Dire economic threats in the Covid-19 pandemic are heightened in developing countries. Given that much impact investing focuses there, we at DGI are wondering how #impinv leaders are responding. A recent interview in Forbes magazine with Lauren Cochran, a managing director at Blue Haven Initiative, provides a case in point. Her answers were both sobering and inspiring.
Blue Haven, launched by a family office in 2012, is focused in part on sub-Saharan Africa. The initiative “makes direct investments in mission-driven, early-stage companies and projects focused on creating economic opportunity, improving standards of living and delivering products and services to under-served communities,” the Forbes article says. The sub-Saharan portfolio is $50 million invested in nine companies. Over time, between $250,000 and $8 million is focused on a given company, most with headquarters in Lagos, Nigeria or Nairobi, Kenya.
As the pandemic hit Africa a few weeks later than the US, Blue Haven initially offered forward-looking operational advice to protect employees’ safety. This included setting up employees to work at home and finding ways for essential personnel to travel to sites by private cars rather than public transport. At a company that helps pharmacies manage inventory, investors advised on installing hand washing stations in pharmacies and ensure PPE was provided. It was really back-to-basics kind of stuff.
Then came the financial discussions. How can companies continue to make revenues, and how will they handle it if half of their revenues disappear overnight? “We think about what our businesses would look like in a recession, regardless of the timing,” Cochran said. “But we haven’t looked at a recession that takes hold and wipes out your revenues in 10 days. The rapidity of this is alarming and tested any plan we may have had as to how these businesses would do.”
Hoping for business to rebound by early 2021, Blue Haven is supporting company leaders as they try to keep their teams intact, look at possible management and founder salary reductions, consider taking on more debt, offer to pay commercial rent months ahead at serious discounts, and look for ways to make payments easier for consumers, when that’s part of a business model.
The initiative is also contributing to Open Road Alliance, a philanthropic effort with experience supporting companies encountering sudden economic shocks. The goal is to support a group that already has the expertise, structures and on-the-ground people.
In countries where basics like Internet and electricity can be unreliable in the best of times, these are uncharted waters. Impact investors are facing the same challenges as other investors, but are committed to sustaining the social good that will be made possible by their portfolio companies’ survival.