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info@CheetahDevelopment.orgwww.CheetahDevelopment.org +1 (612) 382-3533

Solving the Biggest Puzzle in International DevelopmentCheetah Development1 is an investor developing solutions that benefit smallholder farmers. These are the typically farmers with less than 2 hectares (5 acres), comprising the majority of the poor on earth. Ironically, although farmers, they usually fail to feed themselves, while their opportunity is to feed the world. They are the largest demographic on the planet, some 2 billion people.

Like a Rubik’s Cube, there is are almost endless variations for aid, international development, and smallholder empowerment, but solving for sustainable profitability has proven elusive.

1 Within this document, “Cheetah” is inclusive or our investment company, our funds, and companies we start.

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Over the past six years, Cheetah Development has spent millions of

dollars piloting a

revolutionary new approach to smallholder income and management.

Herein are a series of commonly asked questions regarding Cheetah with brief answers. We also have further documents available and stand ready for a further discussion.

There are creative solutions that really work. And like the Rubik’s Cube, the steps to a solution can be learned.

This isn’t just the biggest puzzle in the world, it is the biggest opportunity.

Don’t suffer a meltdown. Come and see.

Cheetah’s mantra is simple: Turn crops into cash.

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Q: WHAT IS CHEETAH DEVELOPMENT’S APPROACH?

Cheetah Development is a 501(c)(3) nonprofit investor, managed by business people, creating for-profit investable opportunities.

Cheetah sustains a double bottom line: we improve the livelihoods of smallholder farmers and we make profits. These objectives are not in conflict – instead, they are perfectly aligned. Every partner in a healthy value-chain must add value and receive value. The same is true for smallholders. We do the obvious: End poverty by creating income.

Cheetah focuses on the key underlying problems that have kept farmers poor:

markets and finance. Depending upon perspective, there are a number of other ways to understand Cheetah’s distinctive approach.

Foundational Approaches Business Model Key InnovationsPhilanthropy for Initial Risk Capital: The context of these investments can be perceived as high-risk. Cheetah mitigates that risk by piloting investment opportunities within its nonprofit.

Farmer Market Partnership: In order to end poverty, we need to shift from giving to the poor and start buying from them. Cheetah partners with smallholder farmers, joining our success to theirs.

Making Farmers Investable: Becoming investable is subtle but important distinction from the current efforts undertaken. Every activity needs to be accountable and enforceable. Without it there is not enough money to end poverty.

Business for Self-Sustainability and Returns on Investment: We don’t do projects – we start businesses. The latter has no planned end-date dependent upon donors for extensions. By further providing a return on investment, we are able to attract capital for growth.

Solve Value-Chain Gaps: In agriculture, what is missing are the layers of small and medium businesses that surround smallholder farmers. These are gaps – there is little or nothing there. The solution is not investing in existing entrepreneurs but starting from scratch.

Metafinance: (Not microfinance) Metafinance is a system of engaging local banks in agriculturally related finance to support communities of smallholders. It is a scale of finance not currently available and it overcomes many of the challenges for microfinance in rural areas.

Capital for Scalability: Real economies need massive amounts of capital to grow and exist. Donor will never be able to provide a sufficient infusion of cash to sustainably end the horrors of poverty that these people suffer from. What is needed is to make

Franchise-Like Replicability: Having the businesses be replicable lowers the cost of future investments, increases the likelihood of success, causes all business processes to be carefully determined and managed, shares successes between different

Micro Venture Capital:As with metafinance, our Micro Venture Capital model is designed to place investments in the “Missing Middle”. It uses business pilots, franchising, and shared back office support to successfully enter this investment gap.

Don’t give to the poor, buy from them.

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the pie bigger, not just redistribute wealth.

locations, creates resilience, and helps operations to cross cultures.

Q: WHO BENEFITS FROM WORKING WITH CHEETAH?

Cheetah Development simply allows partners to accelerate the pace and confidence at which they work with smallholder farmers. It is a model where everybody wins.

