Business innovation has the potential to help drive the Macedonian economy forward, yet it remains largely unfunded. In order to address this gap in the market, USAID Macedonia awarded a Cooperative Agreement to the Crimson Development Foundation to establish an Innovation Financing Vehicle (IFV).
Through the IFV, the Crimson Development Foundation provides direct financing (debt and quasi-debt) to registered Macedonian companies with a marketable, innovative approach, service of product that has good potential for growth and job creation, preferably with contracted liquidity event that will take place within 24 months, such as a contract for investment, purchase of product or technology, etc. The range of financial products offered through the Innovation Financing Vehicle will include short-term working capital; term loans; revolving credit lines; and convertible debt.
The IFV recently concluded its first transaction: a 2-year loan to a woman-owned, start-up software development company. The company’s innovation is parental control software that allows parents to restrict the internet sites their children may access. The software is user friendly and will be available in local Balkan languages, including Macedonian, making it unique on the market. The company will use the financing from IFV to finalize software development and market the program, creating four new jobs in the process.
The Crimson Development Foundation (CDF) is a registered, non-profit, Macedonian foundation, owned and operated by Crimson Capital Corp. CDF’s mission is to facilitate economic growth and job creation through the provision of innovative types financing for small and medium-sized enterprises (SMEs) and through financial literacy and management training to its client borrowers. CDF supports SMEs working in all sectors of the economy, but especially targets those that are not being adequately served by existing financial institutions, including rural businesses, entrepreneurs and enterprises owned by women and minorities. In just eight years (and with only $1.5 million in initial loan capital), CDF has made loans totaling more than $24 million to Macedonian SMEs, supporting over $100 million in new exports for Macedonian companies (many of which hadn’t exported at all prior to CDF’s assistance), and more than 3,275 new, permanent jobs, including over 1,600 jobs for women and 350 for minorities. To date, CDF has also indirectly supported more than 12,150 local farmers and 275 agro-collection points. CDF loans and financial literacy training have also stimulated large increases in revenues and profits for client SMEs.