Alternative Finance

for Clean Technology

2014 Asia LEDS Forum Deep-dive training on

Green Industrial Innovation

Xiaochen Zhang

About this lesson

• Market Potential of Clean technologies for SMEs

• Barriers to realize the market potential

• Crowdfunding for Green Industrial Innovation

• Scale-up crowdfunding in Asia

Outline Outline

Building Competitive Green Industries, World Bank, 2014, http://www.infodev.org/publications/green-industries

What barriers do SMEs face to realize the market potential of the clean technologies sector?

How can I validate business

model with reduced costs?

How can I reduce risk for investors for my business?

How can my projects be discovered

by investors?

How can I collect real-

time feedback effectively

How can I reduce inventory related

operational costs?

How can I reduce

capital costs to cover upfront

investment?

If I fail, how can I fail

early

How can I help the user of my products to afford my products

How can I find

potential customers?

Case study: Most common barriers face by clean technology SMEs in India

infoDev: http://www.infodev.org/infodev-files/infodev_crowdfunding_study_0.pdf

What barriers do SMEs face to realize the market potential of the clean technologies sector?

WHAT IS CROWDFUNDING

Crowdfunding

Friends and family finance

Social Networks

Internet Finance

Innovative Projects/ Venture

Crowdfunding Models

Donation-based crowdfunding: funders donate without expecting monetary compensation, average funding sought (US$) < $10,000, e.g.: socialants.org (Korea) Reward-based crowdfunding: funders receive a token gift of appreciation or pre-purchase of a service or product, average funding sought (US$) < $10,000, e.g.: wujudkan.com (Indonesia) Lending-based crowdfunding: Funders receive a debt instrument that pays a fixed rate of interest and returns principal on a specified schedule, average funding sought (US$) < $50,000, e.g. rangde.org (India) Equity-based crowdfunding: Funders receive equity instruments or profit sharing arrangements, average funding sought (US$) < $250,000, e.g. http://angelcrunch.com/ (China)

Build Rescue Boats in Flood Prone Communities (Philippines )

$25 Contributes to the costs of building a boat $100 Contributes toward the building of a boat $810 Builds a boat

http://www.globalgiving.org/projects/build-rescue-boats-in-flood-prone-communities/

The community of Banaba is affected by flooding almost every year. For the residents of this small community just outside Manila, it isn't a question of if there will be more flooding, but when. But these inspiring community members aren't taking matters lying down - they've organised themselves and are prepared to respond when floods come. Your donations allow them to build rescue boats so that they can look after one and other during floods.

Reward-based Crowdfunding for Energy efficient cookstove in Kenya

Reward-based Crowdfunding for Energy efficient cookstove in Kenya

Challenge: The Baker Stove seeks to raise funds to further its dream of providing women in developing countries with an energy efficient cookstove solution to the three-stone fire problem. Solution: The company launched a campaign on Indigogo, a reward based platform, to raise fund. The campaign raised $35632, 119% of the goal, from 318 funders. Result: The crowdfunding campaign helped put the initiative on the map around the world with articles in the US, EU, South Africa, and Thailand. The initiative was selected by the Global Alliance for Clean Cookstoves for their Investor Pitch and Deal Rooms initiative to scale-up its impact. https://www.indiegogo.com/projects/baker-stove-an-energy-efficient-cookstove-for-the-developing-world#home.

Husniya is a very hardworking and determined woman from Tajikistan EarthSpark International, Haiti,loans for retailers to purchase and resell both solar products and clean cookstoves to expand last-mile distribution; Barefoot Power, Tanzania, loans for small to medium-sized solar product distributors to expand adoption in rural areas; Credit Mongol, Mongolia, loans for clean energy and energy-efficient products in one of the most polluted countries on earth;

http://www.kiva.org/lend/647884

GREEN LOANS FROM KIVA

MOSAIC’S RESIDENTIAL SOLAR LOAN PROGRAM

Mosaic connects high quality borrowers who are going solar with qualified investors. The borrower gets clean energy and saves money. Solar power is less expensive than power from the utility. Investors get paid back with interest. Investors can easily re-invest payments or transfer them to their bank accounts.