1. Smallholder Farmers and Their Communities: Cheetah creates solutions that typically increase smallholder incomes ten-fold or more, just in the first year. Crop yields swell, families start to eat, put their children in school, and buy medicine. Indeed, we have an independent study that shows that there is such a jump in ‘disposable’ income that communications and transportation show the largest percentage growth in family spending. These benefits spread out and impact entire communities.

2. Value-Chain and Other Partners: Cheetah designs its work and investments to enable smallholders to successfully engage with partners. These partners are typically value chain companies like crop input suppliers or food processors, they are NGOs doing development work among smallholders, they are commercial banks or investors engaging smallholders or value-chain companies, or they are government agencies supporting their constituency. Buyers of crops are able to receive reliable supplies of high quality. Banks are able to consistently achieve high repayments of loans, while gaining large numbers of new depositors.

Crops from Cheetah farmers and unassisted farmers planted on the same day. Managing the inputs, finance, the logistics and guaranteeing markets is where we really set ourselves apart.

Integrating Smallholders into Economic Opportunities

At Cheetah Development, we accelerate your ability to work with smallholder farmers – at scale – through an innovative business model that makes smallholders investible and trustworthy even to the largest banks and multinational brands.

This isn’t just the biggest puzzle in the world, it is the biggest opportunity.

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3. Investors and Entrepreneurs: Smallholder farmers represent the largest demographic on the planet, the most intractable problem, AND the biggest opportunity. They occupy a space where large business opportunities are ready to be developed. The world’s population is still growing rapidly as are the number of people in the middle class. Developing nations, especially those in Africa are well positioned to become major food producers worldwide. Investors and business people working this opportunity are likely to be significantly rewarded for their patience.

Q: WHAT IS THE PREMISE OF THE BUSINESS MODEL?

While smallholder farmers may be pre-commercial in reality, they must be treated commercially as small businessmen tied to profit in order to be successful and not co-dependent. To accomplish this requires debt (so farmers can produce more) and equity (so value-chains that connect to farmers are created). The current situation is a vicious cycle.

Cheetah Development provides both debt capital and equity investing. Our debt capital differs substantially from microfinance which finances a single farmer at $30-$300. We focus on “The Missing Middle” of $5000-$500,000 loaned to farmer cooperatives (often villages) to become small businesses that can hire others and mitigate risk. In short, we finance small and medium enterprises versus individuals. In addition, we invest in creating markets for smallholder production filling in gaps where the solution is both scalable and repeatable (much like a franchise model). Cheetah expects repayment because of the success in transforming the smallholders and our execution team both on the ground and through the use of financial and agronomic technology ensures the highest performance rates in the industry.

Q: DOES IT WORK FOR SMALLHOLDERS?

As mentioned previously, Cheetah has an independent study demonstrating substantial first year impact. Although we expect more of these studies to be conducted in the future, Cheetah’s objective is livelihood development not the more difficult targets like training, health, etc. Therefore, we are able to see intrinsically measured results – they are a part of our financial data, which is audited. Here are typical results for smallholder farmers:

An average of $20 free cash to over $200 in the first growing season. These numbers often double in subsequent years and we have farmers now earning over $1000 in profits.

Crop yields averaging 5 to 10x per acre what was previously produced. Access to finance at 6 to 10x in the first year and up to 30x by the fourth year.

Farmers produce little for sale• So no

commercial loans

• So no reliable market causing much waste

Food businesses lack crop inputs• So limited

growth and investment

• So they import needed volume competing with nearby farmers

The current economic situation is a vicious cycle that requires investments in two spheres simultaneously.

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No group loans have failed to date, with around 50 having been issued. Farmer repayment rates average around 85% in the first year and then rise to over 95%. Every farmer receives a bank account, which previously was only around 5% of the population. No farmers have ever voluntarily left the program.

