Topic: small and medium enterprise (SME)

New Ventures: Voices of the Entrepreneurs

Sarah Parsons — Mon, 12 Nov 2012 18:20:42 -0500

Summary: Voices of the Entrepreneurs

Small and medium-sized enterprises (SMEs) can account for as many as four out of five jobs and more than 29 percent of GDP in developing countries. Environmental SMEs—enterprises that capitalize on commercial opportunities while generating clear, measurable environmental benefits—have an important role in shaping growth that is both economically and environmentally sustainable.

Yet the entrepreneurs behind these environmental SMEs face many challenges that limit their ability to grow their businesses. The main roadblocks highlighted by the environmental entrepreneurs whom we interviewed were: accessing finance, attracting and maintaining quality human capital, tackling limited markets and mind-sets, overcoming unsupportive policies, coping with risk and uncertainty, and distributing their products and services. New Ventures addresses these roadblocks by empowering entrepreneurs to develop solid business plans and skills, linking entrepreneurs to networks of mentors and supporters, and showcasing entrepreneurs to investors.

There is much more to be done. The barriers that prevent environmental entrepreneurs from scaling up their businesses are far from gone, but as Earth’s resources become increasingly constrained, our future well-being will depend more than ever on the success of these entrepreneurs. In addition to accelerators like New Ventures, donors, investors, policymakers, corporations, and international development institutions will need to step up to enable greater success for environmental entrepreneurs.

A Note on New Ventures’ Transition

With strong, distinct New Ventures programs in Brazil, China, Colombia, India, Indonesia, and Mexico, WRI has decided to conclude its role as global coordinator. WRI is immensely proud of New Ventures’ accomplishments and is confident that the program will reach new heights with greater local and regional independence.

RELEASE: Transition of New Ventures Global Network

James Anderson — Wed, 26 Sep 2012 11:46:24 -0400

After 13 years of building support for environmental entrepreneurship, the World Resources Institute will conclude its role as coordinator for the New Ventures global network at the end of 2012. WRI recognizes that the New Ventures Local Centers have built strong, distinct programs in their respective countries, and we are confident that greater local and regional independence will allow New Ventures to move into its next phase of development.

Following is a statement by Manish Bapna, Managing Director, WRI:

WRI is extraordinarily proud of New Ventures’ accomplishments and impact in enabling the growth of environmentally focused entrepreneurs in emerging markets. Founded by WRI in 1999, New Ventures has provided business development support to 362 innovative small and medium enterprises (SMEs) whose goods and services produce clear, measurable environmental benefits, such as clean energy, efficient water use, and sustainable agriculture. Oftentimes these goods and services address the challenges experienced by the world’s poor. New Ventures has also facilitated $290 million of investment into these SMEs, helping them scale their businesses and yield positive impacts.

WRI has been privileged to partner with expert local organizations in establishing New Ventures Local Centers in six of the world’s most dynamic emerging economies:

SMEs in emerging markets play a critical role in the economy by creating jobs and spurring growth. As the need for sustainable economic development intensifies, New Ventures enterprises continue to prove that innovative technologies and business models can deliver environmental, social, and financial returns.

Much has been accomplished in the world of entrepreneurship over the past decade, including the formation of new investment vehicles emphasizing environmental and social returns (alongside financial returns), the creation of associations and alliances that bring together key actors, and development banks’ and agencies’ capital and technical assistance commitments to pursue development solutions through private enterprise.

However, there is still much more to be done. As the world tackles environmental challenges such as water scarcity, climate change, deforestation, and pollution—against the backdrop of continuing population growth—entrepreneurs will continue to be sources of innovation and action. Organizations supporting these entrepreneurs on the ground, like the New Ventures Local Centers, will continue to play a vital role in nurturing their efforts, affording them the resources necessary to scale their impact.

New Ventures – and the entrepreneurs and investors it works with – have proven that profitable enterprises can be created and scaled while simultaneously protecting natural resources and improving livelihoods. It is a model that will endure and create pathways for many others with ambition and dedication to sustainable economic development. WRI looks forward to many more extraordinary accomplishments for New Ventures in the coming years.

New Ventures China Investor Forum: Green Growth Generating New Opportunities

Tracy Elsen — Mon, 18 Jul 2011 14:13:06 -0400

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.

WRI Experts on Asia's Clean Energy Future

Maggie Barron — Thu, 16 Jun 2011 10:44:50 -0400

Why is Asia such an important region for clean energy deployment? WRI experts respond.

From June 22-24, the Asian Development Bank (ADB), the U.S. Agency for International Development (USAID) and the World Resources Institute (WRI) will co-host the premiere knowledge-sharing platform for clean energy investment in Asia, the 6th Asia Clean Energy Forum (ACEF). Taking place in Manila, Philippines, the event brings together energy leaders from around the world to discuss clean energy policy, regulation, financing and innovative business models.

I sat down with WRI experts who will attend the events in Manila and asked each of them, what is unique about Asia’s path to low-carbon development?

Opportunities of a Low-Carbon Economy

Large and small countries in Asia understand the opportunities of a low-carbon economy. We’re seeing these countries transition rapidly to renewable energy, and in doing so driving global markets. China, for instance, is leading the world in renewable energy investment, and others are looking to follow its lead. These successes may help drive even greater ambition among Asian countries, allowing countries to reap the economic, environmental and development benefits of a low-carbon economy.

— Jennifer Morgan, Director, Climate and Energy Program

Global Leadership and Innovation

The low-carbon transformation will be very different from technological transformations of the past because many of the innovations will come from developing countries, in particular countries from Asia.

These are the countries making large scale investments in energy infrastructure. They are transforming their economies to be competitive participants in the global clean energy value chain, as they make the transition from low cost, low skill manufacturing to high skill, high value-added manufacturing. They see the potential to become global leaders in the clean energy sector while meeting domestic energy challenges.

— Letha Tawney, Senior Associate, Two Degrees of Innovation

The Meaning of “Clean” Energy

Asia is home to a large proportion of the world’s poor, who either have no or very limited access to energy. And it’s also home to some serious gaps in governance. That’s why when we say “clean energy” we need to make sure we’re talking about both a type of fuel and an absence of corruption. There is no reason why vested interests will not become entrenched in the clean energy space, just as they have in the energy sector in the past.

