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The MEDA Risk Capital Fund

Investing risk capital since 1953

MEDA is a recognized global leader in impact investing, blended finance and market-based programs that assist millions of people around the world to realize their economic and social aspirations.

The MEDA Risk Capital Fund (MRCF), is a pool of investment assets owned by MEDA. By investing in viable Small and Medium-Sized Enterprises (SMEs) and funds in developing markets, MEDA strives to support the economic advancement of excluded, low-income and disadvantaged communities including women and youth.

The critical role and need for investment capital in developing markets is only continuing to grow. In 2018, MEDA's investment outreach benefitted over one million households and over 90,000 women, men and youth participated in MEDA programming. From its founding investors in 1953 to the establishment of MEDA as a non-profit entity in 1973, MEDA has adapted alongside market trends and the evolving nature of investing risk capital in developing markets.

Quick Facts

Fund Size: $24.8M

Number of current investments: 26

Deal size range: $100,000 – 2,500,000

Sectors

SME Finance Icon

SME Finance

Agribusiness icon

Agribusiness

Financial Services icon

Financial Services

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Impact Investment Platforms

Information Technology icon

Information Technology

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Microfinance

Our Expertise

Blended Finance

MEDA is experienced in structuring blended finance partnerships that allow for different types of capital to achieve commercial and impact objectives. An early leader in blended finance, MEDA partnered with the Government of Canada in 2013 to pilot the use of concessionary finance to raise private capital for development-related investments in private equity and trade finance. A key aspect of these partnerships is the provision of technical assistance to funds and SMEs to support the achievement of the Sustainable Development Goals.

Technical Assistance

MEDA develops bespoke technical assistance packages, delivering services directly to funds and SMEs in gender lens investing, environment social and governance (ESG) integration and impact measurement and management. Through partnering with more than 20 fund managers and 37 companies across 21 countries, MEDA has supported improved business performance and impact including the development of groundbreaking toolkits like the Gender Equality Mainstreaming Framework.

Our Impact

MEDA's investments ultimately aim to contribute to poverty alleviation through supporting local economic growth, creating jobs and decent working conditions, and promoting gender equality and environment and climate change.

To support investments and projects, MEDA develops technical assistance packages, delivering services directly to funds and SMEs, or building the capacity of local partners to do so. Technical assistance can take the form of coaching investment fund managers, managing challenge grant programs for SMEs, training on environment, social and governance (ESG), and gender equality mainstreaming. MEDA initiatives also combine investment with other project activities to accelerate the development of value chains, women’s entrepreneurship, climate-smart agriculture and youth employment.

Women Staff
Women Managers
Women Directors

The MRCF Model

The MRCF Model

The MRCF offers a flexible and agile investment approach to ensure long-term impact through the following four characteristics:

1

Unique Funding Structure

The MRCF is embedded within MEDA’s charitable organizational structure. In contrast to conventional investment vehicles that maximize returns for shareholders, the MRCF’s structure prioritizes stakeholder interests and ESG impact. The MRCF is governed by a separate board comprised of business leaders that support MEDA’s work. The board provides oversight, risk management, and approves investments and exits, ensuring MEDA makes mission-aligned investment decisions.

2

Strategic Partnerships

While MEDA staff participate in sourcing and recommending investees and designing technical assistance, MEDA utilizes a thirdparty asset management firm to ensure deals undergo rigorous and objective financial due diligence and monitoring. Currently, MEDA engages Sarona Asset Management in this role.

3

Values-aligned Investors and Donors

MEDA raises the majority of its capital from values-aligned investors. MRCF capital is made up of roughly equal parts financial donations, retained capital and low-interest earning promissory notes. This kind of ‘unencumbered capital’ gives MEDA complete discretion over how and what it invests in. Consequently, MEDA plays a unique role as an intermediary, linking donors and investors with the private sector to promote market-based investments to help achieve the sustainable development goals.

4

Values-added Technical Assistance

MEDA seeks to enhance development outcomes achieved by investee funds and SMEs through assessments, capacity building, training, challenge grants, and introducing appropriate methodologies, incentives, tools and technologies. For example, MEDA applies the Gender Equality Mainstreaming Framework (GEM) with trade finance intermediaries to integrate gender lens investing in their investment policies and practices including promoting gender upgrading in their portfolio for business growth and impact.

In addition to the MRCF model’s key characteristics, the following qualities are core to MEDA’s investment process to maximize impact.

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Enduring Impact

Invest in impactful SMEs and funds to promote sustainable and equitable growth

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Agile Process

An investment process that moves at the speed of our entrepreneurs

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Flexible Investing

An investment approach that evolves with the rapidly changing global context

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Recycled Capital

An evergreen fund reinvesting capital and investment returns into perpetuity

Our Promise

Adaptability

MEDA will continuously adapt the MRCF investment strategy in response to the changing needs and trends in the impact investing eco-system. MEDA will continue to catalyze new platforms and blended finance partnerships, improve the fund’s investment policies and procedures, scale the organization’s gender lens investing strategy and design more sophisticated impact reporting methodologies.

Thinking Forward

MEDA is currently developing a $100 million gender lens investing fund for global financing of women-led and gender mainstreamed companies and funds. MEDA continues to offer distinctive financial mechanisms through the MRCF in collaboration with private equity and asset management firms, and blended finance partnerships with donor governments and philanthropic foundations.

Continuous Learning

  • Making impact investments in platform builds and project-related investments increases outreach and impact, whereas one-off investments are typically tied to a more focused objective.
  • Mobilizing capital from investors and donors to finance market-based approaches is essential to meeting the sustainable development goals. Combining risk capital and technical assistance enables MEDA to act as a trusted intermediary in establishing blended finance partnerships.
  • Starting new companies can add significant complexity and risk to investments. Rather, investing in established SMEs with competent management teams enhances the likelihood of achieving financial results and long-term impact.
  • Investing in funds boosts diversification, leverages local investment expertise and decreases transaction fees, helping to improve the risk-return profile of the portfolio while supporting the development of local financial ecosystems.