E+Co Enterprise Development Services (EDS)

Currently, E+Co’s funding to support its EDS program comes from grant funding provided by foundations, development banks and private donations. It is estimated that EDS expense is US $.30 of every US $1 invested. The economic recession which began in 2008 has reduced available funding to the organization, albeit with no cutback in our EDS service to date, but we will require new funding sources to ramp up the provision of EDS.

In order to increase the number of entrepreneurs served via EDS, E+Co projects that three additional staff would facilitate significant increases in the number of entrepreneurs trained, and the number of entrepreneurs to receive investment. The Africa and Central America regions are most in need of this support.

We are seeking grant funding to hire these three staff for a two year period, projected funding required is $510,000 ($85,000 per staff per year).

Without this funding, we will continue to provide EDS, but will not be able to significantly increase the training, support and subsequent investment that the markets require.

There will always be some need for grant support to provide EDS to these early stage entrepreneurs – few, if any, local institutions are presently willing to pay for this. Yet it remains critical to the markets because of the impact on local economies. Increasingly there is recognition of the power of the entrepreneur, especially in emerging markets, “which are building and redefining industries that satisfy domestic demand and generate export income—not to mention create employment for the rapidly growing younger population.” (Harvard Business Review, September 2010).

In the US, these services are generally available at no cost to entrepreneurs via academic institutions, SBA-associated organizations and others, all of which generally have some government-funded support. In the developing world, local government organizations are not providing this funding, it takes intermediaries like E+Co, with non-local private funding to support this work.

This type of support should receive public support, as it does in the US, where it has been effectively catalyzing private investment for some time. At some point, developing world governments may fund these services, but that is not yet the case, and so private funding for intermediaries like E+Co remains critical. The impact of these services, however, is already catalyzing private investment, and that will only increase as more enterprises launch, grow and succeed.

Any loss in funding will reduce the amount of EDS provided and will lengthen the process for entrepreneurs to develop their business plans. However, EDS is critical to E+Co’s mission, and it will continue to allocate resources, even if more limited than at present, to carry out these programs. The “Great Recession” has caused shortfalls in sourced funding, although to date it has not negatively impacted our ability to provide EDS, but without new funding beginning in 2011, we will start to feel the impact.

E+Co has always provided these services at no cost to entrepreneurs, as few could afford to pay for them in these developing world economies. We are evaluating a “fee” based system, which we are loath to implement but may become necessary.

We are working to reduce the costs of providing EDS, currently estimated to cost US $.30 per US $1 invested. In order to take advantage of internet and telephony technologies, we are developing an online, interactive, mentor-supported training platform called the “Invisible Schoolhouse” (see separate submission to the G20 SME Finance Challenge as a “solution”). The launch of this platform is intended to accelerate the learning process and enable entrepreneurs to spend some time in independent learning, although E+Co regional staff will continue to spend face-to-face time with entrepreneurs in traditional EDS.

We continue to evaluate other sources of funding to facilitate and grow the EDS platform, including government contracts similar to the USAID FENERCA program, implemented by E+Co in 2000.

Because EDS is carried out by regional E+Co offices staffed locally, we have never faced any backlash from local institutions in doing this work, but should local governments and/or other institutions place restrictions on our abilities, as a US based non-profit, to carry out this work, our solution could be impacted.

Should local institutions in the developing world begin to provide the same level of Enterprise Development Services that E+Co provides, we believe this would only increase the demand for these services overall, and therefore drive more entrepreneurs to providers like E+Co.

The demand for clean energy as a solution to energy poverty and climate change has been increasing, and the success of the ‘clean energy enterprise’ solution is recognized by increasing numbers of institutions. E+Co has traditionally focused on the provision of services and capital to smaller scale enterprises that serve rural and peri-urban regions, as that is where there have been significant gaps, and where E+Co’s role in these markets has have the greatest impact. We will maintain a focus on providing EDS to early stage entrepreneurs, but we are seeing increasing opportunities at scale. E+Co’s deep seated knowledge of clean energy enterprise will facilitate the growth in impact the organization can have both in the EDS it provides to entrepreneurs at varying levels of growth, as well as investment.

E+Co’s success has resulted from a singular focus on clean energy, but we do see opportunities to provide EDS to other sectors, especially those with a connection to clean energy, such as agriculture, health, sanitation, water, etc. We have already entertained opportunities to provide EDS to facilitate, for example, distribution of solar refrigerators for clinics, as just one example. Of our own choosing, we have been conservative in our growth to date, but the markets increasingly are demanding we scale to new levels of impact. We will, however, not deviate from our core work in clean energy.

Geographically, E+Co has been selective in determining the countries in which it operates, which limits the provision of EDS. Because EDS has traditionally required much personal interaction, that places great importance on the knowledge of local markets, we have limited the provision of EDS and Capital to approximately 21 markets to date. We will continue to evaluate expansion into new countries and regions opportunistically, although we continue to explore partnerships which would enable us to work with organizations already familiar with a region or market. As clean energy becomes a greater consideration for development, we expect that we will increase the geographic regions where we will expand our influence.