This week I came across what I believe should become the new normal. I had the pleasure of moderating an interactive session at SOCAP focusing on the severity of the global pandemic crisis on women. We heard the stories of three resilient entrepreneurs working at the frontlines to keep their businesses strong and their communities safe; and three impact funds that moved quickly to support them in these efforts.
Why should these frontline responses become the new normal?
They put people first.
They react quickly.
They are not afraid of risk.
They focus on solutions.
They are based on trust.
They save lives.
They keep the economy going
Jane Maigua is Managing Director of Exotic EPZ, a macadamia nut company in Kenya that employs 80 women in its processing plant and sources from 600 women farmers. Eric Kaduru is the Managing Director of Kad Africa, a socially-driven agribusiness that uses fruit farming as a vehicle to empower women and girls in Uganda. Flavia Bustamente, Operating Director of Estrafalario, an ethical fashion company that trains and employs women who have been victims of domestic violence and are incarcerated in a Peruvian penitentiary.
When COVID-19 hit, all three of these enterprises were strongly affected.
Their operations came to a screeching halt. The entrepreneurs feared for the safety of their employees and suppliers, their families and communities, and the survival of their businesses. Already working with people who are living in vulnerable conditions, already providing services that go beyond their business such as training in reproductive health, midwifery, domestic violence prevention; these entrepreneurs knew that they needed to move quickly to respond. First focusing on the human side of the situation, and then quickly pivoting to ensure that their business could keep operating and sustaining its workers.
When orders stagnated, Exotic EPZ paid stipends to its employees, women who were responsible for caring for their families. They reorganized the factory to be compliant with hands-free equipment and social distancing. They continued to provide the women with psychological support and did the same with the farmers providing them with supplies and safety equipment. The emergency response support of Root Capital was key in helping the enterprise to have the resources to make these changes and carry on with these activities.
Photo from Kad Africa
A similar scenario unfolded with Kad Africa, an enterprise that trains and provides quality seedlings to its fruit suppliers as well as reproductive health and financial literacy education to young girls who are transitioning to become suppliers. When production stopped and the enterprise lost its source of revenue, Acumen emergency support arrived. The enterprise used this funding to train the girls and young women to make and sell masks; to provide education on domestic violence; to digitize the enterprise’s curriculum; and to move their suppliers to digital mobile payments. Kad Africa also equalized payments so all of the farmers would have enough to support their families.
Photo from Estrafalario
Photo from Estrafalario
In Peru, Estrafalario lost contact with the incarcerated women that it employs due to shelter-in-place regulations that severely interfered with visitation, which the CEO, Valery Zeballos, routinely conducts. Finally, one of the women managed to get a note out describing the severity of their situation, of which there was very little information available to the public. The enterprise moved quickly to get masks to the women to keep them safe and also provided PPE to prison staff. With NESsT contingency support, they were able to deliver supplies and start making masks for the entire prison and eventually for their clients while transitioning to e-commerce. They developed a new line of comfortable work-from-home clothes that they are now selling through virtual channels.
These three stories reflect the incredible capacity of entrepreneurs to use their passion, empathy, courage, and entrepreneurial skills to be solution seekers.
Root Capital, Acumen, and NESsT surveyed all of their clients, fellows and portfolio companies, only to find that the frontline response of these entrepreneurs repeats itself over and over again.
Root Capital found that their women-led clients faced a wider variety of disruptions; they had more reductions in sales, were less likely to be operational, and faced more barriers to pivoting. The inequity that these enterprises normally confront was only exacerbated. For Acumen, it was the same. The role of gender came up in a myriad of ways. The fellows they support are businesses but also first respondents who sustained their enterprises while also providing crucial services to women and their communities. NESsT developed contingency plans with all of its portfolio companies and used its gender lens to provide tailored business assistance and funding that was sensitive to gender inclusion and to the specific needs of women.
All three funds listened before developing their response. The investors demonstrated their commitment to their enterprises by providing remote services and emergency/flexible capital to respond to immediate needs. These enterprises have been able to position themselves for future growth because they sustained their operations and the trust of their communities at a time when so many businesses have been forced to close permanently.
This is what impact investing is really all about. It's a way to catalyze capital and other resources to ensure that those who live in conditions of exclusion are given an opportunity to overcome them. It requires empathy, flexibility, rapidness, risk tolerance, and a deep desire to save and improve lives. The pandemic crisis has brought to light the need for our industry to make frontline investing the new normal.
The coming together of Root Capital, Acumen and NESsT to discuss urgent issues focusing on gender lens investing has now become a SOCAP annual tradition. This was our second time and we hope to do it again next year!