AP provides seed finance (up to PKR2 million) to promising new entrepreneurs and offer startup and early growth finance (up to PKR10 million) to small enterprises. AP, with AKFED-IPS, will also intermediate one-to-two pilot SME investments (up to $500k) in growing established firms to establish proof-of-concept for a future envisioned AKDN SME Investment Fund. AP financial products test and deploy tailored and risk tolerant loan and mezzanine products (e.g. royalty sharing), as well as equity stakes, always as a minority share, intended to align incentives with the entrepreneur and unlock growth.
It uses comprehensive selection criteria, screening and due diligence processes that incentivize the identification of youth and women-led enterprises, as well as SMEs that create multiplier impacts for rural and peri-urban communities (e.g. sourcing from smallholder farmers, providing last-mile services). An AP Investment Committee makes the final decision on all returnable capital investments, with involvement of local and regional experts. Investment is patient, for up to 5 years, and will be bundled with mentorship and TA to businesses, as per the needs and requirements of the company. Interest, dividends or royalties is paid by investee businesses based on growth and revenue milestones, and the firm’s profitability, to be laid out in the AP investment term sheet. Importantly, AP redeploys all returns.
A critical measure of AP success is the number and amount of supported enterprises that secure follow-on financing from other sources, such as angel investors, mentors, SME banks and funds.