Strategy and Approach

Criteria and Return Expectations

d.o.b foundation provides patient capital and expertise to enterprises in East Africa that generate a social or societal return within five years as follows:

1. generate income earning opportunities for at least 1,000 low income people;
   or
2. provide affordable products and services to at least 10,000 low income people.

The realization of this societal impact is a necessary criterion for all investments. The initiatives should also be:

• innovative, so that systemic change benefitting low income people takes place;
• replicable, so that more low income people benefit from the successful initiatives.

Initiatives should preferably have a positive environmental return. This means that natural resources are used in a responsible manner and that the initiative has a positive contribution to energy efficiency, biodiversity, waste management, water resources, or another relevant environmental aspect. The financial return should at least ensure the long term sustainability of the initiative.

d.o.b foundation does not compromise on risks related to management, business model, valuation, technology, governance, competitors and societal impact. These are to be assumed by the investee companies and are considered when determining the required internal rate of return.

Other Criteria

The following additional criteria apply when selecting investments :

1. driven by private initiative in a country with an enabling investment climate;
2. a capable entrepreneur who is financially involved;
3. limited availability of patient capital: no crowding out of (semi) commercial and local resource;
4. solid and replicable business model projecting self-sustainability within 3-5 years

Sectors

In terms of sectors, d.o.b foundation seeks to invest in sectors that have a high societal impact and where innovation can lead to systemic change. Based on the market research and sector analyses, the following sectors are considered for investments by d.o.b foundation:

• agribusiness;
• natural resources (forestry and mining);
• retail and distribution;
• waste (collection and recycling);
• services based on mobile technology;
• stand alone or off grid water and energy.

In all these sectors, d.o.b foundation will seek for those initiatives that propose innovative approaches that either enhance the income generating and job creating capacity for low income people or propose products and services that are affordable for these people. Additionally the initiatives should have the potential to generate positive environmental returns. d.o.b foundation will not invest in ‘proof of technology’ ventures.

Approach

The aim of d.o.b foundation is to be an active and influential shareholder, but d.o.b foundation is not in the position (being based in the Netherlands) to do management turnarounds or to provide regular hands-on management support. d.o.b foundation invests in entrepreneurs and management teams who are the first responsible for running the business and making it successful, as they are the most familiar with local conditions and have the market knowledge. Through a board representation, d.o.b foundation wants to contribute to the soundness of the financial and business decision making processes of the initiative and the continued focus on the social return.

In order to influence the investee company’s strategy and management, d.o.b foundation prefers to co-invest with one or two other like minded institutional investors. The co-investors can be (besides the entrepreneur) local, regional and international financial sector actors that are among the most professional in the financing community and committed to impact investments.

Exit Strategy

The investments are conditioned by specific and measurable predefined indicators related to social, financial and environmental returns. If an initiative is successful in both areas, it will be able to attract 'commercial' follow-on investors and lenders, thus enabling d.o.b foundation to exit.

The formulation of an exit strategy is always part of the investment process and its realization will depend on the development of the venture and the capital markets in the region.

The investment period is between 5-10 years. Nowadays, a trade sales or self liquidating exit is the most likely. However, as time passes, public offerings might become a realistic option for exiting the investee companies.