The USAID funded Farmer-to-Farmer (F2F) pilot project Engaging Venture Capital to Strengthen Agricultural Value Chains in Morocco that VEGA implemented from 2012 to 2013 arose from two key observations initially made by Program Adviser William Fellows, a former venture investor and long-term advisor to venture/risk capital funds in the Maghreb region:
- Despite bringing ‘smart’ capital to growth oriented SMEs in Morocco, Venture Funds face real and impactful constraints. VC funds in emerging markets are typically staffed by purely or largely financial staff, ex-bankers, or chartered accountants who do not have the expertise necessary to help solve pressing industrial challenges, whether in production, technology, or management.
- Local markets can have decent basic expertise to develop and call on, but often lack in depth expertise to support industrial innovation, particularly for new markets. It is usually cost and time prohibitive to search out and bring in specialized expertise on their own, and typically the investor teams lack the time and networks to address specialized issues that a firm may face, such as specific certification issues for a given market or improvement in industrial processes.
The project established a partnership between the Moroccan national venture capital association (AMIC) and VEGA as an important screening mechanism to identify technical assistance needs for high-potential, innovative agribusinesses. It also was conceived as a mechanism to assist the agribusiness sector better understand the long-term business and economic value of equitable win-win relations, in particular with small holder farmers.