NOTE: The INVEST project closed in September 2024. All data is accurate as of that date, but this page is no longer being updated.
Addressing USAID’s development priorities—from climate change to health systems to food security—cannot be done with donor resources alone. Channeling private investment into priority sectors can help achieve development objectives while supporting the sustainability of interventions.
For example, small and medium-sized enterprises (SMEs) know the needs of their communities and are well-positioned to provide the goods and services people need. They also create the lion’s share of formal jobs in emerging markets. However, these businesses often struggle to grow because they can’t access the financing they need.
Transaction advisory services respond to some of the most important barriers that deter investment into firms in USAID priority sectors and markets. Transaction advisors essentially serve as matchmakers between companies and investors and other finance providers, helping to structure and close deals. This is especially important in developing markets, which tend to have more challenging investment climates.
Why use transaction advisory services?
Over seven years of project implementation, USAID INVEST mobilized $1.61 billion in capital for development; 85.2% of this capital was raised with the aid of transaction advisors.
In working with them, we found:
- You don’t have to do it alone. Transaction advisors have extensive knowledge and experience in navigating the complex investment environments found in developing countries. They bring knowledge extensive networks and knowledge of investor needs, can help structure deals, and use their expertise to ensure alignment of financial and development objectives.
- With experience comes efficiency and effectiveness. By engaging transaction advisors, donors can streamline and expedite the investment process. Their expertise can help donors make informed decisions and ensure that scarce resources are used effectively, allowing donors to focus on core development objectives.
- The whole ecosystem can benefit. By working with transaction advisors, donors’ impact can go beyond supporting individual transactions. These successes can help demonstrate the potential of a new market or sector, which can help increase the flow of capital and development of a more robust, sustainable market overall.
INVEST's experience has generated valuable evidence on how USAID and its partners can use transaction advisory services to reach their goals. The Mobilizing Investment for Development with Transaction Advisory Services learning brief captures best practices, case studies, and lessons learned. It also contains a set of tools and templates to make it easier for USAID staff and partners to effectively engage transaction advisors. These resources include sample Requests for Information, Statements of Objectives, and deliverables.
After seven years of implementation, the Performance Incentives for Capital Mobilization learning brief synthesizes INVEST's experience in determining performance-based compensation for subcontractors, specifically transaction advisors, engaged in capital raising activities. Insights are drawn from subcontract data, reflections of the INVEST technical team, and subcontractor feedback.
What is the best way to structure agreements and payments with these third-party advisors to make sure USAID is setting the right incentives? INVEST dug into this question, based on dozens of engagements with transaction advisors. See insights in Working with Transaction Advisors: Setting the Right Incentives.
How USAID is supporting successful deals
Haiti: Improving access to essential services and creating jobs in solar
“Haitian SMEs, such as solar companies, experience many barriers to scale. Our job is to connect SMEs to funding opportunities that help grow our country’s private sector.” - Béatrice Duret Gentil, CFO of GECA
Tunisia: Helping tech startups grow
“Being a start-up, we’re doing a lot of ‘one-man-show’ work...We cannot afford that $100,000 CFO who can get your outreach document to the point to impress investors. That’s where CrossBoundary came to fill a huge gap for us.” -Kais Khadhraoui, CEO, Fulfillment Bridge
Read more: Tunisian Business Proves That Global Tech Companies Don’t Just Grow in Silicon Valley
Nigeria: Securing investment for a local agribusiness
"The value that we got from CrossBoundary and USAID was really to help us figure out how to tell that story — why we were now ready to invest in a factory. [And] the introduction to new investors who I didn’t know — that was also very valuable." - Mira Mehta, founder and CEO of Tomato Jos
Read more: A Nigerian Tomato-Farming Business Shows the Human Impact of Private Investment
Indonesia: Unlocking capital for impact-focused businesses
"We build pathways to connect the Wall Streets of the world to underserved communities by measuring and unlocking investment capital." - Durreen Shahnaz, IIX Founder and CEO
Read more: Building Pathways Between Wall Street and the Global South -- A Conversation with IIX
El Salvador: Investing in access to finance
In El Salvador, USAID helped 12 businesses raise over $40 million, of which $31 million was for the financial inclusion sector. Read about four of the fintechs that received investment to expand access to finance with USAID support.
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This page is made possible by the support of the American people through the United States Agency for International Development (USAID). The contents of this page are the sole responsibility of DAI and do not necessarily reflect the views of USAID or the United States Government.
Photo credits: Installing solar irrigation - Mulugeta Ayene/WLE. Cows under tree in Tunisia - MooMe. Solar lantern - Ekotek. Team at factory - Tomato Jos. City road in Indonesia - Afif Ramdhasuma on Unsplash. Woman with dough - Optima.