Amandement 1 Attachment J.3 Questions and Answers DIGI.pdf

ATTACHMENT J.3 – QUESTIONS AND ANSWERS

USAID is pleased to provide the following answers/responses to questions that were submitted by industry/prospective offerors. All questions and points of clarification received by the due date and time were considered for inclusion in the Question and Answer table below. Please note that: the questions and answers have been aligned with the solicitation format (Sections) for ease of reference. Additionally the solicitation has been updated and the updates are highlighted in yellow.

QUESTIONS USAID Responses

GENERAL

When registering a fund and placing a debt or equity; if you are able to get debt or equity facilitated to the tech company, can it flow through the fund?

Only debt or equity investments that flow through the investment fund and then into the company will be counted towards Deliverable 2 in the RFP.

The RFP is amended to reflect this clarification.

Timeline – expected delivery dates. Could you raise capital for 2-years and then deploy everything within those 2 years or would that be canceled?

Offerers can execute on Deliverable 2 milestones faster than the anticipated timelines presented in the RFP. Payment will be made on satisfaction of the Deliverable milestones, not dates.

Definition of a technology company for debt capital/deployment of capital – is that a percentage of business or criteria for investment companies? This is in terms of doing business in Zambia and what that looks like.

Please see Attachment J.1 Definitions where Technology Companies are defined for the purposes of this RFP.

The RFP is amended to clarify definitions.

Is this opportunity open to 1st time fund managers? Do you have to demonstrate experience?

It is not mandatory that the Contractor have previous specific experience, however, one of evaluation criteria in Section M.2 on Page 68 includes the

Contractor demonstrating it has "institutional capacity to achieve the results and deliverables described in the RFP."

Clarify the 1% fund management commitment?

Please see page 9 of the RFP. "The contractor must invest their own capital in the fund in excess of the 1% required by SEC regulations. This co-investment must be evergreen - continuously reinvested in the fund as it is repaid by investees - in a way that lowers risk and increases returns available to investors."

In addition, a higher fund manager commitment would help achieve the results of the contract and be considered under the evaluation factors in M.2.

Need clarity on the definition of:

a. Deliverable 1- refers to tech startups; and

b. Deliverable - tech enabled companies.

The definition of Technology Startups and Tech-Enabled Companies are defined for the purposes of this RFP in Attachment J.1 Definitions.

The RFP is amended to clarify definitions.

What is the definition of a startup? A business that is less than 2 years old? Are there other criteria? Raised finance previously?

Please see response to Question 6.

Does USAID prioritize or exclude specific sectors from the fund?

The RFP is not sector-specific. Please see Section C.5, Page 10 of the RFP, specifically the Hard Criteria for exclusions and the Soft Criteria for priorities.

What happens if a start-up fails to meet the milestones? Is there flexibility to adjust the deliverables?

Payment will not be made if the deliverables are not met.

There is no flexibility to adjust the deliverables absent extraordinary circumstances

Baseline of what start-up tech companies look like. What is the threshold? What is the baseline for tech start-ups?

Is there consideration to work with a Pan- African fund or a Zambian fund? Is it possible for USAID to work with a Pan African fund that has a priority interest in Zambian business?

The Contractor can work with an international or Pan-African entity as subcontractors. The prime contractor must be a local entity as defined by the RFP in Section L.2 (h) on Page 63. It must be able to meet the expectations in Section C that starts on Page 8 of the RFP. Specifically, it must be able to have, "an investment fund authorized by the Zambian SEC with the capacity to receive private sector investment, make debt and equity investments into Zambian technology and tech-enabled firms, and continue as a fund beyond the 4-year timeframe of this activity."

Is there a $5 million cap on investments per entity? If there is a commit of $10 million does that count?

USAID will count up to $5 million per single debt or equity investment towards satisfying Deliverable 2. The fund may participate in multiple rounds of investments with the same firm, with each round counting towards the deliverable, as long as each investment round is considered a separate activity. The fund can mobilize investment in excess of $5 million per investment, however, only the first $5 million of a single investment will count towards Deliverable 2.

The RFP is amended to clarify Deliverable 2.

Do you have any indication/vision of what the ceiling is? Narrative in terms of deliverables?

USAID has an internal estimate for the price but it will not be shared with prospective offerors. It is the responsibility of the offeror to present the best value to USAID.

Feedback and learning – does USAID provide feedback on unsuccessful proposals?

Yes, information about which offeror is selected will be announced. There is an opportunity for USAID to provide feedback to unsuccessful bidders.

