Providing funding for neonatal units for a hospital in Rwanda. Getting computers into a Rwandan school. These are good deeds that can also provide investment returns for those providing the funds, says Chris Hale, CEO of Kountable, a financial and technology firm in San Francisco that facilitates overseas impact investments.
Hale, a former financial advisor with Ameriprise, is also the founder of Kountable, which acts as a middleman linking financial advisors and accredited investors to for-profit companies carrying out impact projects.
Kountable does not manage the funds. Instead, Hale works with advisors to find the appropriate investors to connect to entrepreneurs. He founded Kountable three years ago with $500,000 in start-up money, and another $750,000 of his own funds to make sure the concept would work before he solicited investors.
The financing platform allows small entrepreneurs in emerging countries to obtain needed financing at reasonable rates. It’s called trade financing, and it works like this:
An entrepreneur in Rwanda has a contract to put a computer lab in a school for girls and he wants to buy computers from a U.S. company. No seller is going to ship inventory to a small entrepreneur in Africa without getting paid first. But the school board doesn’t want to pay a small entrepreneur without seeing the goods.
The entrepreneur needs financing for that few weeks when the computers are being delivered. Kountable becomes the third party in the deal and provides financing for the entrepreneur to buy and ship the computers. Kountable gets paid by the school and passes the money on to the entrepreneur, minus a fee.
“We structure this opportunity for investors as a note linked directly to the cash flows of the trade, so we are essentially creating a trade-backed asset where one didn’t exist before,” Hale says. “They have an expected yield, are issued with an expected term and are dollar-denominated.”
The projects provide an opportunity for short-term investments (an average of 90 days) in private debt. Kountable says it’s prohibited by regulations from saying what the investment returns are because it could be construed as advertising.
Kountable has had 10 investors so far for projects that are mostly confined to Rwanda, Kenya and Uganda, but Hale hopes to expand to India, the Philippines and Mexico. Although investors must be accredited, the minimum investment is only $5,000.
Hale says the entrepreneurs who receive funds are screened to make sure they have the necessary international connections for the equipment they need, and all parties are investigated by Kountable to make sure they are legitimate and not involved in money laundering or other illegal activities. Kountable receives more pitches from entrepreneurs asking for assistance than the organization can fund right now.