Contact: Michael Meneer
The Aspen Institute
he Aspen Institute
New Aspen Institute Program to Push for Small Business Investment
in Developing Countries
Billions of dollars of aid goes to the developing world each year, yet only a fraction goes to building small businesses
LONDON, March 26, 2009 – A group of philanthropic organizations, including social venture funds, foundations, business assistance providers and international development firms, today announced the launch of a new economic development network that would increase investment in small and growing businesses in the developing world. Supporters of the network said poverty reduction would require expanded support for small business owners in emerging markets who are ineligible for smaller microfinance loans and are often overlooked by traditional sources of investment because their businesses are not yet big enough.
Based in Washington, DC at the Aspen Institute, the Aspen Network of Development Entrepreneurs has garnered the financial backing of the Bill & Melinda Gates Foundation, Citi Foundation, Google.org, The Lemelson Foundation, Omidyar Network, The Rockefeller Foundation, Shell Foundation and Skoll Foundation. To-date, thirty-five organizations have joined the network, which organizers said would collectively manage more than $750 million during the next five years.
“Invention and entrepreneurship drive prosperity,” said Julia Novy-Hildesley, executive director of The Lemelson Foundation. “Funding start-ups and young ventures is more important now than ever before, given the current global economic and environmental crisis. There is no better way to build a middle class from the bottom-up than through small and growing businesses.”
“Finding collective solutions to common barriers will be a major focus of our work in the years to come,” said Peter Reiling, executive vice president of the Aspen Institute, and a 22-year veteran in the field of business development. “We believe that by coming together, by combining efforts to support small businesses with high growth potential, we can truly move the needle in creating widespread prosperity in the developing world.”
The creation of the network marked a major step forward in addressing a well-documented disparity between investment in small and growing businesses compared to other business sectors in emerging markets. According to research conducted for the network by Dalberg Global Development Advisors, the volume of loans made in both the microfinance and small-scale private equity sectors were each six times greater than those made within the small and growing business sector.
“The developing world is currently missing out on an engine of job creation and economic growth because entrepreneurs are unable to access appropriate finance and business training,” said Chris West, director of the Shell Foundation. “Through the Aspen Network of Development Entrepreneurs, we have the potential to change this situation – unlocking latent, much-needed entrepreneurial potential.”
The research also showed considerable momentum within the small and growing business sector, with 150 organizations – mostly foundations, development finance institutions and private investors – which have already injected up to $4 billion in capital into small and growing businesses in the developing world. Those same funders reported more capital readily available for investment. The key to expansion, these funders said, would be to support the growth of intermediary organizations that directly invest in small and growing businesses.
“Amid the turmoil of the global economic crisis, the launch of this network offers reason to be optimistic in entrepreneurial quarters of the developing world,” said Randall T. Kempner, executive director of the Aspen Network of Development Entrepreneurs. “In the long-term, our goal is to create the real possibility that the next Bill Gates or Richard Branson could come from a developing country.”
An expert on innovation and economic development, Kempner said in the short-term the network would focus on helping social venture funds and business assistance providers expand their ability to grow. Kempner also announced the start of a fund that would annually give $1 million (USD) in grants to increase innovation and collaboration within the network. Money to start the fund was donated by the Bill & Melinda Gates Foundation, The Lemelson Foundation and Shell Foundation.
Kempner made the announcement this morning in Oxford during the 2009 Skoll World Forum on Social Entrepreneurship, a gathering of more than 700 leading social entrepreneurs, funders, academics and policymakers from more than 60 countries.
Note to Media: Several senior executives of the firms that have joined the Aspen Network of Development Entrepreneurs are available for interviews to discuss their work and to offer examples of small and growing businesses that are being funded and supported in the developing world.