This post was co-written with Saurabh Lall, Research Director of Aspen Network of Development Entrepreneurs (ANDE). ANDE is a global network of over 170 member organizations that focus on the potential of small and growing businesses (SGBs) around the world to create economic, social and environmental impact.
Over the past few years, we have seen tremendous growth in impact investing, investments made to generate both a financial and a social/environmental return. The sector now manages about US$40 billion.
While this growth on the supply side of mission-driven capital has been tremendous, we must now focus on the demand side—in other words, the entrepreneurs themselves. It’s essential to ensure that there are enough entrepreneurs and small and growing businesses (SGBs) out there to address today’s complex, global challenges. These businesses must also have the capacity to take on the type of capital that impact investors have to offer. Accelerators and incubators are and will be increasingly critical to achieving these goals.
Accelerators are groups that provide business development support to enterprises with existing customers and revenue, while incubators typically serve earlier stage enterprises (pre-customers and pre-revenue). These types of groups can help grow environmental entrepreneurship by ensuring that demand meets supply; in other words, a strong pipeline of deals is ready to meet the growing supply of capital.