The first BoP (Bottom of the Pyramid) convention and expo held in Singapore attracted a diverse collection of enterprises from all over the world. The buzz at the sessions was just palpable in terms of the potential that delegates saw in the market.
One of the issues that I heard time and again though was the difficulty in getting funding for start-up and growing enterprises. Even though they have great ideas and innovative social media campaigns that reach out to thousands, the money does not seem to be coming in at the end of the day. I found that interesting, especially considering the prevalence of viral marketing campaigns, crowdfunding mania, and all the trendy buzzwords. Olivier Kayser of Hystra explained in a plenary that the best form of marketing for enterprises actually come through word of mouth. This is cheap yet ‘formidable’. Social media marketing gives plenty of exposure but often does not lead to action or ‘decision’.
At AVPN (Asian Venture Philanthropy Network), we found this to be quite true. The most effective form of fundraising comes in the form of recommendations through other investors that have ‘tried and tested’ an organization. Marlon Verles from Nexus Carbon for Development highlighted the importance of intermediaries in facilitating this process of match-making the funder and investee organization. Our organization does ‘funder to funder’ match-making – introducing different types of funders to each other, perhaps because they have similar sector interests, so they can choose to co-invest or partner on specific investments or projects – and at times that is even more effective.
That is not to say that direct match-making sessions are not useful. The afternoon of the first day was filled with pitching sessions from different regions. The main session started with a call from Estefetta, a face-to-face match-making platform that travels globally, explaining the need for ‘hybrid financing’ in order to get the money to assist enterprises in the most effective way. It was great to note that even at an event that pitches the BoP market as a trillion dollar opportunity, speakers were also stressing the importance of ‘patient capital’.
I attended the African pitching event and was surprised by the number of delegates that had attended a conference in a South East Asian country in order to seek funding. There is obviously still a need to build more pipelines and platforms to facilitate the process on a global, regional or sector level. I agree with what the Estefetta speaker said, that more people should also be funding and supporting intermediaries and facilitators, and those who do so are in fact seeing things with a longer term vision, rather than funding individual projects. The facilitators will be able to ensure the growth and scaling up of more enterprises, producing a multiplier effect in an industry that needs scaling up in a huge way.
I recently heard at another event the question on whether ‘there is too much money chasing projects or the other way round?’ Everywhere I go I witness grumblings about this disconnect, but most people still do not recognize the importance of the middle man in closing this gap. Hopefully there will be a shift in this mindset soon enough.
Stacey Choe is membership services director at AVPN (Asian Venture Philanthropy Network).