Balloon Ventures

Unlike most SME investors, who come from a finance background, our experience blends finance with small business consulting and entrepreneurship education. We’ve worked intensively with 2500 entrepreneurs in East Africa and built entrepreneurship software and courses for some of the world’s leading universities. Unleashing the potential of small and growing businesses (SGBs) cannot be achieved through a financial innovation alone.

SGBs are currently too high risk and too low return for traditional SME investors. Therefore the solution requires technical assistance plus money to increase returns and reduce risk. However, technical assistance needs to be delivered extremely efficiently in order to be viable. Our approach is to productise our business support services, so all businesses go through a standardised journey using the same core set of tools and methods.

The focus is good management. Data from the World Management Survey shows that good management practices create a sustained competitive advantage. Good management is also well defined. Our process therefore creates good management efficiently:

1. We have created SGB diagnostic tools that draw inspiration from the World Management Survey and uncover the relative strengths and weaknesses of a business. The Diagnostic is split into 4 sections: Strategy Deployment, Financial Management, Supply Chain Management and HR, and Sales and Marketing.
2. Using the Diagnostic, staff score the current practices of a business to identify the critical areas to work on and build a plan for our support.
3. With the plan defined, we have a toolkit with standardised guides, templates and case studies that can be deployed according to need. The Diagnostic identifies the key area of focus, and our Toolkit gives staff and businesses the resources to fix the related issues. For example, we have:
   • Guides to build a sales force, or introduce financial controls, or manage working capital
   • Templates for job descriptions, performance management reviews and tracking credit
   • Case studies that show how all this has been applied successfully in the past.
4. This approach ensures consistency and efficiency, and means the work can be done by smart, ambitious young staff with limited experience but lots of energy, drive and desire to learn. It also means that as we support more clients, we build knowledge about what works. This is made possible through executing a high volume of investments into a similar profile of businesses; the challenges and solutions very often apply across our portfolio.
5. The entire journey from finding, selecting, investing, and growing SGBs is collected and presented in our Playbook. In 12 months we will open source this Playbook for others to adapt and replicate the model in their own geographies.

At every stage we use technology to drive quality and enable greater visibility in real time; which informs improvements in processes over time. In some cases this means deploying technology to improve internal practices, for example digitising credit procedures or the execution of business support services. In other cases it involves utlising technology in the companies we support, for example by migrating financial management onto cloud based software or by rolling out digital checklists to track the execution of key production tasks.

Our efforts are inspired by experience of several successful approaches. EY use their Growth Navigator Diagnostic to structure all consulting projects. Rocket Internet have a Playbook for launching every new venture in their 30+ portfolio. The World Management Survey diagnoses management capability in 20,000+ companies through 18 standard questions. These examples show that it’s possible to productise venture growth.

That’s not to say it’s easy. We’re currently trying to distil our approach to behaviour change in businesses we support. This means creating a package of resources and training that empowers staff to turn insights about what works (i.e. good management practices) into practical changes that really stick. Achieving a strong degree of standardisation that takes account of each business’s culture, needs, goals etc. is a tough ask but progress so far is positive.

We’re looking forward to sharing more details as things develop over the coming months.