So governments need to strive for more transparency, inclusive decision-making, and accountability. Business as usual will allow inefficiencies to continue, with little if any regulatory oversight.

Countries that exclude people from decisions about clean energy deployment run serious governance risks. To a farmer whose land is taken over without due process, it’s of very little consequence whether it’s for coal or for a solar PV plant. The governance challenges in the energy sector don’t go away just by calling it “clean.”

— Bharath Jairaj, Senior Associate, Electricity Governance Initiative

Scaling Up Smart Renewable Energy Policies

Asian countries are providing more and more examples of smart policies that lead to increased deployment of renewable energy in line with their broader development objectives. And they are learning from each other, instead of looking only to developed countries or international institutions for advice.

These countries can develop good models of what we refer to as “smart renewable energy policy”, but if they want to scale them up to the level that is necessary to meet the huge energy challenge Asia faces, they will need international financial support. For example, both India and Thailand pay guaranteed prices to renewable energy producers, paid for with a surcharge on electricity. They are supporting renewable energy with their own resources. Yet their resources are limited, so their support for renewables can only go so far. Donors need to step in, build on existing successes and help bring them to scale. A meeting like ACEF brings donor institutions and in-country experts together and provides an opportunity to form the partnerships necessary to expand on countries’ successes so far.

— Lutz Weischer, Research Analyst, Two Degrees of Innovation

A Role for Entrepreneurs

Entrepreneurs in Asia are taking on the issue of energy access. There’s a lot of talk about large solar installations, but those come with their own storage and distribution challenges – how are you going to expand the grid to get that solar energy to a remote village? That’s why there is so much potential for decentralized clean energy, like solar lanterns, microhydro plants, and biomass gasification.

For the first time we’re starting to see a critical mass of companies that are selling these kinds of electricity products, and prices keep coming down. So it’s no longer an issue of technology, or price. It’s now about getting these technologies to consumers. That’s a really important shift, and entrepreneurs are coming up with creative solutions to tap into this very significant rural market.

— Saurabh Lall, Research Officer, New Ventures

Energy Efficiency Brings a Competitive Advantage

In Asia, there’s very real pressure for companies to invest in energy efficiency, both from governments and from large customers who want to squeeze carbon out of their supply chains.

So there’s this confluence of very strong policy drivers, very strong demand drivers, and industries that recognize the opportunity to gain a competitive advantage. These all create the conditions for a good market for energy efficiency technology.

The challenge now is that a lot of the low-hanging fruit for energy efficiency projects has already been achieved. The next step is for companies to make longer term investments, and for that many of them need external financing. If Asian countries can help companies address some of the financing and capacity barriers, they can jumpstart a lot of new technology and continue to drive costs down.

— Xiaoyu Shi, Associate, Climate & Energy Program

An Urgent Necessity

Right now Asia is at a crossroads. Energy demand in the region continues to grow rapidly and is expected to rise at a rate well above the global average. Asia must decide whether to meet this demand using traditional carbon-intensive technologies or switch to clean energy and enable the transition to a low-carbon economy.

Asian countries face serious threats from the potential impacts of climate change on their economies, their ecosystems and their people. This combined with rising prices for food and fossil fuels make the case for low-carbon future. This is no longer a matter of choice - it’s an urgent necessity. With Asia leading the charge on massive investments in wind, solar, biomass and geothermal, it has the opportunity to become a major hub for clean energy investments.

— Athena Ballesteros, Project Manager, International Financial Flows and Environment

Global Investor Forum Showcases Rising Sustainable Businesses

Tracy Elsen — Tue, 12 Apr 2011 09:56:45 -0400

Ready to scale up, six environmental entrepreneurs from around the world make their case to investors in New York City.

The inaugural New Ventures Global Investor Forum, held last week in New York City, showed how environmental entrepreneurship can provide clean economic growth and investment opportunities in emerging markets. Six environmentally-focused entrepreneurs presented their business models to an audience of over 160 leading investors and businesspeople. The forum, themed “Green Opportunities in Tomorrow’s Markets,” showcased a wide range of companies, from Ouro Verde, a sustainable Brazil nut harvester working with Amazonian communities, to Sinen En-Tech, a Chinese industrial steam recycling company helping its industrial customers reduce energy and water use.

As the world’s population continues to rise, innovative small and medium enterprises (SMEs) will play an important role in conserving resources such as water, energy and biodiversity. Steven “Mac” Heller, Chairman of electric car company CODA Automotive and former Goldman Sachs banker, provided the keynote address. He spoke about the power of entrepreneurs to address critical environmental problems while simultaneously creating profitable businesses. “We have the ability to build companies that are sustainable for the environment and are themselves sustainable,” he said.

“We have the ability to build companies that are sustainable for the environment and are themselves sustainable.”

—Steven “Mac” Heller, Chairman of CODA Automotive

The role of environmental entrepreneurs will be especially critical in emerging economies because of the rapid economic growth expected in those markets over the next few decades. New Ventures entrepreneurs from Brazil, China, India and Mexico delivered presentations explaining their companies’ business models and their positive environmental and social impacts. They also highlighted significant competitive advantage. For example, Ecostar, a Chinese company that recycles and remanufacturers used photocopiers at a fraction of the price of new copiers, is the only company in China licensed to import used copiers.

All of the companies that attended the forum are ready to scale up, and are looking for international investment to implement their growth plans. Mexican biotechnology company AliBio plans to expand into ten international markets, while Indian renewable energy company Husk Power Systems aims to increase its number of rural power plants from 80 to 2,000 over the next five years.

Entrepreneur Manoj Sinha presents on Husk Power Systems, a company that brings affordable electricity to India’s rural villages. Photo credit: Saurabh Lall.

Following the presentations, a panel of experts questioned each company about its potential to provide environmental solutions and solid financial returns. The panel was composed of WRI President Jonathan Lash, Investors’ Circle CEO Suzanne Biegel, Namir Capital Management Partner Erik Mielke, and New Ventures Mexico Director, Rodrigo Villar. The Executive Director of the Aspen Network of Development Entrepreneurs (ANDE), Randall Kempner, served as moderator.

Panelists discussed the need for innovative financing options for SMEs in emerging markets as well as the value of strong support networks and business training opportunities. “When looking at companies in emerging markets, I always consider what the ecosystem of mentoring and coaching is on the ground,” said long-time impact investor Suzanne Biegel.

