STEP 1: Attract Prospects

2. All members attend mandatory onboarding and annual trainings, as well as pass competency tests. Note to Author: These should be developed by your investment firm’s / fund’s leadership. Recommended types of trainings that RENEW provides include: a. Onboarding (at onboarding): To learn about the firm and be successfully onboarded to the fund management process. b. Investment Strategy Deep Dive (annual): To teach team members about RENEW’s investment strategy and how it ties into all of the SOP activities and tools. c. Mastering the Investment Criteria (annual): This training walks team members through RENEW’s investment criteria and uses a series of case studies to develop the team members’ skills in using the investment criteria to screen deals. d. Presenting the Firm’s Value Proposition to SMEs (annual): This training teaches team members how to articulate how the firm adds value to the portfolio. It explains the theory behind the SGS team and how to discuss the concept of “control” with promoters in a way they understand the benefits of having the firm as an investment partner. e. Hotwash, Lessons Learned and Best Practices (every six months): This collaborative and engaging discussion reviews the past six months of investing work – pipeline and portfolio activities – to extract lessons learned and best practices that can be used to update this SOP. f. How We Train - Train the Trainer (every six months): This training teaches team members how the firm runs training programs, and how it is a core strategic pillar for the firm. Specifically, we focus on the PE Investment Seminars for SMEs and stakeholders. The purpose of the PE Investment Seminars (as discussed in STAGE 1, Step 1.F) is to educate attendees on the private investment process. The goal of the PE Investment Seminars is to add value to the private sector ecosystem, build the firm’s brand and attract new companies to the pipeline. g. Building a Network (annual): This trains the team on how to build a network of stakeholders to source deals. Stakeholders include banks, associations, government offices, professional firms and individual agents. h. Sourcing (annual): This trains team members on how to source deals, including the tools, steps and best practices they should use when meeting prospects. i. Asset Management Meeting Battle Rhythm (annual): This teaches team members about the various internal meetings and what the standards are for each meeting. j. Stage Training (annual): Team members are trained annually on each stage of this SOP. Each stage covers the purpose, scope, steps, standards and tools of each stage. During these trainings, the team members can also provide feedback about where and how the SOP might be enhanced.

3. SIM tracks which trainings team members completed trainings and provide that information to the COO and CFAO as part of their annual review. 4. New team members shadow an experienced team member to learn how to source for one month: a. Attend sourcing meetings, trainings and internal meetings to understand how the firm’s pipeline management process works. 5. New team members obtain written approval from a manager to verify that they are ready to begin sourcing (i.e., become a Relationship Manager or RM).

Standards:

● New team members must attend mandatory trainings, pass competency tests and shadow an experienced member for one month before sourcing deals on their own.

● All team members must be onboarded, trained and tested on this SOP.

● All team members must take mandatory annual trainings.

● All trainings must be taken to qualify for promotion and bonuses at [INV./FUND

MANAGER NAME].

STEP 1: ATTRACT PROSPECTS

Once properly onboarded, team members can begin external facing activities, like building a sourcing network member and meeting with prospects. When opening a new country or regional office, team members will learn about the markets and major actors in the private sector space, establish a sourcing network (i.e., signing a Memorandum of Understanding or MOU with resource providers or RPs) and run an investment process training to meet new companies or prospects. Team members must be disciplined about documenting meetings with network members and companies. All KPIs (MOUs signed, deals sourced, deals advanced to A-pipe) should be tracked and reported to the country or regional manager and are part of the team’s evaluation. After the internal training, all staff involved with sourcing should be skilled at communicating [INV./FUND MANAGER NAME]’s value proposition. The SIM will know if the team needs further training if the volume and quality of deals coming into the funnel are poor, or there is a very low conversion rate of companies that pass IIC approval into the active pipeline.

We suggest that SME-focused investment firms enhance their investment management team’s sourcing capacity to be “gender smart” by asking these questions, per the CDC Gender-Smart Investing Guide:

● Diversity of team: Is there enough diversity among the investment team, enabling us

to source a diverse pipeline of companies?

● Networks: Could our networks be affecting the composition of our pipeline? Are the referrals received male- or female-dominated?

● New approaches: Have we considered how to diversify our pipeline by reaching out to women business groups, women’s organizations and conferences, and women entrepreneurship support organizations, as well as events focused on women to establish relationships? Have we considered attending targeted events focused on investing in women-centric sectors such as healthcare or childcare, and have we proactively sought out female founders and partnerships with female entrepreneur networks?

1.a Build and Manage a Sourcing Network

A sourcing network is an engaged and educated network of bank loan officers, government organizations, business associations, and private professional firms like law, and accounting and brokerage firms that refer companies to [INV./FUND MANAGER NAME]. [INV./FUND MANAGER NAME] might also work with sourcing “agents” or brokers that are outside of the firm, but that are compensated for bringing good deals into the pipe that ultimately receive an investment. Legal must approve these arrangements before any form agreements are made with brokers. The RM and SIM must meet, educate and build a relationship with potential network members, and find ways to regularly engage them and add value to their stakeholder (potential prospects); otherwise, the relationship can grow stale. [INV./FUND MANAGER NAME] may sign an MOU with a network member that clarifies what we need from them, and what they should expect to receive from [INV./FUND MANAGER NAME].

Outcomes:

● To increase the flow of high-quality deals. ● To build the investment acumen and ecosystem in the country. ● To raise awareness about [INV./FUND MANAGER NAME]’s in the market.

● Signed MOUs with network partners.

Process:

1. Attend trade fairs, meeting with professional organizations (law firms, accounting firms, and banks), visit conferences. 2. Identify a potential sourcing partner, hereafter referred to as Resource Providers (RPs). 3. Identify people within RPs that interact regularly with SMEs – such as incubators and accelerators, bank loan officers, accounting firms and lawyers. 4. Invite them to coffee at the office or a convenient location to introduce them to

[INV./FUND MANAGER NAME] and to learn about their work: a. Save names of RPs in the COUNTRY Pipeline tool's Contacts tab. b. Capture relevant notes from meetings with RPs in [INSERT APPROPRIATE FILE PATH]. 5. Over a series of meetings, educate them on [INV./FUND MANAGER NAME], the differences between private equity and debt financing, and the benefits we bring to companies with whom they work - ideally, they should see that connecting their clients to [INV./FUND MANAGER NAME] provides a benefit to them. The benefits to them are as follows: a. Bank Loan Officers: Sometimes they meet companies that are very well managed and have big opportunities, but they do not have the collateral needed to take out a loan (a barrier that is exacerbated for women entrepreneurs). [INV./FUND MANAGER NAME] can help these companies procure the assets to become a client for the bank. Ask the loan officer to introduce you to companies such as these. b. Accountants: Many times, accounting firms know the challenges of their clients. They can refer companies that need growth capital to [INV./FUND MANAGER NAME]. [INV./FUND MANAGER NAME] also has portfolio companies that need accountants. c. Lawyers: Many times, companies need lawyers to help them negotiate contracts. [INV./FUND MANAGER NAME] also needs local lawyers to represent the portfolio. d. BDS Providers: These can be chambers of commerce, consulting firms, brokers, accelerators and incubators - their goal is to help companies secure financing. [INV./FUND MANAGER NAME] can be this source of financing. Investment firm and fund managers need to help BDS providers understand what they require in order to make the investment process smooth and successful. e. Sector and Trade Associations: In many countries, industries or sectors have associations of members which could be prospects. Many associations want an MOU to be signed between [INV./FUND MANAGER NAME] and the association as a symbolic gesture of the partnership. Refer to the template provided above. 6. Invite RPs to attend the next investment process training that either [INV./FUND

MANAGER NAME] is hosting or recommend a similar training hosted by a technical assistance provider operating in the region (Note to Reader: See Step 1.F below for details). During this training, the RPs should be taught the basics of the private investment process and be able to communicate the same to their SME clients, in particular on equity investing. 7. Follow up with RPs monthly. Provide them with tools, information and invitations to events. The goal is to have the RPs refer companies to [INV./FUND MANAGER

NAME]’s Investment Seminar trainings that are held on a regular basis (minimum of one time per quarter, per country). 8. Track which RPs referred a company to the most recently hosted Investment Seminar training. 9. At the end of each quarter, the SIM will review the referrals and recognize the RP that has referred the most companies with a thoughtful thank you gift. Standards:

● The RM and SIM are responsible for establishing the sourcing network.

● MOUs must be approved by legal before sending and signing.

● SIM or IIC member sign MOUs.

● SIM and RM must manage the stakeholder relationships and communications.

● All meetings should be done to [INV./FUND MANAGER NAME]’s standards (i.e., arrive early, written meeting purpose, outcomes and agenda, printed materials, sharp/clean).

● All network points of contact must be entered into the Country Pipeline tool within 24 hours; all columns completed.

● All notes taken during the meeting must be added to a document and saved to the appropriate Google Folder within 24 hours.

● All referrals from the network member should be tagged to the company in order to track the volume and quality of deals coming from the network member.

● Stakeholders should be engaged with no less than once per month.

● Face to face meetings should be held with stakeholders no less than twice a year.

1.b Manage Social Media and Public Relations

Note to Reader: Please insert your firm’s / fund’s social media and public relations strategy to build on your company’s brand recognition for the target countries in which you invest.

1.c Prepare Market Research Reports

Team members should spend two to three hours a week reading the news, looking at the shelves in supermarkets for new products, meeting with stakeholders, etc. We call this gathering “scuttlebutt”. This formal and informal gathering of market intelligence is some of the

best work a good RM can do and ensures team members always have their pulse on the market. When you find an important piece of information, put it weekly news file and share with the team on Friday.

Outcomes:

● To establish [INV./FUND MANAGER NAME]’s credibility with investors and stakeholders. ● To provide [INV./FUND MANAGER NAME] with data to enhance investment decision making. ● To support efficient screening of deals. ● To ensure the team is informed about what is happening in the market. ● To find new partners and companies. ● To learn about existing pipeline, portfolio and/or competing companies.

Process:

1. Collect, read and present weekly news on each country - Each Friday, the assigned RM will present important and relevant news on each country during the WIR Meeting. 2. Collect and prepare important monthly news for each country for the Investor Deal Call Each Month, the SIM will populate the Investor Deal Call Running Notes with the links and short summaries of the most important news for each country in which [INV./FUND MANAGER NAME] is operating and/or investing. (Note to Reader: This is only applicable if an Investor Deal Call is hosted by the investment firm / fund for current and/or prospective investors.) 3. Prepare research report - Each month, the SIM (and assigned RMs) will research a new sector or update a prior sector that has been researched. The team will spend no less than two days a month reading reports, news and online articles about a sector or industry, and performing primary research - in market surveys, and then compiling those into two-page sector research reports. (Note to Reader: It is recommended that you develop a research template to ensure consistency across projects.)

Standards:

● A minimum of six, two-page sector research reports should be prepared by the investment team each year.

● All data is saved in firm’s shared drive, named accordingly, and filed in the appropriate country and sector folders: a. For weekly news, all files and articles should be saved in the research folder: [INSERT FILE PATH] b. For a research summary, save in [INSERT FILE PATH]

● Data from the research is saved in a database to be used for analysis and financial modeling.

● All reports should be written well, using [INV./FUND MANAGER NAME] templates and standard formatting.

1.d Visit the Market

Some of the best sourcing can be done by getting out of the office and driving around the city and to other parts of the country, which are off the beaten path, to meet with new companies. Industrial areas are often filled with potential opportunities, and we encourage the team to get out into the field to look for deals.

Outcomes:

● Learn about what is happening in the market – new entrants, new products. ● Find new companies.

Process:

1. Twice a month for a half to a full day, visit industrial parks: a. Prior to the field visits, gather your business cards and print marketing materials on [INV./FUND MANAGER NAME]. (Note to Reader: RENEW suggest creating informative and visually stimulating one-pagers that can be used to introduce prospective SMEs to your firm / fund) b. Do research about the companies you might try to visit (use Google Maps). 2. When “knocking on the gate” be sure to have a friendly demeanor and explain you work for a U.S. investment firm that has been in the region for over a decade and we are learning about businesses that are operating in the area. 3. Ask questions – follow the First Interview Form (FIF) flow – but be more passive and inquisitive (not interrogational). 4. At the end, give them your business card and a copy of your printed marketing materials. 5. Invite them to an upcoming investment process training that either you or a recommended, third-party TA provider is hosting in the coming weeks. (Note to Reader: See Step 1.F below for details). 6. Ask for their email and contact information. 7. Enter them into the pipeline when returning to the office and add notes to the appropriate folder. 8. Send a follow-up email thanking them for showing you around the business.

Standards:

● Enter all companies into the Country Pipeline tool within 24 hours.

● Add all notes from the site visit to firm’s shared drive.

● Add their email to the marketing list serve for the country.

1.e Attend Networking Events

NOTE: This is likely the least effective sourcing activity.

Outcomes:

● To meet new companies. ● To raise the awareness about [INV./FUND MANAGER NAME].

Process:

1. Learn which companies will be attending and select which companies you want to meet. Remember the purpose is to obtain business contacts (i.e., business cards), meeting companies and learn about competitors and the market. 2. When you meet, introduce yourself and [INV./FUND MANAGER NAME] and use approved talking points (see Deal Sourcing Calls tool). 3. Give them your business card and accept their business card; jot down notes on the company that match the basic fields in the First Interview Form (FIF) (i.e., industry, brief description of what they do, when they started, etc.). 4. Enter business cards into the Country Pipeline tool.

Standards:

● Each member should try to attend one networking event or trade show each month.

These should not just be an opportunity to fill your calendar - the expectation is you find good companies.

● Enter all businesses contacted in the Country Pipeline tool.

1.f Run or Offer Training on the Private Investment Process

Note to Author: RENEW has found that many SME owners in Africa do not fully understand what private equity investing is, how it works, what the basic steps are, and how more technical elements of it work - like company valuations, financial modeling, due diligence, etc. This information gap makes is difficult for the fund manager to handle an efficient sourcing and screening process at a scale needed. It also adds considerable sunk costs and losses for the fund manager, which could already be working from a lean budget given the potentially varying