The finance of smallholder farmers with large loans has been historically a very difficult proposition. It is one of the reasons commercial banks are reluctant to give loans without external support. Nevertheless, Cheetah has been able to demonstrate a significant track record of success.

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Q: WHAT IS THE HISTORIC PROBLEM OF FINANCING THE “MISSING MIDDLE”?

The Missing Middle is a gap of businesses that are largely absent in the developing world. The corresponding lack of funds was identified in a worldwide study by the German Marshal fund as the predominant cause of this gap. However, investing in Missing Middle is difficult because size of investment is small compared to needed vetting, accounting, mentoring, management etc. Therefore, investors have avoided this space though it is the key size for business development.

Q: HOW DOES CHEETAH SOLVE FOR THE MISSING MIDDLE?

Cheetah has established both a debt and an equity fund. Each of these funds target opportunities related to creating success for smallholder related businesses. They are usually deployed jointly.

Debt/Metafinance:

We find banks need to have externally mitigated risk at the outset or they will not participate in lending. Therefore, we place capital equal to the required collateral on deposit. It is placed in USD so it is not subject to currency risk.

Then with Cheetah’s coordination, the bank makes and manages the loan. Local banks have more ability to collect on failed loans – a strength that is not lost on the borrower.

The loan is place directly with the farmer group – who is provided the farm inputs/equipment rather than the money – under management of Cheetah.

The inputs are distributed to individual small groups as in the microloan model. If a small group fails to repay, the larger group is still responsible.

Finally, Cheetah provides a market for the crops.

Equity/Micro Venture Capital:

Venture capitalists have avoided smaller investments for good reason: they require too much investment management to achieve returns on that work. Cheetah overcomes this by the following:

Pilot businesses internally in the nonprofit before placing investments.

Microfinance: good but not enough

Although one may debate the extent to which MFI loans transform the lives of the poor, the simple fact that MFI lending has reached its current scale is a remarkable achievement. …However, the structure of its success in lending to the poor is such that we cannot count on it to be a stepping-stone for larger businesses to be created and financed. Finding ways to finance medium scale enterprise is the next big challenge for finance in developing countries.

-From first major study of microfinance (conducted by MIT), “Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty” by Banerjee and Duflo

The ͞>Missing Middle͞?Problem: (Small/Medium companies

lack access to finance of this size)

Microfinance(Typically $30-300; usually

too little to hire people)

Int͛Ql Finance & Big Venture Capitalists(Typically over $2 Million; too much

for most early stage companies)

Empl

oyee

s

Investment Targets

Investment

Needed

100

5

250

1

$Millions

$500,000

$5,000

$0

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Use a franchise model to replicate success so that future investments have a lower risk and reduced cost of investment management.

Share back-office services companies to lower investment costs, risks, and improve quality.

Q: HOW DOES CHEETAH MANAGE RISK?

Managing risk is built into all of Cheetah’s work from the ground up. For example, there are 30 actions taken to mitigate risk in the Metafinance model.

The fundamental distinction between making a smallholder investable and all other work engaging with smallholders is exactly in this area. This means that all activities must be accountable and enforceable. For example, smallholders cannot just be offered training, they must be held accountable to learning the material and employing it in their own crop management. Risk

management is therefore built into all of the company’s processes. And as Michael Porter demonstrates, process is not red-tape, it is competitive advantage.

Since Cheetah uses a franchise-like replicability for its businesses, it is documenting its processes to a greater degree than is ordinary. This gives us both a

competitive advantage and a risk advantage.

Q: WHAT IS CHEETAH’S EQUITY INVESTMENT STRATEGY?

In order of approximate priority, here is what Cheetah seeks when selecting investment opportunities:

1. Profitable2. High impact – change livelihoods significantly3. Ag or ag/food/inputs value chain4. Replicable – can be replayed and cross

cultures5. Scalable and able to grow quickly meeting the

needs of many

6. High need, fills a critical gap, ‘last mile’ to farmers

7. High leverage – few employees or low investment changes many lives

8. Cluster – fit with other investments to multiply effect

Q: WHAT ARE THE GREATEST CHALLENGES CHEETAH FACES?

