The Aspen Network of Development Entrepreneurs (ANDE) presents the second report on Central America from the Global Acceleration Learning Initiative (GALI). It explores startup data as well as qualitative findings on accelerators and investors.
Contact: Evelyn Hernández
Senior Program Coordinator
Aspen Network of Development Entrepreneurs (ANDE)
Guatemala City, Guatemala, April 14, 2021 – The Aspen Network of Entrepreneurs for Development (ANDE), a global network of almost 300 organizations that promote entrepreneurship in developing economies today launched a new report entitled ”Acceleration and Access to Financing in Central America”.
The report, available in English and Spanish, aims to capture the characteristics of the entrepreneurship sector in Central America in recent years, using a sample of 809 companies that applied to 21 different acceleration programs in the region. It also uses business data to provide an analysis of how capital behaves and the challenges and opportunities in the ecosystem. Following up on the first report on this topic, published in 2019, it examines the performance of companies one year after going through an acceleration process, and seeks to answer the following questions:
- What types of capital are entrepreneurs looking for when applying to an accelerator?
- Do accelerators effectively connect entrepreneurs with the capital they seek?
- How can accelerators and finance providers better collaborate for the benefit of early-stage businesses?
Some of the main findings from the research include:
- Entrepreneurs are not meeting their own fundraising expectations. Interviews with investors and accelerator representatives suggest that entrepreneurs’ fundraising expectations are unrealistic and that regional and economic constraints limit access to capital. Entrepreneurs are more likely to seek and secure debt, with little access to equity financing and challenges in obtaining favorable loans.
- Investors largely point to a lack of investment readiness and scalable business models. The early stage and lack of formality of Central American companies are not attractive to finance providers, along with the inherent economic volatility in the region that makes revenues unpredictable. There is still a long way to go to prepare entrepreneurs to make investments and engage the investment community.
- Accelerators generally focus on financial education but acknowledge the lack of financing designed for early-stage businesses. Entrepreneurs need a significant improvement in their investment readiness. Accelerators aim to close this gap, but traditional financiers sometimes have unrealistic expectations of start-ups, highlighting the lack of adequately sized and flexible capital as a major constraint.
ANDE will host a report launch event, conducted in Spanish, at 9am Guatemala/11am ET
The Aspen Network of Development Entrepreneurs (ANDE) is a global network of organizations that propel entrepreneurship in developing economies. ANDE members provide critical financial, educational, and business support services to small and growing businesses (SGBs) based on the conviction that SGBs create jobs, stimulate long-term economic growth, and produce environmental and social benefits.
As the leading global voice of the SGB sector, ANDE believes that SGBs are a powerful, yet underleveraged tool in addressing social and environmental challenges. Since 2009, we have grown into a trusted network of nearly 300 collaborative members that operate in nearly every developing economy. ANDE grows the body of knowledge, mobilizes resources, and connects the institutions that support the small business entrepreneurs who build inclusive prosperity in the developing world.
ANDE is part of the Aspen Institute, a global nonprofit organization committed to realizing a free, just, and equitable society.
GALI is a research initiative by the Aspen Network of Development Entrepreneurs (ANDE) designed to explore key questions about enterprise acceleration. GALI is supported by the Argidius Foundation, Omidyar Network, the Kauffman Foundation, Stichting DOEN, and the Australian Government, among others.