LuxAid Challenge Fund

All commercial companies recognized as such by the law of the country of application are eligible. This could be a SUARL (société unipersonnelle à responsabilité limitée), SARL, SASU, etc.

Sole proprietorships that are not registered as one-person companies, EIGs, associations and NGOs are not eligible.

The applicant for the LuxAid Challenge Fund must be a commercial company that meets all the criteria. That said, proposals made by or involving a consortium are permitted.

If the company was legally registered before January 1, 2019, it will not be eligible.

No, LuxAid Challenge Fund targets companies registered between January 1, 2019 and January 1, 2023.

Yes, if the company also meets the other eligibility criteria.

Yes, all commercial companies that also meet the other eligibility criteria criteria are eligible.

The solution proposed by the company must have been tested on the market, generating commercial revenue for the company at least over the last 3 months. If the project meets these and other criteria, it will be eligible.

If it has not been officially registered in Burkina Faso, Mali or Senegal between January 1 January 2019 and January 1, 2023, it will not be eligible.

If the company can prove that it was legally registered in one of the 3 countries between January 1, 2019 and January 1, 2023, it will be eligible.

The project must be implemented and have a measurable impact in at least one of the 3 countries (Burkina Faso, Mali, Senegal). On the submission platform, applicants must choose one of the three countries for their application, ideally where the company’s head office is based / where the activity is most developed.

The rule is that the company must employ at least 2 employees with an employment contract. If a member of the team is employed under a service contract, but is fully employed 100% of the time by the company, and this can be demonstrated through the contract or otherwise, then he or she is counted as an employee of the company. However, if the company obtains co-financing from LuxAid Challenge Fund, it will have to commit to stable employment, and will therefore endeavor to offer an employment contract within the structure as soon as possible, in accordance with the principles of Responsible Business Conduct (RBC).

In order to be counted as an employee of the company, it is necessary to prove the legal existence of an employment contract that complies with national legislation. of an employment contract in compliance with national legislation, i.e. a written contract is mandatory.

This call for projects targets the “missing middle” or “pioneer gap”. These are innovative start-ups with a validated MVP (minimum viable product) and first commercial revenues, whose financing needs are too large for microfinance institutions, but too small and risky for other types of private investors. In some markets, the investment ecosystem (venture capital market) is simply not mature enough, leaving a gap in the entrepreneurial landscape and hindering the development and growth of high-impact businesses, thus creating a vicious circle.

The LuxAid Challenge Fund’s involvement in this specific segment reflects the central role of development cooperation in providing strong additionality: without this support, the project would not have been able to achieve these results, or not on this scale, or not as quickly.

Companies are unlikely to be profitable for 2-3 years, but they must have a clear business and financial plan to achieve viability. In addition, they must have, or be prepared to have, a clear theory of change and monitoring framework for their solution, and strive to improve their responsible business conduct.

Yes, the applicant must be able to guarantee that :

• the company is neither responsible for nor involved in environmental degradation, human rights violations, forced labor or child labor
• the company is not subject to ongoing criminal prosecution related to fraud, corruption, money laundering, terrorism, human trafficking, and does not discriminate on the basis of race, color, age, sex, gender identity and expression, ethnic or national origin, disability, pregnancy, religion, political affiliation, union membership, veteran status, protected genetic information or marital status in hiring and employment practices, such as salaries, promotions, rewards and access to training;
• the company is not subject to European Union (EU) sanctions and its representatives (owners or managers) are not on the EU sanctions list;
• the company does not operate (directly or indirectly, via related companies) in the following sectors: arms, mining, alcohol, gambling, tobacco, pornography, extractive industries and non-renewable energy.

For the LuxAid Challenge Fund, the criterion futureproof refers to adaptation to future risks and trends, such as climate change and land degradation, changing consumption patterns and industry 4.0.

Looking at the project’s overall potential impact (positive and negative, short- and long-term), is the project economically, socially and environmentally sustainable and forward-looking with regard to major global risks, threats and trends? For example, depending on the objectives of each action, does the project include in its analysis the risks and impacts as well as the opportunities that megatrends such as climate change and the fourth industrial revolution (among others) could have on its business case?

In the context of the LuxAid Challenge Fund, an innovation is a new solution with the transformative capacity to accelerate impact. Innovation is about creating, finding, adapting and applying new ideas, approaches, products, services or methods to solve existing problems or address unmet needs. It is not limited to the creation of something completely new, but also encompasses the significant and creative modification of what already exists, or its use in a new context. Also, innovation can provide a solution that had no local demand because it was unknown, but which meets a real need in terms of impact.

To be considered “innovative”, the solution must be sufficiently distinct from other products, services or approaches already on the market in the country in question. This can mean distinctions in product/service design features to better meet needs, distribution model, customer segment (i.e. offering new products or services to previously underserved populations), business model (who pays and who benefits, price), product or service resilience (anticipating future developments).

