Supporting entrepreneurs when it matters: optimising capital allocation for impact

Purpose - This paper argues that policymakers and academics should place more emphasis on maximising the additional benefit created by entrepreneurial support programs and impact investments. It demonstrates a robust approach to advancing this field of research by using qualitative methods to determine the variables that may predict the additional benefit a firm will gain from funding. Design/methodology/approach - The research is based on 60 semi-structured interviews averaging 1.5 h each; 45 with entrepreneurs that did or did not receive funding from a business plan competition in Nigeria, 15 with relevant elites. Detailed World Bank panel data on program participants further validated responses and supported conclusions. Findings - Numerous factors that may explain additional benefit were uncovered, including those that vary the need for external funding and those that vary access to it. Research limitations/implications - Qualitative methods explored variables previously assumed to be unobservable. Future studies are necessary to test the results quantitatively. Social implications - Understanding the characteristics that indicate ex ante which firms would most benefit from support will help policymakers, impact investors and development institutions to more effectively allocate capital. Originality/value - This paper addresses the paucity of research into increasing additional impact and demonstrates the value of pursuing it. Methods used to suggest additionality variables for such programs and many of the factors highlighted are unique to this study. The research is also based on unique access to the participants and un-anonymised data from a significant World Bank study, and on substantially more interviews than previous papers.