Saul (Malawi) was able to expand his crop of green maize with a SIA grant.
Have you heard about “angel investors”? In the business world, Angel Investors are wealthy, entrepreneurial-minded individuals who provide capital to start-up companies.
Now, imagine a world where Angel Investors didn’t just back Silicon Valley tech start-ups. Actually, aren’t SIA donors already Angel Investors for small business entrepreneurs in Africa?
“No successful company in the U.S. started with loans,” said Alan Patricof in his article about microfinance in developing countries, “Steve Jobs, Michael Dell, and Mark Zuckerberg did not borrow from their local banks to start Apple, Dell, and Facebook. They got angel investors.”
Grants, Not Loans
With Spirit in Action we all have the opportunity to be Angel Investors. Think about it, if I have just $150 I can give it to a family in Africa to start a business. I don’t need that $150 back. It’s only $150 and it can make a world of difference! Corporate Angel Investors give to projects that inspire and excite them, projects that give them hope for something better in this world that their precious money can go to help. What’s just money for me, is a tool for empowering our partners.
You may have heard about other micro-loan organizations, like Kiva. However, these traditional micro-finance institutions take people down the path of dependence with high-interest loans and by making them prey to in-country loan sharks. I was shocked to hear stories of interest rates as high as 48% for a two-week micro-loan in Malawi! How can that possibly create success?
Businesses started with SIA Small Business Fund (SBF) grants are more likely to succeed and thrive than those started with a high-interest micro-finance loan.
Justina Phiri (Malawi) sells beans and popcorn. She can now afford to pay for one child to go to high school and one to university!
Our SBF grants, give people a windfall to start their business without debt, to start off in the black. This means that their first $150 in profit goes to pay for school or health care, rather than to pay back a comparatively wealthy investor. We realize that $150 can have a much bigger impact when it’s given graciously to an entrepreneur, rather than restricted through a loan process.
Because Angel Investors assume a high level of risk, they are also betting on a high return on investment. At SIA, we bet on the entrepreneur’s success, rather than depend on their interest to earn our money.
A Minnesota angel investor group found it is best to fund a project early on, when there is still a chance to lead and plan with the group for a successful business. In addition to the micro-grant, Spirit in Action also provides business training in the early stages of the business. Our local coordinators participate in the development of the business plan by guiding initial group discussions and helping them estimate costs and income. This direct, early (and then on-going) support is crucial for the group’s success.
Be an Angel Investor
Juliet Namusobya (Uganda) received a SIA grant in 2007 and is still in business today!
Spirit in Action also puts the “angel” in Angel Investor. We are an organization founded on compassion for others and the world. We encourage SBF groups to pray together for their needs and for the needs of their customers and communities.
This Christmas, I’m choosing to be an Angel Investor to a new shop keeper in Kenya, a new tomato farmer in Malawi, or a new mat-weaver in Uganda. Boyd and I give to Spirit in Action because we believe that it’s worth at least the $150 “investment” to see these businesses started, these leaders trained, and these families changed forever.
You can also be an Angel Investor, through a tax-deductible donation to SIA.
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