https://www.crowdfunder.com/quetsol/deal/

Crwodfunding as a business solution

Validated by the crowds

support

Crowdfunding campaign is a brand creation and user engagement process

Investors can find my

projects easily

Direct communications with final

users and stakeholders

O inventory through CF pre-order model

Crowds ask for much less equity than

VC

Demonstration before scale

up Debt based crowdfunding for BOP

CF as marketing and

pre-order

In the era of Crowdfunding

MARKET POTENTIAL FOR CROWDFUNDING ACROSS THE REGIONS

infoDev:http://www.infodev.org/infodev-files/infodev_crowdfunding_study_0.pdf

http://cdn.crowdfundinsider.com/shared/2014/08/Renewable-Energy-Crowdfunding-Map-Web.jpg

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Name Country Model Year of establisthment Website

Badhai India Donation 2012 http://www.badhai.in Ekjaa India Lending 2013 ekjaa.org

Exhilway Private Capital Market India Equity 2013 exhilway.com

IGNITE INTENT India Reward 2012 igniteintent.com MicroGraam India Lending 2009 micrograam.com Milaap India Lending 2010 milaap.org Rang De India lending 2008 rangde.org M-Changa Kenya Donation 2012 changa.co.ke

Mobile Movement Kenya Donation 2009 mobilemovement.tv

DreamDoIt Mexico Donation 2012 dreamdoit.com

Fondeadora Mexico Reward 2012 fondeadora.mx

Can Crowdfunding be employed for clean technology development in Asia?

World Bank / infoDev Climate Innovation Centers (CIC): Basic Model

CIC Services

Technology Commercialization

Technology Collaboration

Proof of Concept Grants

Facilities

Venture Acceleration

Education and

Training

Market Development

Policy Advocacy

Regional Networks

Market Analytics

Access to Finance

Investment Syndication

Seed Capital Facility

Business Development Services

Cost: USD 15-20 Million

The growing CIC network

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The Ghana CIC will support local competitiveness in the SME sector

The Morocco CIC will support local SMEs to participate in CTF Ourzazate and other solar ambitions

The India CIC will support a networked approach, covering multiple locations and will address skills constraints and lack of financing for the next generation of Indian cleantech entrepreneurs

The Ethiopia CIC will focus on agriculture and include a women-led innovation program

The Kenya CIC, is featured on GoK’s Climate Change Action Plan and is already working with more than 70 Kenyan firms

The Caribbean CIC will be regional and focus on tourism, agriculture, distributed renewables and adaptation tech

The Vietnam CIC will focus on green buildings and support the government’s Green Growth Strategy

The South Africa CIC, featured in the government’s Green Economy Accord, will promote inclusive innovation

World Bank / infoDev Climate Tech Program in Asia > Vietnam Climate Innovation Center

(VCIC) • Likely to be launched in Spring /

Summer 2015 > VCIC Proof-of-Concept Competition

• Identified the most promising Vietnamese climate technology ventures to be supported by VCIC

• 24 finalists out of 158 applications • Bootcamp training on developing &

improving a business plan (in Ho Chi Minh City, Oct 10-13, 2014)

> India CIC is being developed in 2016

Participants & Mentors at the Vietnam CIC Bootcamp

Barriers hinder the scale-up of crowdfunding in developing countries

Joint research program: • Crowdfunding readiness for national development banks • Crowdfunding co-investment models for developing

countries; • Crowdfunding eco-system in Asia… Joint Initiatives • Crowdfunding PPP • Academic-industrial initiatives • Donor-developing country government initiatives • Industrial association…. Crowdfunding for clean tech in Asia • CC/GG community and CF community initiatives

(1) Lack of Crowdfunding infrastructure: (2) Lack of business models knowledge: (3) Barriers to reach wider and deeper for successful platforms (4) Lack of knowledge, tools and data: (5) The lack of risk management skills and tools.

Partnership and collaborations are extremely important !

Thank you

• https://www.linkedin.com/in/cmyidea • Xiaochen Zhang