The New Ventures Global Investor Forum provided an opportunity for a diverse mix of traditional financial investors, impact investors and emerging market environmental entrepreneurs to come together in New York for the first time. To date, New Ventures’ investor forums have been held in each of its six countries of operation – but as the New Ventures Global Network continues to strengthen, so does its potential to inspire the debate about environmental entrepreneurship on an international stage.

The Global Investor Forum brought together a mix of traditional financial investors, impact investors, and emerging market entrepreneurs. Photo credit: Saurabh Lall

At the post-event reception, audience members were able to meet and speak to entrepreneurs about their businesses and potential investment opportunities. “My fellow entrepreneurs and I were surrounded by a unique atmosphere of supporting camaraderie,” said Francesco Piazzesi, director of Mexican sustainable housing company, Échale a Tu Casa. There were “people from all around the world, investment from many funds, goodwill, and an audience that believed in community, environment and entrepreneurship.”

New Ventures is the World Resources Institute’s center for environmental entrepreneurship – providing business development services to environmentally-focused small and medium enterprises (SMEs) in emerging markets. Visit the New Ventures website for more information.

Special thanks to our event sponsors, Citi Foundation and NYU Stern, and our Gold Sponsors, Alcoa Foundation and Fundación AVINA.

Environmental Entrepreneurs: Beijing Sinen En-Tech Saves Water with Steam Recycling

Tracy Elsen — Tue, 05 Apr 2011 11:14:47 -0400

With a new technique for reusing steam, a Chinese company helps industry save water and conserve energy.

China is currently suffering its worst drought in sixty years. The effects of drought have been exacerbated by increased water demand from China’s rapidly growing industrial sector. In some towns, villagers are not allowed to use water from certain rivers because it has already been designated for industry. As China’s economy grows, fueled largely by industry, its need for water will also increase. However, water is in short supply in China – the country has only one-fourth the global average amount of water per capita.

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A New Approach to Steam Recycling

Industries such as petroleum, steel and textiles regularly use steam for industrial production, consuming large amounts of water and energy in the process. Once steam has been used, it can often be polluted with metals and organic particles, and is therefore usually discarded as wastewater. Chinese entrepreneur Yucheng Yang decided to create a new technology to address water and energy wastage in industrial steam by filtering and then recycling it at high temperatures for reuse.

Mr. Yang previously focused on energy efficiency issues at a Chinese research institute, but felt that he could develop better solutions to China’s water and energy issues by starting his own company. “I am the type of person who likes to make things happen,” he says. In 2001, after developing two key technologies for advanced industrial steam recycling, Mr. Yang started his company, Beijing Sinen En-Tech.

Saving Water, Energy, and Money

Typically, in order to reuse industrial waste steam, the steam must be cooled for the treatment process and then reheated for reuse. This process is costly and is currently reliant on fossil-fuel based energy. Sinen En-Tech’s patented micro-filtration and membrane technology treats industrial waste steam at high temperatures, thus reducing energy costs and creating steam that is ready for reuse.

The process also saves money for its clients; although Sinen’s system costs between RMB 6 and 7 million to purchase and install, it saves customers approximately RMB 10 million in energy costs each year and pays for itself within seven to nine months. Since its founding, Sinen En-Tech has, in total, helped its clients save 25.2 million tonnes of water and 252,000 tonnes of coal that would have been used to reheat steam.

“The market potential for this technology is huge,” says Mr. Yang. “New opportunities continue to emerge on the horizon.” Sinen En-Tech technology can be applied to a variety of industries, including the oil-refining, steel and iron, thermal power, pharmaceutical, and alcoholic beverages. The majority of Sinen’s current oil-refining customers are from Sinopec, one of the three largest state-owned Chinese oil companies. According to Mr. Yang, the oil-refining industry alone produces over 3 billion tonnes of wastewater annually.

Innovation to Meet Demand

“Although we have solid financing, we still have a hard time meeting the demands of the market,” says Mr. Yang. As Chinese industry grows and resources become increasingly scarce, Mr. Yang sees the demand for his technology continuing to rise. One of the biggest challenges Sinen faces is how to balance fast growth versus the steady development of the company.

In order to meet the demands of the market, Sinen needs to continue to put money into research and development and into recruiting talented staff. The company is well-financed from Chinese sources, but is ready to seek international investment for its future growth plans, which include targeting an Initial Public Offering (IPO) in the next three to five years.

Mr. Yang will travel to New York City in April for the New Ventures Global Investor Forum to seek investment from a group of international investors. “Our vision in ten years time is to become a famous brand in the energy-saving space,” says Mr. Yang. In order to achieve this vision, Sinen will continue to develop innovative solutions to conserve water and energy, addressing two of China’s most critical environmental issues.

Special thanks to gold sponsors Fundación AVINA and Alcoa Foundation, and silver sponsors Halloran Philanthropies, Related Companies and Harmon Foundation for supporting the New Ventures Global Investor Forum. WRI’s New Ventures program is supported by Alcoa Foundation, Citi Foundation, Dutch Ministry of Foreign Affairs, Fundaci ón AVINA, Morgan Stanley, Rockefeller Foundation, UK Department for International Development, UPS Foundation, US Department of State - Asia Pacific Partnership, Zennström Philanthropies

Environmental Entrepreneurs: Mexico's 'Échale a Tu Casa' Builds Green Houses for Low-Income Families

Tracy Elsen — Mon, 04 Apr 2011 16:00:45 -0400

Houses crudely constructed from sheets of cardboard and aluminum start to appear just south of the Mexico-United States border and stretch across the Mexican landscape. These homes, which are often overcrowded, unstable and made of dangerous materials, provide stark visual evidence of Mexico’s severe housing shortage. The country needs nearly nine million more homes than currently exist, and experts expect the problem to increase over the next twenty years as the population of Mexicans aged 25-45, the key home-buying demographic, grows. The housing shortage leaves many low-income Mexicans unable to purchase a permanent home.

Housing for Communities

Francesco Piazzesi, a university professor and entrepreneur, provides housing to low-income Mexican families who otherwise would struggle to afford a home. His company, ¡Échale! a tu casa, works with Mexican communities to help them self-build new homes. By building their own homes, community members are able to have a new home in just one month, a process that, according to Piazzesi, could otherwise take 10-15 years.

