A successful business support organisation and Argidius strategic partner, headquartered in Guatemala, running its cultivation programme for small businesses and entrepreneurs across Central America and Mexico. 9.5K+ new full-time jobs and 7.5K+ new part-time jobs in SGBs created to date.
“Launching a small business is tough anywhere in the world’ says Alterna CEO and founder Daniel Buchbinder. “But in emerging economies, like in Central America, it’s even tougher. Entrepreneurs have to accept a really significant amount of risk. There isn’t much government support for enterprise. There’s not much room for failure. It’s very different to operating in a more dynamic market like North America or Europe.”
Exactly the same factors applied for Alterna when Daniel set it up in Guatemala’s second city Quetzeltenango, in 2010, with the aim to help small purpose driven enterprises grow and fulfil their commercial promise. After dedicating 3 years to creating its own social impact ventures and a trial period spent testing out ideas, Alterna and its social business cultivation methodology were born, but with barely any funds to get them off the starting blocks.
Daniel opened the doors of the cultivation programme on a shoestring, by creating a pro-bono fellowship scheme for professionals from the global North, who came to Guatemala to help for a period of months. It was one of these fellows, researching funding opportunities in the enterprise development sector, who discovered Argidius.
Argidius executive director Nicholas Colloff recalls, “I got a strong sense from Alterna, when they first approached us for funding in 2014, that they were doing something interesting and unusual, they’d started off well and we should give them a go. At first we gave them a one-year grant to see how things went, then topped that up for a second year.”
“It was a really significant high point when Argidius approved our funding application,” recalls Daniel. “It was the first institutional grant we had ever had. It gave us a decent runway to prove our business cultivation approach right and gain initial traction. And importantly it was also a major signal of trust and validation from an external body. This had very positive effects for the team and really unleashed our trajectory.”
In 2019, with five years’ good results in Guatemala clearly evident and with a proper governance board in place, Argidius invited Alterna to become a strategic partner, deepening the relationship and opening up the opportunity to offer core funding.
Impact numbers
Nicholas explains, “A strategic partnership, for Argidius means ‘how do we help a partner organisation go to the next level of its own development and life?’. We ask partners who have proved themselves and their approach, ‘what is it you need to do in order to be a better organisation?’ and then support that with core funding.”
“Giving core funding is not popular or fashionable. But if you want to achieve effective work, you need effective, sustainable organisations, with sound core structures. The core funding Argidius gives is not purely unrestricted in the sense we give money and say ‘do what you like with it’ – there’s a plan. But that plan can be flexible and change over time.”
“We agreed that Alterna would use our core funding for two key goals - to improve their M&E, which they knew they needed to get better at, and to scale up into neighbouring countries to support more entrepreneurs.”
The new core funding enabled Alterna to improve pay and remuneration for all its staff, some of whom were not proper employees and to take on new team members, as well as to put proper HR systems in place to help with staff retention.
Daniel says. “When we first met Argidius we had a handful of staff. Now we are almost 50. We were working only in Guatemala. Now we are also working in Central America and beginning operations in Mexico and our reach and impact are commensurately higher. We had very basic structures and resources for monitoring and evaluation. Now we have a MELI team of six. In fact the MELI team is now the same size as the whole of Alterna was when we started and they are involved right across the organisation. He adds,” We don’t see M&E just as a way to report. It is the only way for us to understand if we are who say we are - and if we are good at what we say we are good at. It’s how we prove ourselves right - or not.”
Significantly, the core funding and the improvements Alterna made with it, encouraged other funding partners to come forward, including IDB, the Inter-American Development Bank.
Daniel says “The stars aligned – or as you might more realistically say, Argidius and Alterna worked together to align the stars – so that we could leverage interest from other donors for a pioneering impact investment fund, the Catalyser, which Alterna wanted to set up. It’s a small-ticket fund targeted to the “missing middle” of entrepreneurs, whose needs are bigger than microfinance but find it hard to access larger funds.
“The core funding from Argidius has without doubt been transformational for us. It has been an inflection point to evolve and to attract other potential partners, for positioning, for hiring and to significantly advance our compensation structure ” he comments.
Both Daniel and Nicholas think that good levels of trust have defined the partnership all along.
“When I look back, there have been some stand-out moments and key decisions, famously a lengthy strategy discussion in a really horrible hotel room in Guatemala City, ” says Nicholas. “But the overall success of the partnership has been much more to do with the longstanding and developing relationship between us and trusting our own ongoing judgment to fund their work.”
Daniel says, “My experience is that ‘trust’ is at the core of Argidius’ values and they also have a healthy level of organisational self-confidence – in what they do, why they do it, how they do it. They are also willing to learn from experience when things don’t go exactly how they were supposed to. I think they are able to project such trust to their partners. Of course, trust has to be earned and Argidius makes you earn it. It takes time. But after due diligence has been done and once transparent reporting and results have started to be demonstrated there is no need to be breathing down partners’ necks.” He concludes, “Argidius trust themselves and their strategy. They are pretty thorough but they know what they want. It should be a straightforward value and a very powerful one by the way but unfortunately it’s not the standard for every funding organisation.
Nicholas concludes, “All Alterna’s trajectories – country expansion, numbers of businesses worked with and now a commercial investment vehicle – have gone very well and show what is possible. They started out as good people with values, with inspiration, with lots of energy, trying out things and learning about them. Now, they have become a professional organisation, but along the way they have kept the values and inspiration, the high energy levels and a consistent willingness to learn, including when to stay with it and when to change in response to that learning.
“There’s no doubt in my mind that more and better results and impact come from giving the right organisations space to grow, develop and improve over time.”