What is your perspective on innovative and adaptive management in project implementation? What is your view on modification during implementation/how flexible is USAID to those changes?

The Offeror can utilize innovative and adaptive management during implementation to ensure that they meet the required deliverables in the Contract.

What is the expectation of the 1% contribution to the fund and level of operating expenses incurred by the IP?

How will USAID evaluate the financial capacity of applicants to afford this?

Please see response to Question 5 regarding the 1%. USAID is not involved in the operating expenses incurred by the Contractor in this RFP. Payments will be made on achieving deliverables, not costs to the Contractor. USAID will conduct a responsibility determination and reserves the right to conduct a pre-award survey to ensure the Contractor can meet the terms and conditions of the Contract. Please see Section L.2 General Instructions on Page 62

Would having foreign partners in the investment fund management ruin the definition of a local entity?

Please see response to Question 11.

Can a company be on multiple bids with different partners, or must it be with one partner?

Companies can be on multiple proposals.

Deliverable 1 for revenue of $50K – is this the startup's gross revenue or net revenue? Is the deliverable only revenue or gross revenue?

Please see Attachment J.1 Definitions, specifically Startup Company Revenues that are defined as "gross income from sales".

Do you envision that the accelerator should provide services for free or charge a fee?

The RFP does not limit payment from other stakeholders. The Contractor could offer for free or charge for any services it redenders to stakeholders. It is the responsibility of the proposer to design an activity that will meet or exceed the RFP deliverables and offer the best value to USAID.

For the presentation, can two people present? One on the social approach and the other on the technical approach.

Yes, it is up to the offeror to decide how it will do the oral presentation.

The RFP is amended to clarify that the presentation must be done by the leadership or staff of the Offeror.

Does the fund allow for the implementing partner to offer grants to the start-ups in the accelerator program?

USAID will not fund grants. USAID encourages the Contractor to facilitate grants, angel, and seed investments from other organizations into the startups per Deliverable 1 on Page 9.

23 Can the investment be domiciled in a jurisdiction outside of Zambia?

Investors do not need to be domiciled in Zambia. However, the Contractor must follow the hard investor & investment screens listed in Section C.5 on Page 10 of the RFP. The Contractor can propose soft investor & investment screens and related screening processes in addition to those listed in Section C.5. Please see response to Question 11 on the location of the investment fund.

How many slides do you want for the PowerPoint presentation?

There is no limit about the number of slides. Keep in mind that the presentation is only one hour long and it will be evaluated based on Section L.5 on Page 65, and not based on how many slides are shown.

Deliverable 2 – first line. Proof of SEC authorization – can it be a SEC regulated outside of Zambi? What does proof of SEC authorization mean?

Please see response to Question 11 on the need for Zambian SEC authorization. Please refer to the Zambian SEC for the documentation it provides for proof of authorization.

Are all the payments linked to success or are there ongoing payments for running the project?

Payments from USAID are linked to achieving the Deliverables and not for running the project.

Is it required that contractors have a business entity in Zambia? Or is it possible for contractors to have partners in Zambia?

Please see response to Question 11.

If five startups achieve the objective of "at least three full-time equivalent employees and $50,000 in revenues" before their second anniversary, would we be able to invoice for this activity?

No. Deliverable 1 requires at least two years of support to each startup to ensure firms are on sustained growth trajectories.

Would a firm domiciled in Mauritius, but registered with the Securities and Exchange Commission of Zambia, be eligible to operate within Zambia under current USAID regulations?

Please see response to Question 11.

With the ticket sizes called for, it would be impossible for a tech enabled firm to absorb that kind of investment solely on just software or hardware tech. How much of the investment will be allowable for working capital and expansion CAPEX not related to the tech enabling aspect but required for scaling the business up?

Please see Attachment J.1 Definitions.

Investments can be inclusive of all the expenses related to increasing a firm's revenues, decreasing costs, enabling growth, or similar business activities through additional investments into technology goods and services.

For Fund Managers that have a broad pan-African mandate, how will USAID ensure that funds are used for Zambian investments only or to attract investors only for the Zambian pipeline?

Please see Attachment J.1 Definitions. The only activities counted towards fulfillment of Deliverable 1 will be with technology startups with their principal place of business in Zambia with Zambian employees and customers. For Deliverable 2, Technology firms must have their principal place of business in Zambia and work with Zambian employees and customers. Tech-enabled firms can be domiciled outside of Zambia, if the majority of their business relevant to this activity occurs within Zambia and with Zambian employees and customers.

For the location of investors, please see response to Question 23.