Mindsets are very difficult, both of the farmers we work with and the people who want to help them or engage with them. We think of this as managing poverty of the mind. It may be our greatest challenge.

Corruption in developing nations is always a challenge and can be very disheartening. We strictly forbid participating in it at any time and severely sanction or prosecute staff and partners that

Risk Management

Don’t start with risk.

Start with the threats and hazards specific to the business, activity, or location. Next mitigate those with treatments, processes or other activities integral to the business. Build it in everywhere.

Then you deal with remaining risk: Avoid, Accept, Reduce, or Transfer.

Assets (Exposure)Hazards

Vulnerability –Coping Capacity

Risks

We must manage poverty of the mind – both in the poor and those that seek to help them.

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are found acting corruptly. Managing corruption is being built into everything we do but it is a smaller and simpler problem than the cost of labor in developed nations or intense competition.

Staff development of local people whom are the vast majority of our work force requires more time and resources than typical in developed nations that take a well-educated work-force for granted. For some of our staff, they are the first person in their family to ever hold a job. We need to teach them how to work.

Q: WHAT ARE SOME WAYS YOU CAN WORK WITH CHEETAH?

1. We can advise you on how you work with smallholder farmers.

2. We can organize and manage your smallholder farmers for you whether less than a 100 smallholders in a single district or a hundred thousand smallholders in multiple Countries.

3. We fill in missing middle of capital ($5000-$500,000 USD) for villages and cooperatives of smallholders using a unique model tied to commercial banks, collateralizing the initial debt

taken on by a village, establishing credit ratings of villages so debt can be acquired by commercial banks with less and less outside collateralization and a movement to “cutting the umbilical cord” with smallholders as they become successful small businessmen. You can invest directly in our collateral fund where you will see a traditional commercial lending rate of return.

4. You can engage as a bank to provide backed and reliable funding to smallholders. 5. You can purchase crops or food products from Cheetah supported smallholder farmers.6. In partnership with us you can provide products or services to our smallholders. 7. We fill in the missing markets ideally thru large multinational off-taker partners and

governments but often also as a direct investor in “missing industries” which can be scaled and replicated in an almost franchise like model (often later by our multinational partners) across a Country or Region. You can invest directly in our Equity Fund which is built to provide a private equity type rate of return.

8. You can be a partner NGO or donor and better achieve your mission objectives. 9. We can work with select investors and partners on specific joint venture projects provided

they can be scaled and replicated much like projects in our equity fund and meet our social impact mission and business model.

10. We can certify your food brands and products to be Sunborn™ which allows consumers to know the product came from smallholder farmers who are

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carefully managed for quality. This mark can be used generically or to tie to a region Sunborn™ in Africa or Sunborn™ in Tanzania. You choose. Our certification comes with almost no additional restrictions other than the ensuring the product is sourced primarily from smallholder farmers.

11. You can be an impact investor or a donor, whether as a foundation, company, or individual. 12. Please request our document CURRENT PIPELINE OPPORTUNITIES.

Q: WHO MAKES UP CHEETAH?

Cheetah was founded by leading entrepreneurs, experts in finance (both debt and equity), and industry principals in food and agriculture. With a business centric team in place, Cheetah expanded its core leadership to include pioneers in social impact investing, international development and technology. It is an impressive team, with impressive references and impressive results highlighted in our documents and website.

Q: WHAT IS CHEETAH’S HISTORY, ACHIEVEMENTS, AND PLANS FOR THE FUTURE?

Founded February of 2009 by Raymond Menard, Cheetah Development started with a handful of simple but audacious concepts. Mr. Menard is a serial entrepreneur and for him this was a faith calling. He received blessings and support from a growing cadre of friends and family. The first phase of the plan was to take a few years and demonstrate the workability of these concepts. It took almost six years, but there was a lot to be learned and the difficulties faced were daunting. On the other hand, far more was achieved than was expected. The following diagram shows the starting concepts, a very brief summary of what was achieved, and the next phase.

