Provide empirical evidence of your proposed solution's success/impact at present. If your project is in the idea phase, please provide evidence that speaks to its potential impact
Over the past decade, New Ventures has supported over 255 environmental SMEs and facilitated the transfer of over $203 million to the sector. Between 2009 and 2010, we showcased over 40 SMEs to investors and helped facilitate over $20 million in investment to environmental SMEs. Our goal is to turn environmental enterprise into a viable and recognized asset class, just like microfinance has become over the past 30 years.
We support profitable SMEs that have a specific mission to produce positive benefits for the environment and society. Our portfolio is composed of SMEs in the sectors of renewable energy (17%), pollution prevention and waste reduction (22%), energy efficiency (18%), natural resource conservation (8%), sustainable land use (19%), biodiversity conservation (8%) and water resource management (8%). In addition, many New Ventures enterprises offer solutions that help under-served people out of poverty. Approximately 23% of our enterprises have received investment
We also work to drive more systemic change in the economy by conducting investor-targeted research on important sectors, and help financial intermediaries develop new or improved financing mechanisms to drive more capital towards environmental SMEs. In 2009, we analyzed the investment and growth potential of the Energy Service Companies (ESCOs) in India, using primary data from the India ESCO industry. Realizing that one of the primary barriers to the growth of the ESCO industry has been a lack of access to financing, we worked with India’s 4th largest bank, the Industrial Development Bank of India (IDBI) to develop a new financial product targeted at the small and medium sized ESCOs in India.
We believe that investment capital is necessary, but not sufficient for the growth of SMEs. Different forms of support are needed by environmentally and socially responsible enterprises to flourish. A key pillar of our work is to form a community of support for environmental enterprises in each of the six countries where we operate. New Ventures builds in-country support networks for environmental enterprises, by developing investor networks (composed of various types of investors, including debt providers, angel investors, venture capitalists, socially responsible or “impact” investors), mentoring and business advisory support, media relations to generate public awareness, and influencing policy-makers through research and demonstrated impact.
In India, we founded the Green Investor Network, composed of a range of investors interested in environmental sectors, while in Colombia and Indonesia we helped facilitate the creation of the countries’ first angel investor networks specifically focused on environmental and social SMEs. In Mexico and India, we have created coaches’ networks, composed of the countries’ most prominent business leaders who provide pro-bono mentoring to environmental SMEs. In Mexico we contributed significantly in building the country’s national network of enterprise acceleration, in collaboration with the country’s Secretary of the Economy.
How many firms do you expect to reach?
Since 1999, New Ventures has supported over 255 environmental SMEs and helped facilitate over $203 million in investment. We aim to provide one-on-one mentoring, business advisory and investment facilitation support to over 40 SMEs each year.
What is the volume of private SME finance you aim to catalyze?
By following a multi-faceted approach of working with SMEs and investors, developing new or improved financing mechanisms for environmental SMEs, facilitating the creation of new investment funds, and educating investors on the investment potential of key sectors, we hope to catalyze $400 million.
What time frame will be required to reach these targets?
We will achieve these targets by Dec. 31, 2015.
What would prevent your solution from being a success?
There is a possibility that investors will be risk averse as a fall out of the global financial crisis and have limited appetite for investing in SMEs. New Ventures will try to mitigate this risk by reducing real and perceived investment risk strategies – through the development of new and improved financing mechanisms we will try to decrease actual risk and through research for investors we will aim to decrease perceived risk.
There is also the risk of policy barriers that stifle the growth of the environmental SME sectors in emerging markets. New Ventures will strive to mitigate this risk by researching the policy barriers to investment in environmental SMEs and present this policy analysis and recommendations to relevant policymakers and government bodies in order to influence change.