Video 1: This video describes the WAVA model
Summary Paragraph
WAVA, LLC provides West African agricultural entrepreneurs with the capital, equipment and coaching to create profitable enterprises that nourish, employ and empower local communities. After analyzing West African markets, we leverage asymmetric information to make highly profitable agriculture investments that compete in the global and growing trillion dollar+ market for agriculture.
Capitalize
- Twelve to sixteen month exploratory high-yield debt investments
- Cash-flow oriented equity investments
Equip
- Access to capital equipment and technology
- Improved seeds and nutrient formulations
Coach
- Vested relationships with portfolio companies
- Technical assistance to enhance labor and land productivity
- Business process improvements
- Best practice implementation
- WAVA tools and capabilities
We Solve a Big Problem
We invest in profitable entrepreneurs with significant macro trends in their favor:
- Large quantities of fertile land (5+ million acres) at globally low prices ($0.25 to $1 per acre/year)
- Abundant water resources (access to Sewa, Mano and Moi Rivers)
- Rapidly growing economies (projected 2012 real GDP growth of 12.8% in Liberia, World Economic Outlook, and 30% in Sierra Leone, Standard Chartered Bank)
- High domestic food demand (close to $1B for rice is consumed in Sierra Leone and Liberia annually)
- Massive global growth market (demand for global agriculture is growing by $67 B each year)
- Constrained global supply (finite arable land, finite water and leveling yield gains in the developed world)
- Regions with poor but rapidly improving infrastructure (roads, telecommunications and river access)
Entrepreneurs have needs that must be met in order to succeed:
- Investment Capital: Currently the market rate of a bank loan for an agricultural business in Sierra Leone or Liberia exceeds 30%. Immature capital markets make access to capital a major competitive advantage.
- Information Access: Due to asymmetric information, African agriculturalists have weak access to market data and lack the tools to synthesize data into actionable decisions.
- Business Process Consulting: Despite experience running profitable businesses, many agriculturalists in Sierra Leone and Liberia have not been exposed to performance-enhancing business process tools such as root cause analysis, strategic planning or fact-based decision making.
- Technology Access: Due to the small market size and inefficient markets, capital equipment is typically sold to agribusinesses at a significant markup over international market prices.
No one is currently meeting this need:
- The farmers with the greatest ability to scale are not helped by NGOs or aid organizations. These donors are focused on poverty reduction and not wealth creation. As a result, successful entrepreneurs with the ability to employ hundreds are often ignored by the international aid community.
- Foreign plantation companies invest in Sierra Leone and Liberia by setting up extraction oriented concession farms. Unlike WAVA farms, these producers typically supply export markets and do not involve majority local ownership.
WAVA meets the needs of local entrepreneurs. Our help enables these entrepreneurs to seize a massive market opportunity while growing food for local consumption, generating local employment and building local wealth.
Entrepreneurs Desperately Need our Help
Our team has received proposals from over 50 investment opportunities, conducted on the ground due diligence on 25 opportunities and made exploratory debt investments in 5 opportunities. The entrepreneurs that we work with understand WAVA’s value proposition and are eager to partner with us.
Information from our local networks combined with first-hand experience navigating and interacting with businesses on the ground suggest that there are between 400 and 450 investment ready opportunities in agriculture in Sierra Leone and Liberia. Our first investment fund (WAVA fund A) will seek to deploy between 3 and 5 million USD. WAVA will need to identify between 10 to 15 equity-ready opportunities to deploy this amount of capital. There are more than enough investment-ready opportunities in Sierra Leone and Liberia to deploy a 3 to 5 million dollar fund.
Our Solution Meets the Need
Understand the Market:
- Extensive network of local advisors collect market information and help us identify possible investments.
- We track key commodity prices and use hierarchical modeling to project future price movements.
- On the ground due diligence including field inspections, asset verification and historical financial performance.
- Exploratory high-yield debt investments (typically in the range of $5,000 to $15,000) to extend due diligence with real money on the line and build trust with possible equity partners.
Capitalize:
- Equity investments between $100,000 and $500,000 USD to build a diversified portfolio of agribusiness across different ecological zones in Sierra Leone and Liberia.
Equip:
- WAVA insures technology access through a demonstrated import/export capability to make sure our entrepreneurs have access to the capital equipment, information technology and inputs that they need to be successful
- Leverage low cost local networks to source fertilizer and improved seed varieties
Figure 1: Here WAVA staff load a 40' high cube container destined for Monrovia, Liberia. WAVA's demonstrated import/export capability means that we are able to equip WAVA entrepreneurs withe the technology and equipment that they need to succeed.
