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African Leadership Academy (ALA) alumni, Anzisha Fellows and individuals who have participated in any of ALA’s programmes are set to benefit from a $500 000 Young Entrepreneurs Fund.
The rules-based matching fund, which was announced on 15 April at the Very Young Entrepreneur Education & Acceleration Summit in Johannesburg, is a partnership between ALA and the Omidyar Network.
ALA vice president growth and entrepreneurship Josh Adler (pictured above, left with alumnus and Cloudline founder Spencer Horne) — speaking on the side-lines of the summit — said the fund is modelled on the $115-million Endeavor Catalyst Fund.
Launched in 2012, the Endeavor Catalyst Fund is an innovative co-investment vehicle designed to support Endeavor Entrepreneurs with funding by participating in respective equity financing rounds they close.
Adler, who in 2009 was made an Endeavor Entrepreneur, said the idea for the fund followed various conversations he had held with Endeavor.
He said the Omidyar Network — who are partners with both Endeavor and ALA — are excited about taking that model and applying it to young entrepreneurs.
‘Addressing crisis of trust’
The Young Entrepreneurs Fund, Adler explained, aims to solve what he described as a “crisis of trust”.
“So, essentially, we think that the best credential you can give an entrepreneur for an investor is actually a matching cheque,” he said.
Adler pointed out that when it comes to investing in an enterprise, not many people care about where a potential investee graduated from school. “But investors like to see that other people have committed capital. Because that means they are not in it alone,” he said.
He explained why the fund is exclusive to ALA graduates, Anzisha Fellows and other entrepreneurs who have taken part in ALA programmes.
“We can’t give young entrepreneurs a badge, unless we know them. So investors are going to come in based on the fact that they trust us to know the young entrepreneur.
“We’d have said this person is worthy of your trust, we think they will handle your money responsibly. We know that they will put in their best effort and they have thought about this business and we’ve given them a certain amount of skills and training,” said Adler.
For those who qualify, other criteria used to select recipients include having a going concern and being in good standing with ALA as a community member.
Cloudline man named beneficiary
At the event, ALA academy alumnus and Cloudline founder Spencer Horne (pictured above, right) was tapped as one of the first beneficiaries of the programme.
ALA sees the fund as a “demonstration effect” programme. Adler said the academy hopes that when it one day carries out a case study on the fund, other institutions involved in training youth will also find their own matching fund supporters.
“So, we raised half a million dollars for this fund, there’s another academic institution that could easily raise half a million dollars for their fund,” he pointed out.
He pointed out that it’s not really about the size of the fund.
Stressed Adler: “Rather have three hundred funds attached to three hundred leadership institutions that all know the young people they have invested in, that have their own pool of matching investors and angels they’ve built to create that whole thing.”
This story appeared originally on the Anzisha Prize’s blog on 3 July. See it here.
Featured image: ALA vice president growth and entrepreneurship Josh Adler and ALA academy alumnus and Cloudline founder Spencer Horne (Supplied)
The Anzisha Prize seeks to fundamentally and significantly increase the number of job generative entrepreneurs in Africa, and is a partnership between African Leadership Academy and Mastercard Foundation. Through Ventureburn, they hope to share inspirational and relatable stories of very young (15 to 22 year old) African entrepreneurs and the people that support them. [learn more]