Balloon Ventures
Location
Uganda, Kenya
Sector
Other
Type of Investment
Grant
Project Stage
Pilot
Length of Investment
2019 -2023
Website
Investment Overview
Balloon Ventures supports small and growing businesses through a unique model which combines intensive capacity building support with flexible loans. GIF provided a pilot investment to prove its business model and position Balloon Ventures for further investment.
The Development Challenge
In Sub-Saharan Africa, half of all workers are self-employed and a further third work in small businesses with less than 10 employees. Yet while small businesses are key to job creation for the millions of labour market entrants each year, the sector faces several barriers to achieving growth and creating new jobs. Small businesses are often seen as high risk for commercial banks which means they struggle with access to capital. There are also critical gaps in management capacity, with evidence suggesting that improved management practices lead to businesses which are more profitable, grow faster, and more likely to survive.
The Innovation
Balloon Ventures is a social enterprise with a unique model which combines intensive best practice management support with flexible long-term loans for small businesses with between five and 25 employees.The in-situ capacity building component uses a behavioural change methodology which supports managers to see the value in adopting best practices such as ensuring contracts are in place for employees. By combining capacity building with a loan, Balloon Ventures can use its due diligence process to develop customised plans for each business which in turn reduces the risk of business failure and default on the loan. This bundling of management support with the loan allows Balloon Ventures to cover the cost of its services from the interest rate charged on the loans. Balloon Ventures’ model has the potential to deliver better results than classroom- or consultant-based management support, driving business growth and job creation through a scalable and sustainable model.
Our Investment
GIF provided a pilot grant of $230,000 in 2019, which was increased to $270,000 in 2021. Our investment was intended to help refine and de-risk Balloon Venture’s model through growing its portfolio of loans to new businesses in Kenya and Uganda while driving efficiencies to improve cost-effectiveness. Our aim was for this proof of concept to position Balloon venture for further investment. Our investment was also intended to enable Balloon Ventures to create sector-specific best practice tools, policies, approaches, case studies and insights, which Balloon Ventures and other organisations can use to support informal Small Growing Businesses (SGBs).
Progress to date
GIF’s investment ended in 2023 having achieved the core objectives and exceeded targets. At the end of the investment period, Balloon Ventures had provided more than $5m worth of loans to 250 small and growing businesses. These businesses created 133 new full-time jobs, 254 part-time jobs, and improved working conditions for a further 2,182 workers by ensuring that they had contracts in palace and were paid a living wage. The businesses it supported achieved positive growth rates despite protracted lockdowns during the investment period, with the best performers doubling revenues.
The strong performance of the loan portfolio has meant that Balloon Ventures can demonstrate sustainability and profitability, with revenues for the Uganda branch consistently exceeding costs. This has enabled Balloon Ventures to attract significant investment to enable further growth. Balloon Ventures has also consolidated its expertise and learnings in a playbook designed to support efficient and effective management support services to small businesses. This is publicly available under a Creative Commons Licence.
Balloon Ventures in numbers
in the number of business supported during GIF's investment period
workers with improved working conditions
received by balloon ventures in subsequent investment to continue growing its portfolio