Homes like this one in a community called ‘La Petrolera’ are often overcrowded, unstable and made of dangerous materials. They provide stark visual evidence of Mexico’s severe housing shortage. Photo credit: Échale

The houses built by Échale provide opportunities for local community members to move out of unsafe cardboard homes. “I was born in a carton board house, and so were my parents and children,” said one new homeowner in the Mexican town of Miacatlan. “The difference is that my children will never allow themselves to live in a carton board house because they know they can create something different.” Échale has already built or improved nearly 11,000 homes, and recently launched a social fund to lend money at affordable interest rates so more low-income families can afford Échale’s homes.

Making New Homes More Sustainable

Although Mexico desperately needs new homes, the construction of millions of houses could have potentially significant negative environmental impacts. Échale lowers the environmental impacts of its homes by including features such as rainwater harvesting, energy-efficient stoves and composting.

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Furthermore, houses are constructed from Échale’s patented building material, Adoblock, which serves as a natural insulation source and reduces reliance on heating and cooling devices. More than 90% of each Adoblock is made from local soil, which reduces waste and the use of environmentally harmful materials. The blocks are produced with an Adopress, an easily operated machine that can be used directly by community members building their own homes. Piazzeri believes that building environmentally-friendly houses is essential to ensuring Mexico’s sustainability. “Without a sustainable home, there wouldn’t be a sustainable society,” he says.

From Non-Profit to ‘Business with Impact’

Piazzeri initially founded Échale as a non-profit. Several years ago, he began working with WRI’s center for environmental entrepreneurship, New Ventures which provided Échale with a mentor from Ernst and Young in Mexico. “The first lesson New Ventures taught us was that we needed to be a for-profit business,” said Piazzeri. “At first our mentor was a shock, and a real lesson in humility.”

Échale’s staff worked with their New Ventures mentor to remold their operations into a for-profit company. Although Échale had to transform its entire model, after a year of hard work the former non-profit emerged as a company with a business plan, clear goals and targets, and newly hired staff boasting expertise in social business. “While I felt good about what I was doing as a non-profit, we learned that as a business we could make real social impact,” said Piazzeri.

More than 90% of each Adoblock is made from local soil, which reduces waste and the use of environmentally harmful materials. Photo credit: Échale

Due to the large market for affordable housing in Mexico, Échale now holds strong potential for future growth. However, in order to keep increasing their social housing production capacity, Échale needs investment. Piazzeri will travel to New York City in April for the New Ventures Global Investor Forum, where he will present Échale’s business model to a group of international investors. Piazerri plans to expand Échale by implementing a social franchise model, in which communities that have already self-built homes will be able to assist and train other communities in the process. This model will build 120,000 houses in Mexico over the next three years. With investment, Échale will be able to serve a larger portion of the low-income housing market with its affordable, environmentally-friendly houses.

Environmental Entrepreneurs: Mexico’s AliBio Harnesses the Power of Microbes

Tracy Elsen — Wed, 30 Mar 2011 10:22:20 -0400

A Mexican company uses microbes to reduce chemicals used in agriculture and water treatment.

What do bacteria have to do with clean water and sustainable agriculture? Mexican entrepreneur Alfredo Suárez Rivero has built his business, AliBio, around the ability of bacteria and other microbes to treat wastewater and reduce the use of polluting chemicals in the agriculture and aquaculture industries. AliBio addresses issues such as the overuse of antibiotics in fish farming, a practice which leads to the development of antibiotic-resistant bacteria in both fish and humans.

The Microbe Market

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Suárez, who previously owned construction companies, became interested in environmental issues in 1996 and found his entrepreneurial niche. He went back to university to study environment and management, and discovered the many uses for microbes. “The environmental market was just beginning in Mexico at that time, and I saw great opportunity there,” he says. “Now, sustainable food and clean water are a priority worldwide. There is nothing more forward-looking than this microbe market.”

During his studies, Suárez became fascinated with the ability of microbes to replace chemicals in wastewater treatment, agriculture and aquaculture, and consequently found the focus for his next entrepreneurial venture. These microorganisms can provide nutrients to depleted soils, reducing the need for fertilizer, and protect fish from disease, reducing the need for antibiotics. They can also remove contamination from wastewater.

“Now, sustainable food and clean water are a priority worldwide. There is nothing more forward-looking than this microbe market.”

—Alfredo Suárez Rivero

Suárez initially tried to build his microbe business as an environmental arm of a chemical distribution company, but after several years realized that he needed to spin off his own company. In 2002, he wrote a proposal to purchase the division that he had created and crafted a business plan for AliBio, his new company. He saw in AliBio not only the opportunity to make profits, but also the chance to work on critical environmental issues.

Providing Solutions, Reducing Chemicals

“Water is not renewable unless we take measures to make it so,” says Suárez. “In the last century, we abused chemicals in many industries, and now we have a problem that we need to address.”

Agriculture: AliBio combines different microbial strains to create products for agriculture that restore the microbial balance of soils and reduce the need for fertilizer by 10-25%.
Aquaculture: When used in aquaculture, the microbial products degrade organic compounds and toxic bacteria to improve water quality. Improved water quality lessens the need for water pumping, which reduces energy use and water exchange costs. Microbes also control diseases in farmed fish, and increase the quality of harvested aquaculture produce.
Wastewater Treatment: AliBio biotechnology can also be applied to water treatment by using microbes to eat substances in wastewater.

Microbes are non-toxic and non-carcinogenic, and can be used to treat wastewater. Photo credit: Alibio

All of AliBio’s products are non-toxic and non-carcinogenic, unlike some of the fertilizers and chemicals traditionally used in agriculture and water treatment.

A Chilean salmon producer came across AliBio via the Internet in 2008 after losing one third of his salmon production due to overuse of antibiotics. The producer, faced with a collapse of his salmon stock, began to use AliBio products as an alternative to antibiotics to protect his fish from disease, and his salmon production recovered. Suárez expects that many new customers in similar situations will increasingly look to AliBio for solutions.

