Innovations Against Poverty (IAP) is a specialised fund that challenges private sector companies to innovate products, services and business models that benefit people living in poverty while delivering commercial benefits for the private sector. The programme, funded by Sida (Swedish International Development Cooperation Agency) and managed by SNV in partnership with BoP Innovation Center and Inclusive Business Sweden, supports companies operating in the agriculture/food, renewable energy, and WASH sectors in Cambodia, Ethiopia, Uganda, or Zambia.
Private companies with innovative inclusive business ideas apply for IAP support through open competitive calls. Submitted applications are evaluated against pre-determined assessment criteria, and the best proposals are selected to receive funding and non-financial support services over a two-year period. The rigorous selection process ensures a competitive selection of diverse ideas in all four countries.
Innovation and risk-sharing
Low-income markets represent a significant business opportunity. The four billion people living on less than US$ 8 a day constitute a global consumer market with a shared purchasing power valued at US$ 5 trillion. By thinking innovatively, companies can develop business ideas that solve social and environmental issues while at the same time maximizing their competitiveness and profitability. However, many of these initiatives face commercial, technical and financial risks. They have limited access to finance as they are frequently too large for micro-financing but too small and risky for mainstream commercial debt and venture capital.
In this context, the Swedish International Development Cooperation Agency (Sida) launched the Innovations Against Poverty Challenge Fund (IAP) that functions as a risk sharing mechanism to stimulate private sector development initiatives that otherwise would not occur. The programme pays significant attention to gender and environmental sustainability as part of its screening criteria. It provides companies with tailor-made advisory services, including mentorship from impact investors, thus helping them develop and roll out their inclusive business idea.
Background of IAP
The IAP fund was initially launched in 2011 by Sida (Swedish International Development Cooperation Agency), taking on a pioneering role in promoting innovations and social entrepreneurship aimed at the low-income population. Following the success of the pilot phase, Sida launched the second phase of the IAP fund in 2016, managed by SNV Netherlands Development Organization in collaboration with Inclusive Business Sweden (IB Sweden) and BoP Innovation Center (BoP Inc.).
During Round 1 (2017 – 2021), IAP disbursed EUR 3.2 million to 35 contracted companies. In April 2021, IAP selected additional 21 companies, with a total committed grant size of approximately EUR 3.8 million.
IAP financial support and non-financial support
IAP will provide non-reimbursable funding ranging from €50 000 up to €200 000 not exceeding a maximum of 49% of the total required investment to implement the innovative Inclusive Business idea.
The advisory support offered by IAP will be provided through training and coaching, covering areas such as Inclusive Business development and innovation, to enhance and efficiently achieve the targets of each Inclusive Business initiative. In addition, IAP will select and train a number of local consultants that will be available to support the businesses on a fee for services basis.
IAP’s strategic investment partners
IAP provide the opportunity to connect with impact investors to successfully secure investments for their prospective growth and scale-up. IAP’s Strategic Investment Partners (SIPs) network- a network of 11 leading potential investors- will collaborate with the programme over the coming years to provide guidance and mentoring to assist the IBs to become investment ready, create opportunities for networking, knowledge sharing and co-investment synergies. Read more HERE.