Identified theme for SCF Round 4

We are seeking applicants with innovative solutions in the following theme:

Product Development and Quality Improvement:

With large scale production of maize, dairy, cardamom, and vegetables, Koshi province has tremendous scope for the development of new products and improvement of existing products within these value chains. However, very little data is available on processed products that use these as raw materials.

The slow growth of product development and improvement in these value chains is because it remains constrained by several factors, with the lack of service providers, under investment in service provision combined with lack of required level of local technical expertise being the major factor. Koshi province has very few service providers that provide product development and improvement services and most of the existing service providers operate informally resulting in increasing dependence on intermediaries and inflated prices for services. This has led to such services being sourced from India resulting in a vacuum of service provision in the Nepalese market. With limited access to information, lack of platforms for networking, digital mechanisms and continued reliance on traditional product development practices, there are simply not enough service providers, and this has continued to stunt the development of new products in the four value chains.

SCF Round 4 is seeking service providers from the private sector that have innovative, market-driven and sustainable solutions for improved product development and quality improvement services for value-added dairy, maize, cardamom and vegetable products in the Koshi Province.

The fund will provide financial and technical support towards increasing access to services and attracting/developing service providers that can help expand agricultural activities as well as market for agricultural products of the Koshi Province. Innovation, with disruptive potential, will be of prime importance for the challenge fund. NAMDP will, among others, connect with existing start-up support mechanisms to incentivize and launch disruptive innovation. The CF would look at proposals that address the following (covered in further detail under guiding principles of the information pack:

• respond to market challenges.
• are innovative, and additional to what would have happened without Sahaj’s support.
• are inclusive, target women, marginalized groups, and other disadvantaged groups (DAGs).
• will be sustainable after Sahaj’s funding and have the potential to scale up.
• will contribute costs/funds to the proposed solution.

Specifically, the following service providers are encouraged to apply:

• Consulting and food tech companies
• Research & Development firms
• Food testing labs
• Blockchain and biotech companies
• Organizations working in product development and quality improvement

Objectives of the Challenge Fund

• Contribute to increasing employment and value-add in the agricultural sectors (maize, dairy, cardamom and vegetable) of the Koshi Province in Nepal.
• Solicit innovative ideas to address some of the most challenging problems and obstacles identified in Branding, Packaging and Distribution channel services for products in the four value chains.
• Catalyze service providers within the four value chains to provide innovative and market-driven solutions to improve the branding, packaging, and distribution channel of agricultural products of the Koshi province and to expand their reach on a country wide scale.
• Address challenges where disruptive, ‘break-from-the-past’ type innovations are considered key to move the needle in service provision which can solve persistent bottlenecks in the private sector functioning in branding, packaging, and distribution channel of agri-products in the Koshi province and thereby contribute to a higher level of commercialization and economic value-add in the selected agri-sectors.

Guiding Principles

• Competitive process
• Innovation
• Cost sharing
• Scalability
• Transparency
• Additionality
• Competition
• Reciprocity
• Impact
• Gender Equality and Social Inclusion (GESI)
• Green growth, climate change

Support modalities

The majority of the SCF support is expected to be provided through grants. Where relevant, the fund may consider providing technical assistance. In cases where established companies want to embark on a disruptive innovation, a conditional grant (risk-sharing) or co-investment (matching grant) may be considered as well. Due to the nature of disruptive innovation, often done by new companies, no loan guarantees are expected to be provided, as these would imply repayment obligations soon after the disbursement (bank lending is generally considered less suitable for early-stage business initiatives).

Cost sharing

While the nature of the SCF grant is primarily to support disruptive innovation, it is expected that partners (grantees) contribute to the projects and innovations they propose. The overall rate of cost sharing is variable, and a function of the stage of the company or partner SCF chooses to work with. In general, the more established (and cash-positive) a company is, the higher the expectation of cost sharing.

Process and Timeline

Budget, Funding and Duration

The largest fund awards will not exceed NPR 5 million, although exceptions are possible if approved by the SCF Committee. No fund award shall be less than NPR 500K to manage the administrative workload involved in each individual engagement. Awards and accompanying support for innovations are generally expected to last for one year. Where necessary, the SCF Committee may decide to continue support for subsequent periods; this will always be assessed on a case-by-case basis.

Eligibility criteria

Applicants

• Nepali Companies (start-ups, young service providers or a separate team or division from an existing company) that intend to develop a new business line with innovative new branding, packaging, and distribution channel ideas.
• Start-ups that are seeking to expand and have a minimum feasible product and a strong business plan.

Criteria

Service Providers:

• Operating in the selected or related field for at least 1 year or have a credible business idea and plan to form a business.
• That have a minimum viable product, and solid business model and are looking to accelerate.
• That are financially sustainable (i.e. cash flow positive) or demonstrate a credible business plan/projections towards financial sustainability over the next three to five years.
• In case of an existing business, be registered at the company register and tax office and up to date on their registrations and tax duties.
• Able to demonstrate internal procedures and systems to ensure that the grant can be used transparently and efficiently.
• Be able to demonstrate their capacity to provide the funds budgeted for their own contribution.