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Launched two new companies

Launched two new companies. Pearl Foods is a comprehensive farmer service company. Reservoir is providing food preservation equipment to address post-harvest food losses.

Have worked in Tanzania and DR Congo, expanding now to Malawi and planning expansion to Uganda in 2015

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Q: IS CHEETAH A FAITH BASED ORGANIZATION?

No. While several of the key executives of Cheetah have a deep faith and were drawn by that faith into the mission, we strongly believe that the role of supporting smallholders and moving them from subsistence to small businesses is universal across faiths and philosophies. Our mission is profit for the smallholder farmer. We welcome all and are comfortable for any company, donor or investor to join with us so long as they have a passion for helping smallholders increase income.

On the other hand, Cheetah frequently works with faith based organizations working on smallholder empowerment.

Q: WHO BACKS / SUPPORTS / WORKS WITH CHEETAH?

The following is not an exhaustive list and we apologize to the many supporters without whom we would not have made it to where we are today. Also, most private donors and investors prefer not to be named and so we have kept all names private.

Partner Type Past and Present PendingDonor USAID (3 Sub-grants)

Numerous private donorsFamily and corporate foundationsChurches and other faith based orgs

Numerous (unable to disclose)

NGO ConcernFintracDAIAfricareInternational Potato Center

World VisionADRACARE InternationalTetra Tech

Investor Family foundations Lion’s Head Global Partners (private equity)AgriVie (private equity)

Supply Chain Syngenta (seed and chemicals)Yara (fertilizer)AFGRI (largest ag and food co in Africa,

a strategic partner)Mtanga LTD (potato seeds)

Numerous (Diversity of companies and products already in process ranging from farmer services, soil testing, transport bicycles, solar dryers, farming tools, dairy, horticulture, grains, grain bins, cold storage, and seed supply)

Banking CRDBMufindi Community BankTanzania Investment BankNational Microfinance Bank Wells Fargo (business banking)Barclays (business banking)

Opportunity InternationalVision Fund

University University of Minnesota (Carlson School of Business, ag school, Humphrey Institute of Public Policy)

University of Tumaini (business school and Tumaini Ag Institute)

University of Dar es Salaam (Entrepreneurship Center)

University of St. Thomas

IT Agro Tech LTD

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Q: What is Cheetah’s vision?

The objective of Cheetah for the next 5 years is to demonstrate that without question our models work, cross cultures, and scale. We believe that then they will be widely adopted and in a generation spread around the globe. (This happened with microfinance.) We are ready to assist with this expansion and we will open source our methodology. We genuinely believe that most of the worst poverty on earth can be eliminated in a generation. Not all will be farmers for as economies grow many will shift into new

occupations, since they will be given that chance. We don’t need to live with a world in this condition, with 2 billion people trapped in rural poverty. This is not the work of one company – it must become a movement.

Q: HOW CAN I LEARN MORE?

Each Concept is further explained in our short Power Point Presentation: What is Different About Running With a Cheetah? Our Debt, Equity and Smallholder Organization Models and in our 5 Year Business Plan and other attached documents.

POWERPOINT: How Cheetah Debt, Equity and Farmer Organization Models Work (Comprehensive and Technical)

PDF CASESTUDY: A Case Study Approach to How Cheetah Models Work

PDF WHITEPAPER: Many available including, How Cheetah Organizes Smallholders

PDF Business Plan: Comprehensive 5 Year Business Plan for Cheetah

PDF Case Study: Example of Due Diligence Done on Investing in New Regions

Please also visit us online at cheetahdevelopment.org and watch our videos of key board members, founders and stakeholders explain why Cheetah works.

Poverty is no more impossible to solve than a Rubik’s cube. We just have to work together.

Ready to run with the Cheetahs?