelerate the flow of capital in emerging markets and who will be offering funding and support.
In an interview, Chidzero said this about the partnership: “Together with the African Development Bank’s (AfDB) commitment of US$12.5mn in the Alitheia Identity Fund, partnering with Capria to access their extensive network and resources will enable me and my colleagues, Polo Leteka and Tokunboh Ishmael, to finance and support growth businesses, particularly those led by women and gender-diverse teams.”