International Expansion

Biotechnology has become a competitive field, but AliBio holds an advantage over other companies around the world because it works with over 2,000 strains of bacteria, while many of its competitors work with only six to ten strains. Suárez’s next goal is to take AliBio and its many strains of bacteria to a more global market. He has created a business plan to expand AliBio’s presence into six countries, including the United States. In order to enter other markets however, AliBio needs increased investment and exposure in international markets. Suárez will travel to New York City in April for the New Ventures Global Investor Forum, where he will present AliBio’s business model to a group of international investors. Suárez will look to make international contacts and secure investment for his international growth plans. “There is still a large gap in the environmental microbe industry,” says Suárez. “We hope to be the ones to fill that gap, especially now that we are going global.”

Alfredo Suárez Rivero will be attending the New Ventures Global Investor Forum: Green Opportunities in Tomorrow’s Markets in New York City on April 6 along with five other innovative New Ventures environmental entrepreneurs. Whether you are looking for a potential investment deal or hope to be inspired by the power of entrepreneurship to help solve our environmental challenges, join us for the Global Investor Forum. Visit the New Ventures website for more information and registration information.

Special thanks to all of our event sponsors and in particular our Gold Sponsors Alcoa Foundation and Fundación AVINA.

Environmental Entrepreneurs: China’s Ecostar Puts Used Copy Machines Back to Work

Tracy Elsen — Thu, 24 Mar 2011 17:26:50 -0400

A company selling refurbished photocopiers creates jobs while reducing electronic waste.

When Chinese entrepreneur Gao Guoqiang visited warehouses in the United States that stored endless stacks of discarded photocopiers, he saw past the piles of trash to a potential business opportunity. Mr. Gao realized that he could refurbish these copiers and sell them to small Chinese businesses at a fraction of the cost of a new copier. He also recognized that his business model could help address China’s growing electronic waste (e-waste) problem. “I decided to make a career out of this business for life, both from a commercial perspective and a social responsibility perspective,” said Mr. Gao.

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Reducing E-Waste in China

China serves as a dumping ground for many of the world’s unwanted electronics. As consumers and businesses upgrade to new models, their discarded products are shipped to China, often illegally. It is cheaper to break down e-waste in China than it is in other parts of the world due to weaker regulations, but the lack of strict guidelines also means that dangerous chemicals and toxins end up in China’s water and air.

Mr Gao’s company, Ecostar, now holds the only license in China to import used copiers. For every 100 machines Ecostar refurbishes, the company reduces e-waste—which contains numerous highly toxic substances—by 20 tons. In 2010, Ecostar refurbished 25,000 copiers and reduced e-waste by 5,000 tons. Refurbishing an Ecostar copier is also more water-efficient, as Ecostar’s refurbishment process requires only half the amount of water as production of a new copier.

“We have had customers come to us and tell us that their lives have been completely changed by our low-cost machines.”

—Gao Guoqiang

Creating Economic Opportunities

Ecostar is able to sell its refurbished copiers for approximately 1/3 to 1/5 the price of a new copier. This affordable pricing not only gives Ecostar a competitive advantage, but also allows the company’s customers to access an essential business tool. According to Mr. Gao, China’s 100,000 printing shops and 600,000 shops that specialize in express digital copying are mostly small businesses that would like to meet China’s growing demandfor color and digital printed products. High equipment costs and lack of access to credit often means they struggle to do so. Ecostar’s low-priced copiers provide a solution.

“We have had customers come to us and tell us that their lives have been completely changed by our low-cost machines,” said Mr. Gao. One of Ecostar’s customers began his copy shop in 2003, and ultimately bought 20 refurbished copiers. He now owns two shops with revenues exceeding $1.5 million each year. Ecostar has created thousands of job opportunities in China, both within its own company and by jumpstarting its customers’ businesses.

Investment for Growth

Gao Guoqiang, founder of Ecostar

As demand for color digital printing in China continues to increase, so do the opportunities for Ecostar. The company’s only competitors are illegal importers of photocopiers. Ecostar obviously holds an advantage over these peers with its reputation for quality products and customer service and strong brand recognition. As a result of its success in its home market, Ecostar is also looking to scale its business by moving into overseas markets.

In order to take advantage of these growth opportunities, Ecostar needs investment. Mr. Gao will travel to New York City in April for the New Ventures Global Investor Forum, where he will have the opportunity to present Ecostar’s business model to a group of international investors. He hopes to secure additional investment for his expansion plans. The company’s growth potential is strong; while the annual growth rate for photocopier sales is 10-13% in China, Ecostar’s annual growth rate currently exceeds 50 percent. For every additional photocopier Ecostar refurbishes, one less copier ends up in China’s e-wasteland.

Gao Guoqiang will be attending the New Ventures Global Investor Forum: Green Opportunities in Tomorrow’s Markets in New York City on April 6 along with five other innovative New Ventures environmental entrepreneurs. Whether you are looking for a potential investment deal or hope to be inspired by the power of entrepreneurship to help solve our environmental challenges, join us for the Global Investor Forum. Visit the New Ventures website for more information and registration information.

Special thanks to all of our event sponsors and in particular our Gold Sponsors Alcoa Foundation and Fundación AVINA.

MEDIA ADVISORY: Global Investor Forum 2011 at NYU Stern

Lauren Zelin — Thu, 17 Mar 2011 12:44:08 -0400

Six environmentally focused companies from emerging markets to present to investors;

Keynote by Mac Heller, Executive Chairman of CODA Automotive, panel discussion, and more

The Global Investor Forum 2011 in New York City will showcase six leading environmental entrepreneurs from Latin America and Asia to international investors and business leaders. The forum, hosted by New Ventures, the World Resources Institute’s (WRI) center for environmental entrepreneurship, in partnership with NYU Stern School of Business and Citi Foundation, will introduce high-growth, environmentally focused businesses from Brazil, China, India and Mexico to more than 150 investors, business leaders, and philanthropists. Since 1999, New Ventures has facilitated $203 million of investment into the companies it supports.

The event will feature leading voices, including keynote speaker Steven ‘Mac’ Heller, Executive Chairman, CODA Automotive; Pamela Flaherty, President & CEO, Citi Foundation; Jonathan Lash, President, WRI; and Jill Kickul, Director, Berkley Center for Entrepreneurship & Innovation, NYU Stern.

The presenting companies include: Alibio (Mexico), ¡Échale! a tu casa (Mexico), Ecostar (China) , Husk Power (India), Ouro Verde (Brazil) and Sinen En-Tech (China).

