Developing countries grow by entering new export sectors, but it happens too rarely.
Exports are among the most reliable drivers of growth in low and middle income countries, moving thousands of people into better jobs. Over 40% of export growth comes from countries entering new products similar to those they already make. Yet in many cases, critical gaps persist: industries that should exist given a country's capabilities, but don't, with historical data showing that these opportunities often sit unrealized for a decade or more. The jump needs a local catalyst to spot the gap and absorb the costs of going first. Across 65 documented export booms, individuals or small teams drove 24.[1] In 1969, four people launched one of Colombia's first cut flower firms, now a ~$2B industry. Desh Group partnered with Daewoo to start Bangladesh's garment sector worth 50B+. Dutch banker Hans Zwager built the network behind Kenya's cut flower industry. Yet no one systematically backs these attempts: DFIs and local banks support a few firms in established industries, and VC is looking for something else entirely. ESF aims to fill this gap.
ESF takes country-sector opportunities that are currently uninvestable – lacking an operator, anchor partners, or on-ground validation – and turns them into deals downstream funders can scale. These gaps stay open because too many things have to go right at once: an entrepreneur has to know which sector a country can credibly enter, stitch together a supply chain in often-broken ecosystems, line up local partners, clear certification, attract buyers, and pull in capital. They have to clear a minimum bar on every one of these, not just optimize against any single failure mode. ESF eases the constraints that benefit from economies of scale, while the founder runs the firm and clears whatever constraint binds next under market discipline. Once the opportunity is investable on its own merits, we hand it off to DFIs or concessional funders like the Africa Jobs Fund. Nobody else is doing this work in an entrepreneur-led way today.
ESF incubates ambitious founders who take ownership of a specific sectoral gap, identify the right team, and are supported to close it. To start, we will place 1-2 founders with an opportunity, and support them for ~6 months on the ground. We think that starting new industries will be very hard, even more so for the first group in our program who try it. And in order for us to set these firms up for success and support them effectively, we're investing a lot more hands-on time with the first one. We think this will make us much better placed to support organizations in a lighter-touch way in the future.
Our first opportunity: kickstarting Madagascar's freeze-dried fruit industry
Madagascar grows ~100k tonnes of lychee a year, but due to limited logistical and dock capacity, only exports ~20k, with the rest sold cheaply or wasted. Freeze-drying overcomes these hurdles by turning a perishable fruit into a shelf-stable product. The process pulls the water out and preserves flavor, structure, and nutrition for years. Our initial estimates suggest that the economics are promising: at scale, cheap farmgate lychee prices and low labor costs plausibly give us a cost advantage over China, the market leader, which offsets higher energy and machinery costs. Profitability is also encouraging given freeze-dried lychee sells at wholesale prices of $20-40/kg with branded retail prices several times higher, while sitting within a freeze-dried fruit market growing ~6-10% annually.
We are incubating 1-2 people to found and own Madagascar's first freeze-dried fruit company, becoming an anchor for a new industry. The founders will launch and own an anchor firm, with lychees as a flagship product to leverage favorable unit economics. The plan is to buy B-grade and missized lychee wholesale, freeze it, hold it in cold storage, and run batches through an industrial freeze dryer across the year. They will start with a pilot, proving that operations are viable end-to-end by producing ~500 kg of dried lychee and become the first to ever export freeze-dried fruit from Madagascar. With product and real cost data in hand, they will raise further capital for a light-industrial operation, employing more staff and making profits as they sell ~5 tonnes a year at $30-40+/kg. From there, a full-scale raise should produce a $5M+ plant that employs hundreds and seeds adjacent firms. As the firm scales, founders will actively seek ways to seed a whole freeze-drying industry, becoming an anchor firm in a much wider ecosystem.
The pilot helps us test our operating model while we work alongside the founders. For the first six months, we will work for the founders: establishing the venture, importing equipment, securing fruit, and exporting the first batches out. This will help us test our operating model and learn from the challenges operators face before we scale. We're already gearing up to hit the ground – having scoped the sector, started conversations with specialty buyers, found established Malagasy agroprocessors to co-locate with, and raised investor interest in the venture's scale-up round. Once we've proven our operating model, we plan to hold larger incubation cohorts and work towards seeding multiple sectors across developing countries – paving the path for small teams to transform new export sectors from an early idea to investable reality.
[1] Based on text analysis of 65 export booms in the Export Boom Atlas, by Thorsheim (forthcoming).
This document is for informational purposes only and does not constitute an offer to sell, or a solicitation of an offer to buy, any security. All analyses are illustrative and do not constitute business or financial advice.