Investment Readiness Training for Impact-Linked Fund for WASH

The Opportunity

The crisis of clean drinking water and proper hygiene and sanitation is particularly acute in countries in Africa and Asia.

Global Citizen predicts that nearly 230 million Africans will face water scarcity, and up to 460 million will live in water-stressed areas by 2025. To meet these difficulties, the private sector is becoming increasingly crucial in transforming lives by employing cutting-edge thinking to forward a sustainable, high-value WASH sector (Water, Sanitation, and Hygiene sector).

Yet, much like entrepreneurs in other sectors, WASH sector entrepreneurs need extensive support for selecting and approaching investors effectively to raise the capital needed to grow and scale their businesses.

The Impact-Linked Fund for Water, Sanitation and Hygiene (ILF for WASH) is a program co-designed and implemented by Aqua for All and Roots of Impact. It aims to support WASH sector impact entrepreneurs for Impact Measurement and Management and Investment Readiness.

Under its Train-the-Trainer (TTT) program, ILF for WASH provides capacity-building resources to support impact entrepreneurs in the WASH sector across Africa and Asia. 

The 2022 cohort of the TTT program took place from October to November 2022, with participants from Cambodia, Kenya, and Senegal.

LightCastle Partners conducted the Investment Readiness Training for 18 participants from six international organizations in the area of Investment Readiness (IR).

The participating organizations included:

1. Innovative Services Engineering & Advisory (ISEA), Cambodia: An engineering consultancy specialized in business management and technical support to water supply entrepreneurs, with a focus & interest in access to finance.
2. Swisscontact, Cambodia: A business-oriented foundation for implementing international development projects.
3. Intellecap, Kenya: An advisory arm of The Aavishkaar Group, with a focus on building enabling ecosystems and channeling capital. 
4. Private Equity Support (PES), Kenya: Advisory consulting firm focused on enterprise support, including pre-investment support, transaction advisory, and post-investment support. 
5. DevFi Performances, Senegal: A consulting & management firm specializing in investment support in Francophone Africa.
6. Haskè Conseil/Ventures, Senegal: An incubator/accelerator combining venture-building support and seed capital.

The Approach

The Investment Readiness Train-the-Trainer (IR TTT) program was designed to help ecosystem builders deliver international standard IR training to impact enterprises and provide them with a practice-driven, proven IR framework and diagnostic toolbox specifically developed for impact enterprises.

The program was structured in an 18-step or INSIMA framework by the Social Finance Academy.

The framework is outlined in the diagram below:

The framework is divided into three phases that typically mark the journey of an impact enterprise in terms of raising and using impact investment:

1. Investment Readiness: Develop the capacity to seek, use and repay an impact investment.
2. Signing Readiness: Develop the capacity to approach investors and secure a financing contract.
3. Market Readiness: Develop the capacity to keep investors committed and approach follow-on financings using social capital markets.

The IR TTT curriculum by LightCastle Partners focused on the first two parts of the framework: investment readiness and signing readiness.

Through eight interactive sessions, the training encompassed the following elements of investment readiness:

• How to develop a business model through frameworks such as design thinking, human-centered design, and lean data management?
• How to strategize competitive mapping, scenario analysis, and pricing?
• How to grow and scale business operations?
• How to build a financial model considering factors impacting a financial model (such as stages of a startup lifecycle, regulatory environment, business structure, and financial instruments)?
• How to create, customize, and deliver an effective pitch deck?
• How to compose a comprehensive investor long list and shortlist?
• How to develop a term sheet and effectively conduct investor due diligence?

The curriculum included guest speakers from seasoned investors in the WASH sector and key industry experts in Bangladesh and beyond.

Guests were invited from renowned organizations such as Startup Bangladesh Limited, the largest Venture Capital fund in Bangladesh backed by the government; Global Partnerships, an impact-first investment fund manager dedicated to expanding opportunity for people living in poverty; IDLC Finance Limited, the largest Non-Banking Financial Institution (NBFI) in Bangladesh;  and LiquidGold Africa, a unique waterless sanitation impact enterprise in Africa.

Furthermore, to ensure that the IR TTT curriculum was attuned to the WASH sector in Cambodia, Kenya, and Senegal, LightCastle Partners conducted thorough secondary research on the landscape, opportunities, and challenges in the WASH sector in Africa and Asia.

Key WASH sector impact enterprises and stakeholders were mapped through deep background research and analysis. Case studies on WASH enterprises were also developed to facilitate application-based learning in the curriculum. 

The Output

Through the IR TTT curriculum, ecosystem supporters gained skills on how to support impact enterprises in the WASH sector better to enhance their ability to approach investors and thus improve their access to impact-linked funds.

The program served as a comprehensive guide for ecosystem builders. It marked an important way forward to transform lives worldwide through scaled innovative business models working on access to clean drinking water and sanitation for all.

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