The 2 Bridges Program and the Concept of Angel Venture Fund

Emerging Market
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1. What are the potential avenues of sustainability (mentioned in the case study) for the “2 bridges" program?
According to the case study, the ‘‘2 bridges’’program was designed to link small and medium-sized enterprises (SMEs) with financial institutions and capital investors (Befus & Grosse, 2019). The program's initial phase linked exceptional firms with limited or no access to bank financing with a group of commercial banks committed to serving SMEs (Befus & Grosse, 2019). The second phase linked the SMEs with investors interested in investing in SMEs’ minority ownership (Befus & Grosse, 2019). This connection enables SMEs to access bank loans and investment funds to grow their businesses. Both cases intended to offer a range of 20,000 USD-250,000 USD to SMEs (Befus & Grosse, 2019). These connections provided potential avenues of sustainability for the ‘‘2 bridges’’ program.
Other potential sustainability avenues included visiting banks and potential lenders before the program launch. Since the program was new in the local market, the program team undertook a series of visits to banks, government agencies, and microenterprise finance institutions and targeted SMEs (Befus & Grosse, 2019). These visits intended to inform the local market about the program’s presence to mobilize financing, expand credit, and understand the financing policies of the visited institutions to simulate more outstanding SME lending (Befus & Grosse, 2019). Simply put, SMEs' connections with potential lenders and visiting these lenders to understand their financing policies and extend credit created sustainability avenues for the ‘‘2 bridges’’ program.
2. Do you think that the Angel Venture Fund is a viable concept? Substantiate your answer, if you identify weaknesses to the concept implementation, how could these be mitigated?
Although Angel Venture Fund presents various complications, I think it is a viable concept only under specific circumstances, especially if a business is on the brink of collapsing and requires instant funding to maintain its operations. Angel investment is a form of equity financing where the investor provides funding in exchange for the company's equity position. Since most SMEs are non-established, they need equity financing to grow and expand their business operations.
The most significant advantage of the Angel Venture Fund is that it is less risky. Unlike debt financing, Angel investors do not require SMEs to pay back the funds if the business fails. They only need equity in exchange for financing. However, it is essential to note that as the companies handle equity as a portion of the deal, they are giving away a portion of their future net earnings. The angel investor will control the company's operations. They also demand a share of the profit when the business is sold. This is contrary to debt financing, where the lending institution has no control ov...