AGORA PARTNERSHIPS A Better Solution to Nicaraguan Rural Poverty

Agenda:  Nicaraguan poverty  The Agora Model  Comparison to other methods  A success story  Improvements

Poverty in Context  1980’s: Civil War  1985: U.S. Trade Embargo  1989: Collapse of the International Coffee Agreement  1998: Hurricane Mitch Destroyed infrastructure Economic crisis with inflation of 13,000% Depressed coffee prices force farmers into debt Over 500,000 people left homeless

Drivers of Rural Poverty Poor Education & Infrastructure Barriers to Entrepreneurship Overexploited Land Lack of Investment Lack of Economic Diversity & the “Missing Middle”

Drivers of Rural Poverty Poor Education & Infrastructure Barriers to Entrepreneurship Overexploited Land Lack of Investment Lack of Economic Diversity & the “Missing Middle”

Drivers of Rural Poverty Poor Education & Infrastructure Barriers to Entrepreneurship Overexploited Land Lack of Investment Lack of Economic Diversity & the “Missing Middle”

Drivers of Rural Poverty Poor Education & Infrastructure Barriers to Entrepreneurship Overexploited Land Lack of Investment Lack of Economic Diversity & the “Missing Middle”

Barriers to Entrepreneurship  Closed Social Networks (i.e. Entry)  Lack of Formal Business Training (i.e. Education)  Lack of Financing (i.e. Access to Capital)  Poor Entrepreneurship Climate (i.e. Execution)

Drivers of Rural Poverty Poor Education & Infrastructure Barriers to Entrepreneurship Overexploited Land Lack of Investment Lack of Economic Diversity & the “Missing Middle”

Drivers of Rural Poverty Poor Education & Infrastructure Barriers to Entrepreneurship Overexploited Land Lack of Investment Lack of Economic Diversity & the “Missing Middle”

The “Missing Middle”

The Agora Model: Barriers to Entrepreneurship EntryEducation Access to Capital Execution Merit-based identification of promising entrepreneurs. Intensive consulting by US-based graduate students. Direct investment in promising ventures that meet strict criteria. Support including: strategic advice, business contacts and financial management. Barriers to Entrepreneurship Agora Solutions

The Agora Model: Company Profile Clearly defined constraint to growth Operate in sectors where Central America has natural competitive advantage Cash flow positive Innovative Require investment of $25K to $250K Eco-tourism Sustainable agriculture Value-added manufacturing Agricultural processing Organic foods, etc. Or can be within 18 months Provide product or service that is new or reaches new customer base

The Agora Model: Social Impact An Agora Entrepreneur must: Be capable of creating a clear and quantifiable social impact through: Job creation Protection of environment Providing goods/services to the needy Adhere to Agora’s social responsibility guidelines by meeting or exceeding: Ethical, Legal, Commercial and Public Expectations Support the 10 Principles of the UN Global Compact covering: Human rights Labor standards Environment Anti-corruption

Comparison Agora Partnerships Microfinance Institutions Traditional Venture Capital Technical Assistance Groups Example: Procredit Example: Technoserve Debt Financing Equity Financing Target Micro Firms Targets SMEs Provides Consulting

Comparison Agora Partnerships Microfinance Institutions Traditional Venture Capital Technical Assistance Groups Example: Procredit Example: Technoserve Debt Financing Equity Financing Target Micro Firms Targets SMEs Provides Consulting

Bambucasa Jan Van Bilsen- successful entrepreneur  Harvests and converts bamboo into affordable building materials for housing

Testimonial “The guys in the village next to my farm were making $1 a day, and that’s when they could find work. I offered them a consistent salary and trained them in bamboo treatment and construction... Now they are a solid, highly motivated team, with good skills, good salaries, and a long-term perspective on how to get out of poverty through training and learning skills... The success of the business is key to all of this. If we can't make the business side work, none of the change we hope for is going to happen. That's why an organization like Agora is essential.” – Jan Van Bilsen

Ways to Improve  Lack of strong quantitative metrics  No effective ways to measure impact of work  Best measures of workshop effectiveness currently come from participant surveys  New metrics such as ROI needed to evaluate success of entrepeneurs receiving consulting and funding Consulting hours provided by MBA consulting teams: over 6,800 Consulting hours from local Agora staff and volunteers: 3,000

Ways to Improve  More extensive and effective communication  New organization which is not widely known  Expand on website and annual report  Refine website: contains several links which do not work Profiles of Agora’s work in local newspapers, television, and radio: 24

Ways to Improve  Increase Funding  Eventually start to increase size and scope Applications to Agora program: 148 Ventures matched with consultants: 32 Consultants matched with ventures: 142 Agora-supported companies receiving investment from the Agora Fund: 3 Agora-supported companies receiving outside investment: 3