Entrepreneurs serve as critical drivers of economic growth and innovation.

Worldwide, small and medium enterprises contribute to approximately 66 percent of total, full-time employment and generate 86 percent of new jobs in the formal sector. In low-income countries, small and medium enterprises contribute to 78 percent of full-time employment. A range of “social enterprises”  are pioneering innovative business models that advance development outcomes by delivering goods and services to low income communities in areas such as agriculture, energy access, and water and sanitation. These social entrepreneurs create positive social impact for low-income people beyond job creation and economic growth.

However, a number of critical gaps are limiting entrepreneurs in developing countries from reaching their full potential. Entrepreneurs struggle to access the financing they need to test their business models and grow, particularly in the early stages of their development. In addition, they often operate in entrepreneurial ecosystems that are not yet well developed, and thus do not have access to the networks, market information, business development services, and market infrastructure that are important enablers of growth.

At the same time, impact investing has grown to become a vibrant sector and a growing source of capital for entrepreneurs. Impact investors are looking for a pipeline of businesses in which to invest that generate both financial and social returns, yet they are often unable to connect with early-stage entrepreneurs due to a "pioneer gap" that exists between high-risk, promising early-stage enterprises and the ranks of impact investors looking for investable enterprises. These barriers are constraining impact investors from more rapidly deploying capital into promising ventures.

The Lab’s entrepreneurship efforts aim to unlock the potential of entrepreneurs to advance the Agency’s mission of ending extreme poverty.  

We take a systems-change approach to advancing entrepreneurship, working with individual entrepreneurs to help them grow, as well as partnering with investors, intermediaries and other donors to create the enabling environment for entrepreneurial ventures to thrive. Our efforts focus on directly strengthening individual, high potential entrepreneurs; catalyzing private investment into entrepreneurs to support their growth and sustainability; strengthening local entrepreneurial ecosystems in developing countries; and improving the quality and effectiveness of intermediaries that support entrepreneurs.

Investing in Promising Entrepreneurs & Social Entrepreneurs

• Development Innovation Ventures (DIV) is an open innovation fund within the U.S. Global Development Lab that sources, tests, and scales breakthrough solutions to global development challenges. Through a year-round grant competition for innovative ideas in any sector and nearly any country, DIV invests funding and hands-on support in solutions with the potential to deliver more impact, for lower cost, at sustainable scale. DIV has invested in more than 145 ideas across 9 sectors in 35 countries around the world since October 2010. Click here for a list of DIV partners and projects.

• The Innovation Investment Alliance (IIA) is a $44m partnership between USAID and the Skoll Foundation, which aims to influence systems-level change by supporting proven, transformative, and innovative social enterprises to reach scale. With the support of Mercy Corps, the IIA is investing in leading social enterprises such as Evidence Action, WSUP, Imazon, and VisionSpring to scale their reach and impact.

• Diaspora Marketplaces are partnerships involving USAID, the U.S. Department of State and Western Union with the goal of providing funding and technical assistance to start-up and growing diaspora-run businesses. Originally conceived as the African Diaspora Marketplace, this initiative has grown to include the Libya Diaspora Marketplace, the Latin American IdEA Partnership (La Idea), and the Caribbean IdEA Marketplace.

• Priming the Pump is a Global Development Alliance between USAID and General Atlantic, Newman’s Own Foundation, the Pershing Square Foundation, Rockefeller Philanthropy Advisors, and Echoing Green. The partnership aims to “prime the pump” for global social entrepreneurship by supporting more global entrepreneurs and fostering the growth of entrepreneurial ecosystems that support social innovators in developing countries. Through the partnership, the Lab has supported 30 social innovators – including Jehiel Oliver of Hello Tractor and Sara Minkara of Empowerment through Integration among others – through Echoing Green’s Global Fellowship program.

• Securing Water for Food: A Grand Challenge for Development (SWFF) provides financial and acceleration support to game-changing innovators at the nexus of water and agriculture. SWFF is a part of a broader USAID portfolio of seven Grand Challenges. Through its hybrid incubator-accelerator facility, SWFF helps innovators improve their market-driven business development, commercial growth and scaling. The program works with partners along the food value chain to test market innovations, and provides acceleration services and mentorships to help address one of the world’s most pressing development challenges.

• In 2013, USAID Administrator Shah signed a Memorandum of Understanding with Mohammad Yunus, co-founder of Yunus Social Business (YSB) to promote social business around the world. The partnership supports entrepreneurs and the development of social businesses through incubator funds in vulnerable and underserved communities. The Lab and YSB work with USAID Missions in Haiti, Uganda, and Albania to provide financing as well as advisory support to selected social businesses that are poised to grow and scale up their impact.

Catalyzing Investment, Strengthening Entrepreneurial Ecosystems and Working with Intermediaries

• Partnering to Accelerate Entrepreneurship (PACE) aims to catalyze private-sector investment into early-stage enterprises and identify innovations that help entrepreneurs bridge the pioneer gap – thus unlocking the potential of thousands of promising enterprises around the world. As part of President Obama’s SPARK Initiative, PACE has created twelve public-private partnerships which leverage $64 million in combined public and private investments over the next five years dedicated to testing innovations and fostering entrepreneurship, in partnership with over 30 incubators, accelerators, and seed-stage impact investors. PACE partners include Unitus Seed Fund, Village Capital, Shell Foundation, Catalyst for Growth, Open Capital Advisors, Shujog, Intellecap, Jibu, I&P, ASISA and EdgeGrowth, and the BAC VPO program with Enclude, Agora Partnerships, BAC Nicaragua, and the Miller Center for Social Entrepreneurship.

• Launched at the 2015 Global Entrepreneurship Summit in July, the Global Accelerator Learning Initiative (GALI) – a collaboration between the Aspen Network of Development Entrepreneurs and Emory University’s Social Enterprise @ Goizueta – is a first-time comprehensive market assessment and analysis of accelerators. The partnership was created by the U.S. Global Development Lab, Omidyar Network, The Lemelson Foundation, and the Argidius Foundation to analyze the efficacy of accelerator programs. This public-private partnership has committed $2.3 million over three years to scale the program by collecting data on more than 10,000 firms globally. In March 2016, GALI released their first report: What's Working in Startup Acceleration.

• LAUNCH is an open innovation platform founded by USAID, NASA, the U.S. Department of State, and NIKE to foster breakthrough ideas for a more sustainable world. LAUNCH works to identify, showcase and support innovative approaches to global sustainability challenges in both developing and developed countries, and seeks impact at a system-wide level. Through an open call, LAUNCH identifies world-class ideas, technologies, or programs whose transformative potential has great promise for achieving significant impact within the defined sustainability area. The LAUNCH Council, formed from a cross-disciplinary network of thought leaders, serves as a mentor group and high level network for the innovators to access new opportunities for increased growth and impact in the system.