What specific prior track record is required to demonstrate capacity for managing this Fund, as raising funds is often difficult for first time fund managers?

Please see response to Question 4.

Will USAID have preference for a certain % of the Fund LPs or investors to be composed of local pension funds or local institutional investors?

Please see response to Question 11.

Are there any specific expectations regarding the operational team structure and key roles? Such as a local team already in place?

No. USAID encourages offerors to demonstrate their ability to achieve the Deliverables in line with Section L.5 on Page 66 of the RFP, specifically, the Technical Approach section.

35 Will the DIGI Zambia programme require a Chief of Party?

Please see response to Question 34.

In the event that Deliverable 02 is met but Deliverable 01 is not met during the 4 year programme,(or vice versa) what are the implications on the prime partner?

The Contractor will be paid on successfully achieving the RFP Deliverable milestones listed in Section B.4 Payment Schedule starting on Page 5. No payment will be made until the Deliverables are reached. If there is inaction towards Deliverable 1 or 2, or there are material delays in reaching the milestones with Deliverable 1 or 2, the Contract may be terminated for cause.

As part of the evaluation process, will USAID require evidence of a built up pipeline of investable tech or tech enabled SMEs to ensure smooth fund deployment and deal execution?

No. USAID encourages the offeror to demonstrate their ability to achieve the Deliverables in line with Section L.5 on Page 66 of the RFP.

What penalties will the prime partner be liable for in the event of only partial achievement of the deliverables. For example, establishment of the Fund and successful incubation of the tech startups but failure to raise funds and deploy them into Zambian tech or tech enabled companies?

Please see response to Question 36.

Will the Fund Manager be allowed to use USAID logos or branding during fundraising / roadshows?

Yes, based on the Branding and marking Guide instructions in Section D starting on Page 12.

Will proposals that include prime-sub partnerships between two or more local Zambian entities be given preference over those with foreign partners, particularly in the context of localization, knowledge transfer and capacity building?

No. No preference would be given in this situation.

Are there any maximum or minimum parameters or benchmarks for companies eligible for support under deliverable 1, such as current revenue, employee count, etc.?

How do delays or protracted timelines to have a fund authorized by the Zambian SEC affect proposed delivery timelines?

Could bidders propose alternative timelines based on their experience?

The timeline in the RFP reflects an anticipated timeline. Payment will be made once deliverables are achieved; either earlier or later than the timeline in B.4

Offerors do not need to propose an alternate timeline.

Is the >1% capital to be invested by the contractor into the fund envisioned to be paid up front or can it be staggered to match funds raised over time?

The >1% co-investment can be paid up front or can it be staggered over time. The offeror should propose a schedule that achieves the RFP deliverables and delivers the best value to USAID.

Does the capital mobilized towards tech and tech-enabled companies need to be mobilized solely through the investment fund vehicle or can it be done via other investors in the Zambia and pan-African ecosystem?

Investment must pass through the investment fund - please see response to Question 1.

Investors can be domiciled outside of Zambia. Please see response to Question 23.

Do supported startups need to be headquartered in Zambia, or can they be from other countries within the region and have a presence in Zambia or looking to expand into Zambia?

Please see response to Question 31.

Can the contractor propose invoice deliverables with a component of "at-risk" (capital mobilization secured)? For example, develop specific deliverables associated with deliverable 1 (e.g., workstreams to support the start-up's) and a success fee paid upon the start-up reaching the milestones i.e., second anniversary/revenue target etc. Similarly for Deliverable 2, specific deliverables to support capital mobilization e.g., developing investor facing materials for a start-up or supporting investor diligence on a target with a success fee paid associated with the capital raise target?

No. The Contractor can engage in its standard business practices required to achieve the Deliverables, but will only be paid on achieving the RFP Deliverable milestones listed in Section B.4 Payment Schedule starting on Page 5.

Are there examples of any startups that have been funded in the past and what was the progress like?

Examples of USAID-supported startups include Zipline, Twiga Foods, and M-Kopa among others.

Firms could have direct investments so if you can get equity facilitated to a tech company, could those investments flow outside of the fund?

Please see response to Question 1.

49 Share with us the timelines for raising (mobilizing) capital.

Please see Section B.4 Payment Schedule starting on Page 5.

If USAID commits $5 million, will there be a change, or will it remain the same?

USAID doesn’t understand the question.

We are unaware where the $5 million figure comes from and what change it refers to.

What criteria was being used to differentiate technology startups from tech enabled?

Please see Attachment J.1 Definitions where Technology Startup Companies and Tech-Enabled Firms are defined for the purposes of this RFP.