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New Ventures China Investor Forum: Green Growth Generating New Opportunities

This piece originally appeared on the New Ventures website. It was written with New Ventures intern Kevin Short.

The 2011 New Ventures China Investor Forum showcased the potential of environmental entrepreneurship on a larger scale than any previous forum in the program’s eight years of operations in China.

Six rising environmentally-focused enterprises presented their business models to 300 forum attendees in June. The forum provided an opportunity for these entrepreneurs to connect with both regional and global investors, an often arduous task for small and medium enterprises (SMEs).

"It has been extremely difficult for those environmental SMEs to get investment for further development in the local market, which explains why New Ventures’ services are in great demand, " said Tao Zhang, Chief Operating Officer of New Ventures.

A new era of partnerships

This year’s forum, held at the Wan Shou Hotel in Beijing, represented a more diverse cross-section of Chinese society than at any previous New Ventures China investor forum. In an exciting development, New Ventures partnered with China’s Ministry of Industry and Information Technology (MIIT), the first time New Ventures China has collaborated with a local government agency to hold such forum. Government recognition of the energy savings, efficient resource utilization, and potential for economic growth facilitated this new partnership.

New Ventures China and the Information Center of MIIT have agreed to explore the possibilities of co-establishing a online database for Chinese green SMEs to be recognized by MIIT. They will also jointly launch a media initiative to highlight the achievements of Chinese green SMEs.

Alongside these officials sat many members of Chinese civil society, members of the business sector, media personnel, and of course, investors. The global network capabilities of New Ventures were also demonstrated through the presence of New Ventures Indonesia staff.

“We expect to make the New Ventures forum into a leading platform, through which more investors will get proper understandings about the fledgling green companies, help them grow up and finally find a way for profit and environment going hand in hand,” said Walter Ge, Director of New Ventures China.

Diverse services, common challenges

From e-waste management to bioenergy conversion, the companies represented at the China Investor Forum offered a wide range of environmental services. Beijing Huakong Automation System Co. Ltd., Shanghai Honghoo Group, Qingdao United Scrap Automobile Co. Ltd., Shanghai Electric Waste Collection Co., Ltd., Beijing Visualized Energy-Saving Co., Ltd., and Xuzhou Hootech Co., Ltd. were all allotted time to present to investors.

Since its fouding in 2006, Beijing Huakong Automation System Co., Ltd has saved its clients what amounts to the energy impact of 1.5 million tons of standard coal. The unit water consumption in Xuzhou Hootech’s production method is equal to 30% of the average amount across the industry, while the unit energy consumption represents just 1% of that in the ore mining industry.

Despite the range of environmental and energy objectives pursued by the businesses, these SMEs face remarkably similar hurdles. Namely, the SMEs face a lack of financing and sustained investment, barriers to scaling up, and underdeveloped business management expertise. Too large for microfinance and too small for mainstream investment, these companies represent the “missing middle”- an essential but frequently overlooked segment of emerging economies.

New Ventures has addressed this intersection of environment and development in China since 2003, offering services to over 400 SMEs to assist them in growing to scale. Through this program, over 20 Chinese environmental entrepreneurs have received over $150 million from various investors. At June’s China Investor Forum, potential investors included China International Capital Co Ltd, CLSA Capital Partners, Beijing ZhongTinYinTai Investment Management Co, HENG RUN International Group Limited, Energy Capital, LGT Venture Philanthropy, among others.

Prospects for the future

Leveraging the successes from June’s Investor Forum, New Ventures China now looks to expand these matchmaking services and facilitate even greater levels of investment for these green SMEs. New Ventures is now considering launching an impact investment fund that directly targets SMEs in the environmental sector.

"We plan to investigate the feasibility of running such a fund in China in the next two years," said Tao Zhang.

New Ventures China plans to hold another Investor Forum late this year in Shenzhen, a key Chinese special economic zone bordering Hong Kong, as well as continuing to explore cross-regional collaboration opportunities, matchmaking models, and public outreach.

“Environmental impact investment will become more and more important in the country simply because China is facing an increasingly urgent need to balance environmental protection and further economic development,” said Tao.

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