In the context of the LuxAid Challenge Fund, additionality marks a positive contribution that would not have occurred without co-financing, and generally characterizes projects that take bold risks to deliver innovative and impactful solutions. To assess additionality, the selection committees will analyze:

• the extent to which the company cannot self-finance the project (within a reasonable timeframe) or access equivalent support from a commercial investor;
• The extent to which the project’s results would not have taken place without the co-financing, are greater in scope, better in quality or are achieved more quickly;
• the project’s potential to stimulate replication of the model or systemic change in this market or industry.

Applications will be evaluated by a national selection committee made up of 3 or 5 members representing the LuxDev office and the Luxembourg Embassy in the country, an investment/private sector expert, and thematic/sector experts;

The applications shortlisted following the due diligence process will then be evaluated by an international committee made up of 3 or 5 members representing LuxDev headquarters, the Ministry of Foreign and European Affairs, an investment/private sector expert, and thematic/sectoral experts;

Non-voting members and observers may be invited to take part in the pitch sessions and deliberations of both committees, subject to signing a declaration of impartiality and confidentiality. The selection committees reserve the right to delegate the analysis of applications to LuxDev and/or an external supplier with a view to shortlisting the best applications, organizing field visits and conducting due diligence on each shortlisted project and company. Anyone involved or having access to documents provided by companies will sign a confidentiality agreement. Selection committee members will also sign a declaration of impartiality and absence of conflict of interest.

Fixed assets already acquired cannot be included in the personal contribution. On the other hand, if the entrepreneur makes a personal donation to a building or piece of equipment that is necessary for the implementation of the project, this represents a new resource invested and can therefore count towards the personal contribution.

It is not possible to include any other Luxembourg cooperation grant in the resources contributed by the applicant to finance the project proposed within the framework of the LuxAid Challenge Fund. However, grants from other cooperations for the same project can be included in the project’s resources (personal contribution);

As soon as the agreement has been signed by both parties, a first tranche of 25% of the grant amount will be paid, after any conditions precedent have been lifted. Payment of a second installments of 50% of the grant amount will be made on the basis of a technical report demonstrating achievement or progress in achieving the indicators and conditionalities, and a financial report justifying the expenditure actually incurred corresponding to half the total budget. The balance of up to 25% will be paid on the basis of a final technical and financial report demonstrating the results of the project and justifying the expenditure actually incurred corresponding to the fulĺ of the budget. Payment of the balance is capped at the expenses actually incurred.

The 300 000 euros of accumulated financing includes the loans, so this loan is indeed part of the accumulated financing. 

The limit of 300,000 euros in cumulative funding applies to the legal entity/business company submitting the application.

LuxAid Challenge Fund has an envelope of 1 million euros to share between the best projects in the 3 countries (around 15), for co-financing ranging from EUR 50 000 to EUR 140,000 per company.

There is no quota of projects per country. The best projects will be selected, regardless of the country in which the company is registered.

The financial support provided by LuxAid Challenge Fund is non-refundable;

To be eligible for co-financing, expenses must meet all of the following criteria (without being exhaustive):

• be necessary for the realization of the action (economic activity), directly attributable to the latter, resulting directly from its implementation ;
• be borne by the company, i.e. they represent real expenses actually and effectively incurred by the project owner;
• be reasonable, justified and in line with the principle of sound financial management, as well as with the usual practices of the project owner, whatever the source of funding. Procurement contracts must comply with normal purchasing practices, provided that the contract is awarded to the bid offering the best value for money, and that any conflict of interest is avoided;
• be due during the period of implementation of the co-financed project, consistent with the scope and schedule of activities;
• be identifiable and supported by documentary evidence, in particular determined and recorded in accordance with the usual accounting practices of the productive project owner;
• comply with applicable tax and social legislation, taking into account the privileges and other benefits granted to the project owner.

Types of eligible expenditure:

• Expenses used to finance any activitý related to production and sales, such as: 
  • Cost of sales (CPV)
  • Salaries
  • Overheads

  Companies must include an audit of project-related expenses in their project budget. Terms of reference for the audit will be provided by LuxDev.
  Coverage through co-financing: Max 120,000 EUR value of co-financing

• Investments that enable a strengthening of production capacity, productivity, competitiveness, diversification and quality:
  • infrastructure – creation, rehabilitation, extension.
  • equipment – acquisition, installation and commissioning.
  • intangible assets – acquisition or subscription to databases, software and search algorithms, etc.

  If co-financing is used for acquisitions, they may not be resold within 3 years of the end of the co-financed project.
  Coverage through co-financing: 50% cost coverage, up to a maximum of 30% of the total project budget | Max 120,000 EUR value of co-financing

• The project owner’s intangible needs (excluding investments) that help guarantee the “proper set-up” of the activity, its competitiveness and its sustainability, in particular:
  • technical and accounting training.
  • consulting and technical assistance:
    • consultancy/industry expertise, market access, pricing strategy, certifications, licenses and standards.
  • development of business plans, financial management, digitization, human resources management and training, development of a results/impact management strategy and plan, etc.
    • management tools, accounting.
    • customer research/prospecting/access to networks.
    • certification fees.
    • costs related to the intellectual property of a product or service owned by the project leader.