See the complete agenda: here

WHAT:
New Ventures Global Investor Forum 2011 in New York City

WHO:
Steven ‘Mac’ Heller, Executive Chairman, CODA Automotive
Pamela Flaherty, President & CEO, Citi Foundation
Kirsty Jenkinson, Director, Markets & Enterprise Program, WRI
Randall Kempner, Executive Director, Aspen Network of Development Entrepreneurs (ANDE)
Jonathan Lash, President, WRI
Rodrigo Villar, Director, New Ventures Mexico
Jill Kickul, Director, Berkley Center for Entrepreneurship & Innovation, NYU Stern

WHEN:
Wednesday, April 6, 2011

TIME:
3:30 – 7:00 p.m. EST
Followed immediately by a wine & cheese reception

WHERE:
NYU Stern School of Business, Henry Kaufman Management Center
44 West Fourth St, New York, NY

RSVP TO:
press@wri.org
Note: Admission fee is waived for accredited media

For more information or to set-up interviews, contact: Michael Oko, Tel. (202)729-7684; moko@wri.org

Environmental Entrepreneurs: India's Husk Power Systems Converts Rice Husks into Energy

Tracy Elsen — Thu, 17 Mar 2011 09:42:58 -0400

A renewable energy company provides clean electricity and job opportunities to India’s rural poor.

Renewable energy entrepreneur Manoj Sinha grew up in Bihar, one of India’s poorest states, where 85% of the 80 million inhabitants are not connected to the electric grid. He spent his childhood studying by candlelight, before leaving Bihar to earn degrees in electrical engineering and business. Sinha’s early experiences, combined with the knowledge that his cousins continued to live in Bihar without a reliable light source, inspired him to start Husk Power Systems, a business that brings affordable electricity to India’s rural villages.

Turning Waste Into Light

Read more profiles of Environmental Entrepreneurs:

Sinha, along with four friends from university - Gyanesh Pandey, Ratnesh Yadav and Charles W. Ransler, decided to create a clean, renewable and inexpensive source of electricity for Bihar’s villagers. Pandey and Yadav had also grown up in Bihar, and saw electricity as a critical element in addressing poverty in their home state. “Access to better lighting improves people’s lives”, says Sinha. “Students will not study in insufficient lighting, but that changes with electricity”.

Because so many inhabitants live in poverty in rural villages along Bihar’s “Rice Belt,” very little ever goes to waste, with the exception of rice husk, a major rice byproduct. Husk Power’s founders devised a method of using this husk to produce clean, affordable electricity for local villages.

Electricity from Husk Power Systems costs less than half of what many families previously paid for kerosene lamps, and has far fewer environmental and health hazards.

To produce electricity, piles of rice husk are fed into small biomass gasifiers, where gas produced from the husks is used to fuel an internal combustion engine. The operation’s byproduct is rice husk ash which can be sold for use in concrete. Although using rice husk ash in concrete produces emissions, it decreases the amount of high-carbon Portland cement used, and thus the overall emissions of concrete production. Electricity generated from the plants is then sold to families in surrounding villages at the cost of about $1.75 a month. This price is less than half of what many families were previously paying for kerosene lamps, and has far fewer environmental and health hazards than those created by burning traditional fuel sources such as kerosene, wood or dung.

Simplifying the Electricity Process

To lower costs, Husk Power uses bamboo poles to hang wires overhead. Photo credit: flickr/Acumen Fund

Husk Power can offer power to rural Indians at low prices because they have focused their research and development investment on simplifying electricity production and transmission as much as possible. “What we do well is combine many pieces together in a way that works efficiently and lowers overhead and expenses,” says Sinha. For example, when wiring a village for electricity, Husk Power uses readily available and inexpensive bamboo poles to hang wires overhead instead of spending money and time to dig holes and run wire underground.

The simplification of the electricity model also allows Husk Power to employ local villagers, who do not need training beyond that provided at Husk’s local facility. The company has employed over 300 local residents to run its current sixty plants producing electricity, and intends to train 2,500 more people in the next two years.

Growing beyond Bihar

The market opportunity for clean electricity serving India’s rural poor was recently estimated at $2 billion by the World Resources Institute and the Centre for Development Finance at the Institute for Financial Management and Research (CDF-IFMR). Sinha and his colleagues now use this figure as a benchmark for their own growth. They aim to grow their business to bring clean electricity to Indian villagers beyond Bihar, and are planning 2,000 new plants that will serve millions of customers by 2014.

Manoj Sinha. Photo credit: Husk Power Systems

In order to continue their expansion, Husk Power needs investment to open additional plants and train staff. Sinha will travel to New York City in April for the New Ventures Global Investor Forum, where he will present Husk Power’s business model to a group of international investors. He hopes that new investors will challenge Husk Power to grow even further than they are currently planning. “We need aggressive people to push for extremes,” he says. “We need people to say, ‘So you’re planning 2,000 new plants, why not 5,000?’”

Manoj Sinha will be attending the New Ventures Global Investor Forum: Green Opportunities in Tomorrow’s Markets in New York City on April 6 along with five other innovative New Ventures environmental entrepreneurs. Whether you are looking for a potential investment deal or hope to be inspired by the power of entrepreneurship to help solve our environmental challenges, join us for the Global Investor Forum. Visit the New Ventures website for more information and registration information.

Special thanks to all of our event sponsors and in particular our Gold Sponsors Alcoa Foundation and Fundación AVINA.

Environmental Entrepreneurs: Ouro Verde Brings Green Business to the Amazon

Tracy Elsen — Wed, 09 Mar 2011 09:35:44 -0500

A company sourcing Brazil nuts creates both environmental benefits and solid profits.

The Brazilian state of Mato Grosso (“tall trees”) is named for the majestic Amazonian rainforests that cover its northern sections. Mato Grosso, however, has one of the highest rates of deforestation in Brazil.

Brazilian entrepreneur Luis Laranja believes that the state’s Brazil nut trees, combined with the power of small business, can help stop this deforestation. Laranja, a longtime environmental activist, left his job as a professor eight years ago and moved to the Amazon rainforest to start Ouro Verde, a sustainable Brazil nut company. Ouro Verde buys, processes and sells high-quality Brazil nuts and products, including Brazil nut meal, extra virgin oil, and butter.

Read more profiles of Environmental Entrepreneurs:

The Brazil Nut Business Model

Laranja’s company is transforming the living rainforest into a source of income for Mato Grosso’s rural residents. “I really believe that what we have to use to preserve the forests is the market,” he says. “If the forest does not provide money for the people, it will be impossible to save it.”

