El Salvador INVEST Pause and Reflect Brief

The program supports three principal areas of activity: transaction advisory and acceleration support to facilitate investment for companies and projects, the launch of a venture capital fund targeting early-stage startups in El Salvador, Honduras, and Guatemala, and the piloting of a new digital credit product for remittance receivers. The program has mobilized $22.8 million through transaction advisory services and multiple benefits beyond raising capital. Program partners have accelerated support, representing 53% of the $42.8 million life-of-project investment target. The value of capital sought is an estimated $89 million, illustrating a large pipeline of potential investments. 87% of investment to date comes from investors outside the Latin American region, and 5% is from Salvadoran investors. The median capital raise for investees is $1,050,000, with the Financial Services sub-program area receiving 97% of funding to date. Development finance institutions (DFIs) are the largest source of investment to date, demonstrating the capacity to crowd in private capital. The U.S. Development Finance Corporation (DFC) stands to be an important investor if current transactions close. The program aims to foster growth within the formal economy in El Salvador, increasing economic opportunities, jobs, and earning potential for citizens. USAID El Salvador engaged INVEST to support three principal areas of activity: transaction advisory and acceleration support, the launch of a venture capital fund, and the piloting of a new digital credit product. The program has engaged a network of partners to help address persistent challenges in the market. Impact investor Deetken is implementing the Investment, Ster & Sustainability (INES) initiative to rapidly accelerate support for investment readiness and investment readiness and bankability in priority sectors like financial services, trade, and renewable energy. CrossBoundary is implementing the Investment Facilitates El Salvador (IFES) initiative, serving as an intermediary between local businesses and investors. With catalytic funding from USAID, Innogen Capital is launching the ICV Delta Fund I, a $10 million venture capital fund that will invest in early-stage businesses in El Salvador, Honduras, and Guatemala. The ICV Delta Fund is projected to make 18-20 investments over a four-year period. Innogen is receiving transaction advisory support from CrossBoundary. INVEST measures program performance through a robust set of indicators, including capital mobilization, sources of investment, types of investment vehicles, and investee profiles. The program has a capital mobilization target of $42.8 million, with $22.8 million mobilized for eight investees as of September 2023. The program has a slower rate of transaction closes in the initial months, but is expected to accelerate in response to a large pipeline of opportunities. The program has invested in two sub-program areas: financial services and renewable energy. Partners have the flexibility to pursue a wide variety of opportunities that align with USAID's priorities to foster economic growth and job creation.