  A non-exhaustive list of experts and consultants identified by LuxDev in the various fields mentioned above will be provided to the selected companies.
  Coverage through co-financing: 100% cost coverage, up to a maximum of 20% of the total project budget

LuxDev co-financing up to 70% of total project budget LuxDev co-financing capped at min 50,000 and max 140,000 EUR 

Co-financing is a direct financial contribution in the form of a donation or non-commercial payment to encourage companies to propose initiatives that aim to achieve specific impact results in line with the objectives set out in the call for projects. Co-financing can only be used when the initiative originates from the private sector and the results of the action financed are the property of the recipient of the co-financing;

Co-financing is subject to the non-profit rule. This means that on the one hand, co-financing may not have the purpose or effect of generating a profit from the project, and on the other, the creation of reserves is not permitted through the project. Any profit margins obtained as a result of setting up the co-financed project and collected during project execution must be reinvested in project execution;

Double-funding of project costs and expenditure on actions that took place before a co-financing agreement was signed are not permitted (principle of non-cumulative allocation and non-retroactivity).

Selected companies will sign a co-financing agreement with LuxDev specifying the amount of the grant in euros, and payments will be made in EUR.

Ineligible expenses are: costs incurred outside the project period, as specified in the co-financing agreement, dividends paid by the company, debt and debt-related costs, interest rates, bank charges and exchange losses, costs associated with developing the project.

Calls for projects will be launched in different countries where Luxembourg Cooperation is active and in different sectors. An unsuccessful candidate in this competition may apply for future calls for projects.

Not necessarily. Company founders can also be current members of the company team. Please specify in the role of each team member who is also a (co-)founder.

Financial statements are accounting documents that provide information on a company’s financial situation at a given point in time: they include the balance sheet, income statement, statement of cash flows and statement of retained earnings/statement of changes in shareholders’ equity.

To enable us to consider all applications, please complete all sections marked with a *. 

The question refers to the company.

For any technical problems, you can contact akram@vc4a.com.

We offer information sessions on the call for projects, in the form of webinars. Dates and registration links are available at the top of our home page.

Given the large number of applications we receive, we will not be able to offer feedback on the suitability of your application. If you have a question about the application process or the criteria applied, before writing, we recommend that you read this FAQ carefully to check whether the answer to your question already exists. If not, you can send your questions to lcf@luxdev.lu. Any answers shared will then be included in this FAQ section.

Pre-selected candidates will be contacted by LuxDev or an external supplier to discuss their application. In the various pre-selection phases, candidates will be offered free coaching sessions aimed at pitch preparation, or other aspects according to identified needs, such as reviewing the business plan, improving the results chain, etc..

The recommended project duration is 12 to 18 months, with a maximum of 24 months, starting in June 2024.

Applications must be submitted in French.

The company receiving co-financing from the LuxAid Challenge Fund retains full and complete ownership of its innovation, given that LuxDev acts on behalf of Official Development Assistance. In the context of impact evaluations carried out on co-financed projects, LuxDev requires the publication of results and encourages the opening up and availability of the data collected and the analysis scripts underlying the evaluation;

In the interests of fairness, no application will be considered outside this process and timetable;

Applications must be submitted by the deadline via online portal by January 8, 2024.

As mentioned above, LuxDev undertakes to inform you of its decision within 6 months of the application deadline;

VC4A complies with the European General Data Protection Regulation (GDPR). 

More details here : https://vc4a.com/privacy/

We will pay particular attention to gender equality.

To enable LuxDev on the one hand to identify the potential risks of implementing a solution, and on the other hand to develop, in collaboration with the selected companies, mitigation strategies, the shortlisted projects will be analyzed using the following warning criteria:

•   habitat/ecosystem/forest modification (reduction, degradation, change) as well as any change in aquatic resources.
•   introduction of invasive species.
•   land degradation.
•   production chains linked to livestock, cocoa, coffee, palm oil, soy, wood, rubber, charcoal and paper products.
•   increase in environmental pollution, particularly hazardous waste, energy requirements, use of water resources.
• change in land rights/access and community protection.

Co-financed companies will be required to provide LuxDev with half-yearly technical and financial reports. These reports will focus on the results indicators and targets proposed by the companies in their application, agreed with LuxDev and mentioned in the annexes to the co-financing contract. The achievement of certain results will trigger co-financing payment instalments. Following each report (semi-annual or final), the company will be invited to participate in a brief meeting (virtual or in situ) with the LuxDev team and the Luxembourg Embassy in the country. In order to evaluate the results of selected projects and improve learning, LuxDev reserves the right to request on-site visits by its staff, as well as external evaluations.

Based on the progress observed, LuxDev will select certain projects for external impact assessment.