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- One to Watch (OTW) launches the Nepal Impact Investment Community 2 (NIIC 2) to aid the Missing Middle of Nepal’s economy.
- This 20 million euro venture capital fund is focused on investing in SMEs in Nepal working in the basic needs industries— agriculture, infrastructure and healthcare.
- OTW aims to help SMEs grow through promoting international and local co-investments.
Willem Grimminck, Managing Director of One to Watch (OTW), has always maintained that “Entrepreneurs are the future leaders of the nation (Nepal).” In a move to help these future Nepali leaders, OTW, on 2 May 2018, announced the launch of its 20 million euro venture capital fund – the Nepal Impact Investment Community 2 (NIIC 2). On the same day,OTW also announced its partnership with a Nepali investment management company, True North Associates (TNA). NIIC 2 targets early stage growth companies in Nepal and this launch comes after the successful implementation of One to Watch’s 4.5 million euro pioneer fund.
Opportunities and Challenges in Nepal’s Economy
Located in between two of the world’s largest emerging markets – India and China, Nepal has a lot of business potential. It has three irrefutable strengths when it comes to doing business –the high quality of its agricultural produce, the growing purchase power of its citizens, andits location.Even though the Nepali economy was affected by conflict and lack of opportunities, opportunities are now rising and entrepreneurs are generating wealth by starting companies andcreating jobs.These Small and Medium Enterprises (SMEs) account for more than 70% of the Industrial Sector’s contribution to the GDP. “These SMEs,” as Suman Joshi, Managing Director of One to Watch and Managing Partner of True North Associates, aptly puts “have a high impact potential but need help scaling up.” On average,Nepali SMEs can generate 100 jobs for every 400K euros invested. While SMEs find innovative solutions to prevailing development challenges, they also fall into the category of the ‘Missing Middle’ – they are too big for micro-credits, but they lack collateral for banks, and, large funds find them risky, cutting them off from accessing capital they could use for growth.
Filling the “Missing Middle” Gap
This is where OTW comes in. Since 2014, OTW has specialized in investing in the missing middle of Nepal’s economy. OTW works with companies that focus on basic needs- food/agriculture, infrastructure and healthcare, and companies that create profit as well as impact. For Willem Grimminck, the best way to help Nepal develop is through investing in SMEs because, “they are innovative in the fields of infrastructure, agriculture, health care, housing, banking and much more. While serving the basic markets, these entrepreneurs innovate and generate income to distribute among themselves and others.”
Till date, OTW has invested a total of 4.5 million euros in 15 early stage companies in Nepal. In a move to help these SMEs grow and promote international and local co-investments, OTW has partnered with True North Associates (TNA) to develop Nepal’s entrepreneurial ecosystem through investments and business support to entrepreneurs. By bringing complimentary resources to the table, TNA and OTW offer SMEs a blend of international best practices and local experience and network. As a part of this partnership, TNA’s portfolio companies will be joining OTW. More information about the OTW’s portfolio can be found here.
To accelerate and improve the access to finance for these companies, One to Watch has also launched the new fund, NIIC 2. This 20 million euro venture capital fund is focused on investing in SMEs in Nepal that are working in basic needs industries – primarily Agro-Business, Infrastructure, and, Healthcare. The fund will invest in scalable enterprises that can generate good financial returns and positive social and/or environmental impact. “It is only by providing access to finance and enabling companies to grow,” Willem Grimminck believes that “the economic development of a county can take place.”