In 2020, FMO launched its first Ventures Program to support innovative, tech‑enabled businesses in emerging markets. Five years on, an independent evaluation assessed the program’s financial performance, the lessons learned along the way, and how these have shaped FMO’s second Ventures Program.
Through its Ventures Programs, FMO supports early‑stage companies and venture capital (VC) funds that apply innovative business models to improve access to essential services in emerging markets, particularly in Africa and Asia. These are markets where risks are higher and capital is scarce but where the potential for long‑term impact is also significant.
As it was FMO’s first foray into venture capital, the first program was structured with support from the Dutch Ministry of Foreign Affairs and the European Commission, which created an implied 50% first loss buffer. This enabled FMO to take the initial risks required in exploring a new asset class with an impact-driven mandate.
Based on lessons learned from the first Ventures Program, FMO reduced this buffer to 25% under the second Ventures Program, a decision the evaluation considers appropriate, reflecting greater confidence, improved understanding of risk, and a more refined approach to venture investing.
Overall, the evaluation found that FMO has done well with its first Ventures Program, both in terms of financial performance and in identifying appropriate lessons from that financial performance. These insights are already informing the early deployment and further implementation of the second Ventures Program.
The evaluation highlights several insights that are informing FMO’s approach today:
The evaluation also points to areas for continued focus, including a more proactive investor role, careful partner selection, and a balanced approach to exit strategies.
The Executive Summary of the evaluation provides further detail on: