AIDG will be conducting annual business plan competitions in each of its areas of operation to identify entrepreneurs for an incubation program. Additional invitations will be extended on a rolling basis for entrepreneurs that have a particularly strong business plan. Applicants will be reviewed by both external and AIDG staff readers before a finalist group is presented to a panel of local and international judges. Judges will make the final recommendations. Depending on the investment size, the judges' recommendations are approved or declined by either AIDG staff or board.
Entrepreneurs who are selected for membership in the incubation program receive 2 to 3 years' worth of training, an initial start-up grant to help them incorporate their enterprise and begin early operations during extended legalization processes, and in-kind equipment and material donations. AIDG will also provide pro-bono and paid research and development services in partnership with U.S. based universities. Trainings provided include basic business management, human resources, accounting, project management, as well as technical trainings geared towards the specialty area of the enterprise (such as hydroelectric systems or biogas systems). These are divided into one week and weekend intensive courses.
Loans made by AIDG are offered based on performance metrics laid out by the enterprises in their winning business plans. Loans are offered on 5 to 7 year terms at interest rates below 5 percent. Payment schedules are flexible and permit deferments with help the enterprises adjust to the difficulty of running a small business serving extremely low income customers in economically depressed regions.
Over 5 years, AIDG hopes to incubate 4-6 enterprises per year in each geographic focus area. These will include Guatemala, Haiti, and a yet undetermined hub to be selected by the board of directors of AIDG in 2010.
Rural communities and informal settlements within urban areas are disproportionately underserved by traditional large-scale government infrastructure projects. The people in these communities also lack access to the types of capital and training needed to solve these problems within their communities. As a result, they are dependent on either waiting for government resources, or aid organizations, or they resort to poorly constructed stop gaps.
While the proliferation of microcredit has helped the low-end entrepreneur, the mid-scale entrepreneur who could solve local infrastructure issues is faced with a dearth of options. The formal enterprise that would be willing to install a hydro-electric system, for instance, or a community-scale water system, cannot be started with a microloan. Most microloans could barely cover the fees associated with incorporation, not to mention locations, staffing, vehicles, tools, equipment, or bridge financing for projects. Unfortunately, mid-scale finance from banks is typically not accessible to entrepreneurs in areas where underserved populations live. Moveover, high interest rates, restrictions, and fees make for hard paths in extremely unstable business environments with poor customers.
In addition, the lack of technical expertise in systems, or the lack of business knowledge, or adeptness in overcoming bureaucratic hurdles, can keep many entrepreneurs from even starting a business. The World Bank ranks the ease of starting a business in the US at number six in the world, where as Haiti ranks 176th. These barriers in knowledge and access are as significant as the barriers in financing.
AIDG believes that in order to develop affordable services for the needs of underserved communities, local enterprises need to be fostered and supported. Small renewable energy, sanitation, water, construction, and other innovative firms need to be given support, both financing and training, to build the power systems, schools, toilets, water systems, agricultural processing, communications and other forms of infrastructure that can change the basic standard of living for people in poverty.