Economist Turned Engineer Secures 18.6 million Br for Tigray-Based Manufacturing Enterprise

A manufacturing enterprise based out of Tigray Regional State secures $150,000 in equity financing from Impacc, a philanthropic venture capital investment firm. MG Electromechanical Engineering, which was on the precipice of a shutdown during the two-year conflict, looks to make a rebound with the fresh capital injection.

The deal, hailed by Impacc CEO and Founder Til Wahnbaeck (PhD) as a milestone, signals a strategic bet on light industrialization to drive economic recovery in the conflict-affected region of northern Ethiopia.

Impacc operates as a non-profit, converting donations into investments in early-stage companies. The firm focuses on MSMEs with the potential to become "job engines" with great founders, scalable business ideas, and high-growth potential.

“The best way out of poverty is a job,” Till says.

Impacc recognized MG’s job creation potential early on, assisting the budding business in securing 3,500 sqm of industrial land by engaging with regional authorities before making its investment. Impacc has declined to publicly disclose the percentage of equity it acquired, citing confidentiality.

Mearg Gebremedin, founder of MG and an economist by training, set out on an entrepreneurial journey in a bid to help his wife’s bakery. Upon noticing her struggles with manual labor-intensive equipment, he began taking online classes to design dough mixers, cutters, and sheeters.

“We started operations with our savings,” Mearg told Shega.

The early designs had a quick impact, with the bakery scaling up its operations from four to 19 employees in a short while. Demand for his machines soon spread across Tigray, with each unit sold reportedly creating three jobs by automating tasks for small bakeries.

However, the onset of the Covid-19 pandemic stalled their momentum, while the outbreak of conflict soon after dealt a punishing blow. Mearg states that nearly half of their equipment burned down while some of their staff lost their lives in the war. 

Still, the founder remained steadfast in his ambitions, managing to grab the attention of GIZ, the German development agency, which provided financial support.

 “We’ve been very impressed by his resilience,” Till, founder of Impacc, told Shega.

He points out how the manufacturing sector has a multiplier effect across an economy, creating employment for both the suppliers and recipients of machinery. Impacc’s financing model allows them to provide more patient capital than traditional financial institutions.

"While startups in Africa receive funding in exchange for shares, just as with commercial investments, our philanthropic approach is crucial for our fundraising efforts," says the CEO. "It allows us to solicit donations and provide tax receipts." 

Impacc’s equity investment will fund a new factory and support MG’s diversification into agricultural machinery and renewable energy solutions, including a low-cost wind turbine prototype for rural bakeries.

In addition to MG Electromechanical Engineering, Impacc has provided a €50,000 loan to BeSingularity, a business that trains and outsources sales experts (primarily unemployed women). SNY Mobility, a mechanic business creating electrical appliances, is also being supported by Impacc to pilot electrifying Bajaj (three-wheeled vehicles) in Tigray with an initial loan of $25,000. Successful loan repayment from BeSingularity and SNY Mobility will qualify them for Impacc's larger investment pipeline, beginning at $150,000 for a minor equity stake. 

Currently committing over $200,000 in Ethiopia, Impacc plans to put in money into 3-5 more companies this year, totaling around $500,000 of additional investments. The non-profit is active in East Africa (Uganda, Kenya, Tanzania), with around $1 million in cash investments and another $1 million in venture-building investments.