- Our proprietary arbitrage model and commodity price tracker mean that WAVA entrepreneurs have access to better information faster than the competition.
- We enable our farmers to make production decisions that leverages historical yield and cost per acre data for each plot under production using our land use and input/output trackers that harness GIS technology and historic market prices.
- WAVA brings portfolio companies up the international standards in the areas of financial reporting and transparency, land tenure formalization, data-driven decision making and strategic planning.
- Research linkages ensure that WAVA portfolio companies have access to local extension services in addition to international research institutions.
- Through root cause analysis, executive dashboard tracking and a focus on key performance indicators identified for each portfolio company, WAVA keeps portfolio companies on a trajectory of continuous performance improvement.
Figure 2: WAVA tracks market prices at the Chiefdom level through a local network of traders and producers. As a result, our proprietary market data is more complete than any published data set. These maps show rice price projections by chiefdom for Summer 2012. Darker colors suggest a high deviation from international market prices after accounting for expected transportation costs.
Figure 3: Field partitioning as shown for this WAVA funded farm in Bonthe District, Sierra Leone is the first step to applying GIS systems to enhance farm productivity.
We have a Clear Path to Success
A 12 month model validation period will involve meeting a number of key milestones that will significantly de-risk additional investment
- Import capability demonstrated (Delivery Date: 06/2012 Owner: Jamie Patrick)
- Loan repayments complete (Delivery Date: 01/2013 Owner: Michael Bernert)
- Land tenure meet international standards (Delivery Date: 08/2012 Owner: Michael Bernert)
- Yield targets achieved (Delivery Date: 10/2012 Owner: Jamie Patrick)
- Arbitrage model extended to peanuts and cassava (Delivery Date: 09/2012 Owner: Eric Butter)
- Round 3 candidates identified (Delivery Date: 09/2012 Owner: Mohamed Tarawalley)
- Investment strategic plan complete (Delivery Date: Owner: 08/2012 Michael Bernert)
Our Leadership Team is Ready to Deliver
Michael Bernert (Principal):
- Spent 2 months living with migrant diamond miners in rural Sierra Leone and led the launch of an ex-combatant staff rice farm in Brewersville, Liberia.
- Summer Business Analyst at McKinsey and Company, Associate at 8 Rivers Capital, Founding Leadership of Duke Campus Farm and Duke Community Garden. Major in Civil and Environmental Engineering.
Jamie Patrick (Principal):
- Helped lead a beekeeping enterprise in Freetown, Sierra Leone.
- Served as the Country Director for a local Liberian Non-Profit focused on smallholder agriculture, strong working relationships with Liberian Ministry of Agriculture and international aid community in Monrovia, Liberia.
Eric Butter (Associate):
- Designed and helped lead a participatory community development program focused on women soap-makers in Kailahun District, Sierra Leone.
- Founder of two software startups in Silicon Valley and New York and has work experience with venture-backed biotechnology leader.
Mohamed Tarawalley (Associate)
- Esteemed retired general with extensive connections at all levels of government in Sierra Leone and Liberia.
- Commanded over 4,000 men during the conflict and helped lead combatant disarmament in Northern Liberia after the second Liberian War.
Knowing the right people in Sierra Leone and Liberia means that our team is free to operate without concern over corrupt government intrusion into our business or the business of WAVA portfolio companies. A partial list of our local advisers is included in our business plan.
Reasonable Capital Needs
Since our leadership team is working without salary for the first year and living expenses are being covered by outside donors, our costs will be minimal during the model validation period. Through capital contributions from our founding team and low interest loans from friends and family, WAVA has raised a total of $82,000 to date. We need an additional $90,000 to finance our 10 month model validation period (May 2012 to March 2013). Funding from the Duke Start-Up Challenge would be spent as follows:
- Soil testing and survey equipment ($4,000)
- Salaries for local staff ($12,000)
- Capital equipment purchases for farmers ($20,000)
- IT enablement of Kenema Office ($6,000)
- Motorbike and petrol for ground transportation ($3,000)
- Shipping costs for 20’ container ($5,000)
Total = $50,000
Although WAVA has the ability to scale solely off cash-flow, a capital raise of $3-5M after the 12 month validation period will accelerate our growth. WAVA will look to raise this fund in March 2013.
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