Ouro Verde creates special relationships with local indigenous and small holder farmer communities that collect and supply Brazil nuts. By eliminating the high profit margin “middle man” between the company and local suppliers, Ouro Verde can pay its suppliers fair wages and thus make the living forest more valuable than lumber exploitation or landclearing.

I really believe that what we have to use to preserve the forests is the market. If the forest does not provide money for the people, it will be impossible to save it.

—Luis Laranja

Ouro Verde also provides training to those involved in Brazil nut collection to help improve collection, storage, and transportation, ensuring the company receives premium quality and suppliers receive a premium price. Thanks to its practices, the company earned organic certification for its entire product line from Ecocert Brasil, including certificates that address the specific requirements of the Brazilian, European and American markets.

The economic value provided by Brazil nut trees also protects the surrounding trees. Brazil nut trees produce at their highest levels when they live in healthy, primary forests. Therefore, nut collectors are incentivized to protect entire forests surrounding Brazil nut trees in order to access the largest, best-quality crops.

Investment for Expansion

Brazil nut trees produce at their highest levels when they live in healthy, primary forests. Photo credit: Ouro Verde

Ouro Verde’s success so far has led the company to explore relationships with new communities and consider expanding its operations to other products, such as the acai berry. It currently cannot fill all of the orders it receives, meaning expansion at some level is necessary. “If I had double the amount of nuts we have today, I would sell them easily,” says Laranja. He currently supplies nuts to large Brazilian chains such as Wal-Mart Brazil, Zaffari and Bunge, but says he frequently receives large order requests from international customers that he cannot accommodate.

In order to expand, Ouro Verde needs investment to improve the capacity of its factory and process more raw products. The company has received investment from within Brazil, but is ready to receive additional investment from beyond its home country. Luis will travel to New York City in April for the New Ventures Global Investor Forum, where he will have the opportunity to present Ouro Verde’s business model to a group of international investors.

Luis Laranja

Environmental Benefits and Solid Profits

Ouro Verde estimates that it has already protected 1.3 million hectares of Amazonian forest. Laranja hopes that this number will grow as his company does, proving it can create both environmental benefits and solid profits. “When I first got involved in the environmental movement thirty years ago, everyone thought I was crazy,” he says. “No one had ever heard of sustainable development then. And when I started my company, it was just a crazy idea.” Now, rates of deforestation in Brazil are decreasing each year, aided by the efforts of Brazilian environmental entrepreneurs such as Luis Laranja.

Luis Laranja will be attending the New Ventures Global Investor Forum: Green Opportunities in Tomorrow’s Markets in New York City on April 6 along with five other innovative New Ventures environmental entrepreneurs. Whether you are looking for a potential investment deal or hope to be inspired by the power of entrepreneurship to help solve our environmental challenges, join us for the Global Investor Forum. Visit our website for more information and registration information.

Special thanks to all of our event sponsors and in particular our Gold Sponsors Alcoa Foundation and Fundación AVINA.

MEDIA ADVISORY: WRI Announces Companies for Global Investor Forum 2011

Michael Oko — Wed, 02 Mar 2011 11:08:41 -0500

Five Innovative, Environmentally-Focused Companies from Emerging Markets to Present at NYU Stern School on April 6, 2011

Five companies were announced today to take part in the first-ever Global Investor Forum from New Ventures, the World Resources Institute’s (WRI) center for environmental entrepreneurship. The forum, held in partnership with New York University Stern School of Business and the Citi Foundation, will showcase high-growth, environmentally-focused businesses from Brazil, China, India and Mexico to more than 150 investors, business leaders, and philanthropists. The forum will take place on Wednesday, April 6, 2011, at NYU Stern in New York City.

The selected companies represent a handful of the 255 enterprises that New Ventures has supported over the past 11 years through connections to investors and business advisory services to help them manage growth, attract investment capital, and communicate their financial, environmental, and social performance. Since 1999, New Ventures has facilitated $203 million of investment capital into these enterprises.

“While these companies represent diverse locations and sectors, they are united in providing much-needed solutions to critical environmental problems in some of the world’s fastest-growing emerging economies,” said Kirsty Jenkinson, director of the Markets and Enterprises Program at WRI. “Environmental entrepreneurs can provide attractive investment opportunities while achieving the sustainable economic growth that is essential for our future.”

The chosen companies underwent a rigorous screening process, including evaluations by panels of investment and environmental experts. Each company boasts a strong financial performance, a solid management team, and potential for future growth. Companies were also selected based on their ability to provide solutions to some of the world’s most pressing environmental problems through innovative technologies and business models.

The Global Investor Forum 2011 companies are:

¡Échale! a tu casa (Mexico) provides sustainable self-building community development through social housing production for low-income families, who are offered significant price advantages.
Ecostar (China) remanufactures used photocopy machines using exclusive technology, and re-sells the machines, which significantly reduce e-waste, at one-sixth the price of a new copier.
Husk Power (India) is a power generation and distribution company serving off-grid rural Indian villages, a market estimated at $2.04 billion per year.
Ouro Verde (Brazil) works closely with Amazonian village communities to sustainably harvest Brazil nuts, which the company then sells whole or processes into premium products for the Brazilian market.
Sinen En-Tech (China) produces waste treatment technologies for industrial boiler system steam. Its patented micro-filtration and membrane systems purify used steam into high temperature water, which is reused or safely disposed of without further treatment.

To get more information about the forum and register, visit: www.new-ventures.org.

Clean Power to the People

Tue, 01 Mar 2011 10:39:38 -0500

Bringing clean energy to India’s rural poor consumers creates cascading economic and social benefits, in addition to profits.

This piece originally appeared in The Economic Times (India).

The village of Rupahi, home to a small community of sugarcane farmers in Bihar, is too isolated to connect to a traditional electric grid. For cooking and lighting, its residents have traditionally paid — with cash or their time — for whatever was available. The options — kerosene, firewood, dung or diesel generators — left their houses dim and full of smoke. Many of the country’s 114 million poor rural households, comprising nearly 60% of the population, struggle with similar issues. Currently, 45% of the country’s rural poor cannot connect to a reliable source of energy. They spend an estimated $4.86 billion (INR 224 billion) each year on energy, mainly for fuels that are unreliable, harmful to the environment and hazardous to their health.

