Development cooperation is not limited to public governance, but also possesses an important impact on the private sector at home and abroad. Thereby, the creation of mutual co-benefits is arguably one of the most important tasks of our time with a view for a more equal world. The DeveloPPP initiative of the German Government, the KfW DEG and the German Corporation for International Cooperation (GIZ) has so far supported 2400 successful development partnerships worldwide. Its more recent programme DeveloPPP Ventures, which was recently launched, focuses on start-ups and will be explored within this article approaching how German-African start-ups can join the next call!
DeveloPPP Ventures at a Glance
DeveloPPP Ventures is an initiative implemented on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) by the German development finance institution KfW DEG and the German Corporation for International Cooperation (GIZ). Via a matching-funds model, the BMZ provides grants up to €100,000 in support of start-ups whose business model is well-suited for promoting a high impact on an emerging or developing economy provided that the formation phase has been successfully completed.
Whereas the project has officially been launched in Kenya in 2021 with the first round of proposals having been opened from May 26 to July 15, DeveloPPP Ventures will also be launched in other OECD-DAC countries in the future with the second proposal round being evaluated at the end of 2021. Thereby, applications can be sent in from November 15 and up until December 31 with further information about the application procedures being available online.
Especially, since successful applicants already need to secure matching funds equaling the amount of the grant financing in the form of cash injection at the time of application, with at least half of this amount having to be injected as fresh equity, preparing a start-up for a successful round through the ‘Ideas Competition’, the pitch to the DEG investment committee and a final due diligence assessment seems crucial for partaking in the DeveloPPP Ventures programme. The below criteria and recommendations might help to gain a better overview and check whether the DeveloPPP Ventures initiative would be something for your start-up!
Project Requirements and Goals
Formal prerequisites for a participation in the DeveloPPP Ventures programme stipulate that your start-up must:
- be privately owned and profit-oriented
- have a viable business and financial plan
- can provide at least one annual financial statement
- convince other financiers of its business model
- have high growth potential and reach break even within a maximum of three years
- be registered in the target country or plans to register prior to the co-financed growth assessment
- have a business model showing high development relevance and scalability
- have a business plan which contributes to achieving the Sustainable Development Goals (SDGs)
Beyond, the success of your application might increase, if your business keeps in mind that the programme aims relate to:
- sustainable long-term investment into emerging and developing economies
- promoting entrepreneurial projects with a view for development policies
- innovative business ideas with a social and/or environmental impact
- the expansion of local operations through the provision of technical- and operational know-how to local workers
- establishing a cooperation between private and public partners to promote long-term impacts in developing and emerging countries
Inspiration from a Sample Project
Oftentimes, in order to get an innovative idea it is relevant to let yourself be inspired by other projects! Especially, when in the field of international development cooperation creating mutual co-benefits arguably aligns with learning from different knowledge and experience. The below project is not only the first success story from Kenya, it is also an inspiring pilot project in fields such as digitization, fintech and urban mobility.
Data Integrated Limited (DIL): Digital Management & Public Transport in Kenya
Data Integrated Limited (DIL) was founded in 2012 and is a Kenyan women-owned family and fintech company, which offers financial solutions to small- and medium-sized enterprises (SMEs) in Africa. Dreaming to address automation challenges, which SMEs in Africa have been facing, DIL has stated that its motto is to connect “the street to high finance”. Building on expertise and experience on African markets, DIL aims to fight corruption in the public transport sector by introducing a digital system for payments to control ticket sales.
In addition, DIL aims to install a video surveillance system in order to keep track of movements in public transport. Both of the latter aims relate to the broader narrative of ensuring access to certain bus stops and optimizing the bus routes. As Mary Mwangi, CEO of DIL, has emphasized according to DeveloPPP Ventures, “With our innovation, we have helped to make public transport in Kenya more efficient and reliable, which benefits everyone – the bus operators as well as the passengers.”
Considered that Mary Mwangi and DIL additionally set a sample for young African women to start-up in the business world, while promoting a view to further equip African countries with assets, knowledge and infrastructures for the future, DIL’s project contributes to a range of SGDs such as gender equality, sustainable cities and communities and, industry, innovation and infrastructure in the context of the DeveloPPP Ventures initiative. Depending on DIL’s concrete strategies and considering the local background in Kenya, the company could also be able to indirectly solve other challenges related with decent work, reduced inequalities and economic growth.
In a nutshell, the latter is to say that better transport has both a social and environmental impact as well as a positive influence on public health and the accessibility to various societal sectors such as employment. Especially, since Nairobi’s traffic has both been described as chaotic with its vehicle fleet doubling every eight years and severely contributing to air pollution, and after a recent incident, wherein Nelly Waithera, the daughter of Deputy Inspector-General of Police Edward Mbugua, was killed by a privately-owned minibus, commonly referred to as matatu, DIL could tackle one of the most pressing challenges.
Prospects for German-African Start-ups in Africa
With the latter project possessing the potential to provide German-African start-ups who are interested into the DeveloPPP Ventures programme with major inspiration, the following lessons learned may be useful in order to check whether your business should apply to the next funding round and how it should prepare itself in order to become more innovative and attractive!
Our recommendations include that your business should:
- have undertaken thorough research in relation with the local context in your target country in order to address a variety of local challenges both directly and indirectly
- not only have registered in the target country, but also have established valuable local connections or a local network with specialists in different domains
- consist, among others, of local experts and native speakers of your target country
- be diverse and inclusive setting a sample for the initiative you will suggest
- bridge gaps both in terms of knowledge and skills
- show its scalability and expertise in relation with an offered product or service within previously implemented projects
Roughly, the latter suggestions imply that aiming for a scale-up in the context of the DeveloPPP Ventures programme is an interesting opportunity for German-African start-ups, who would like to establish themselves long-term on the African market. Furthermore, it could be an opportunity for German start-ups in Africa, who aim to diversify their fleet and outsource their production/services with a clear view to contribute to the development in African societies and emerging economies. For German start-ups who aim to export specific products without a long-term view for the development of local expertise, content and/or production, an application for the DeveloPPP Ventures programme may not be the ideal fit.
Whether you are a German, an African or a German-African start-up aiming to gain further advice regarding your application to the DeveloPPP Ventures programme, our team of legal experts possesses a broad network, regional expertise and is able to support you with legal and business advice. Our knowledge bridges gaps across various African jurisdictions, however we can also support your team with questions regarding investor search. If you are a start-up yet aiming to fulfill the criteria for the DeveloPPP Ventures programme or a similar initiative in the future, we are also able to support you in your initial phase of founding a start-up in Africa with questions concerning immigration, taxes, IP issues, relocation or expansion covered.
Contact us today for an initial consultation.