Yet, new research in a report, Power to the People: Investing in Clean Energy for the Base of the Pyramid in India, shows that demand for energy presents an opportunity for green business. If cleaner energy alternatives were available, there is a market willing to pay for them, even in very poor communities. The Washington-based World Resources Institute and the Centre for Development Finance at the Institute for Financial Management and Research in Chennai estimate the potential market for clean energy products and services among India’s rural poor at $2.11 billion a year (INR 97.28 billion). This conservative assessment of the market potential signals a huge opportunity for consumers and clean energy companies alike. Companies surveyed for the report that supply clean energy products and services to the rural poor have seen annual gross revenue grow by an average of 36% since 2004. As revenues have grown, so have the number of rural villagers with access to clean and reliable energy.

A new perspective that regards the rural poor as a customer base demanding functional energy solutions signals a very different approach to rural development.

Installed at the community level, small hydro and biomass gasification can supply electricity to an area not covered by the grid, and solar lanterns and energy-efficient stoves can replace ‘dirty’ fuels like kerosene and wood. In Rupahi, villagers now get their power from Husk Power Systems (HPS), a company that converts rice husk into electricity via 35-100 kW mini power plants. HPS provides villages in the country’s rice belt, like Rupahi, with cost-effective and environmentally-friendly electricity.

According to Gyanesh Pande, CEO of HPS:

At first, only 10 of the 32 households in Rupahi made the decision to take electricity from HPS. By the time the electric cables were being laid out, all 32 households had applied for HPS’ electricity services.

A new perspective that regards the rural poor as a customer base demanding functional energy solutions signals a very different approach to rural development. But it is an approach that, when combined with a focus on expanding clean energy and attention to business-NGO-government collaboration on creating an enabling policy and infrastructure environment, creates cascading economic and social benefits in addition to profits. Reliable electricity acts as an economic multiplier allowing businesses to stay open later and use refrigeration to keep products fresh.

In one small Indian market, a company rents solar lanterns to street vendors for a few rupees. According to Jigyesh, a vegetable vendor in Karnataka’s Hassan village:

The solar lanterns allow me to keep my stall open past dark and cost only INR 150 a month. The kerosene lantern I used earlier gave poor light and cost almost INR 500 a month. The solar lantern also produces less heat, so the vegetables stay fresh longer.

Clean energy companies have the technologies in place that provide strong potential for growth, but need to first overcome barriers in distribution and pricing of their products to be accessible to the poor.

Investors can assist the market’s growth by providing clean energy companies looking to scale with patient capital that will allow companies to improve distribution and develop innovative financing mechanisms, enabling consumers to purchase their products.

Intermediaries such as WRI’s New Ventures initiative for environmental entrepreneurship and CDF’s Rural Market Insight group, which works with HPS and other clean energy companies in India, can connect investors with promising emerging businesses in the sector. With the help of patient capital, clean energy entrepreneurs will have a significant opportunity to grow their markets and create profits while also providing rural Indians with access to clean, reliable and environmentally-friendly electricity.

Jamshyd Godrej is chairman of the board of Godrej & Boyce Manufacturing Co., and a member of WRI’s Board of Directors. This post was co-authored by Jessica Wallack, former director of the Centre for Development Finance.

Growing Optimism for “Impact Investing”

Tracy Elsen — Tue, 07 Dec 2010 18:35:30 -0500

Is it possible to do good in the world while also making a profit? A growing group of investors, known as “impact investors”, believe that it is.

This piece is cross-posted from the New Ventures website.

Impact investors aim to make positive social or environmental gains alongside profits through their investments. A recent report by J.P. Morgan and the Rockefeller Foundation estimates the value of this emerging impact investing sector to be between $400 billion and $1 trillion, with profit potential between $183 billion and $667 billion over the next decade. According to the report, “Impact Investments: An Emerging Asset Class”, impact investing constitutes a new asset class.

The report analyzes opportunities in five impact investing sectors – affordable urban housing, rural access to clean water, maternal health, primary education, and microfinance – that serve the global Base of the Pyramid (BoP) population. The BoP is comprised of those who earn less than $3,000 annually.

BoP markets are typically underserved by traditional business, which may exclude this population from being considered as part of a potential customer base. However, WRI research has shown that the BoP population will often manage its finances to buy affordable products or services improving their productivity and reliability of income.

This market introduces operational challenges to otherwise proven business models. For example, the challenges often require innovative approaches to accommodating unreliable income streams or delivering products and services to remote rural areas. While government-led or philanthropic solutions can go part of the way, impact investment can further help capital to flow to profitable businesses with positive environmental and social benefits.

Impact investing is gaining increasing traction among a wide range of debt and equity investors, including pension funds, family offices, private wealth managers, foundations, individuals, commercial banks and development finance institutions. Many impact investors choose to focus either in emerging markets or in developed markets. Part of the reason for this specialization is the significant regional differences that require local expertise. But another driver is investors’ value sets: some prefer to help the world’s poorest in emerging economies; others prioritize their local neighbors in need.

Within the developing world, the growing suite of impact investors is focusing on particular regions and sectors. Gatsby Charitable Trust and the Bill & Melinda Gates Foundation direct some of their investment capital to positively impact the lives of smallholder farmers in sub-Saharan Africa. Gray Ghost Ventures, Acumen Fund, and Omidyar Network all have programs that actively invest in alleviating poverty by financing innovations directed at India’s low-income populations.

These trends, set against the backdrop of climate change, global population growth and finite resources, motivated New Ventures México to launch the first Latin America Impact Investment Forum. The forum, which will be held in Mérida, Mexico from February 2-4 2011, is designed to foster investments and alliances that will support impact investing initiatives throughout the region. It will provide an opportunity to celebrate the accomplishments and progress that the private sector and the investment community have made towards sustainable economic development.

New Ventures Mexico is part of the New Ventures Global Network, the World Resources Institute’s (WRI) center for environmental entrepreneurship, and is a leader in Mexico in promoting the growth of businesses that generate positive economic, environmental, and social impacts.

For more information about the Latin America Impact Investment Forum please visit www.inversiondeimpacto.org or write an email to inversiondeimpacto@nvm.org.mx

Leticia Gasca is the Manager of Public Relations and Communication at New Ventures Mexico.