Climate Innovation Center

Business Plan: India

Contributing Authors:

Anthony Lambkin

Ashok K Das

Julian Webb

Executive Summary

There is strong potential within India to follow a more innovative path to

development that mitigates climate change impacts.

To optimize these opportunities, infoDev has engaged with Indian stakeholders

over the last 8 months to pinpoint the gaps and develop an institutional

response.

The following technologies were prioritized: water, energy efficiency,

agriculture, solar, transportation and bio-based energy.

Combined with this, four functional gaps were identified as gaps in the

innovation landscape:

• Providing access to flexible finance at a number of strategic levels

• Building capacity of new and existing enterprises and facilitating the

exposure of large industry to innovative ideas, enterprises and technology

• Enabling collaboration and developing a supporting ecosystem

• Creating regional clusters of innovation to leverage existing resources

Based on the above, infoDev has developed a business plan with a required

investment of USD 16 million over 4 years to establish a CIC in India.

Structure

1. infoDev

2. Climate Innovation Centers (CICs)

3. India CIC: Mission, Objectives and Impact

4. Stakeholder engagement process

5. Gap Analysis & Business Model

6. Implementation & Oversight

7. Financial Plan

8. Appendix

infoDevInnovate, Connect, Transform

Goal:

Demonstrate the link between technology and sustainable

development

Build local capacity in developing countries to create and accelerate

innovative technology SMEs.

Focus:

infoDev focuses on enterprises that use technology to deliver innovative

solutions or to increase their competitiveness and market reach.

Foundation:

global network of 300+ business incubators in 80+ developing

countries, 20,000 SMEs, 220,000 jobs

Building Local Capacity

Catalyzing Innovative Solutions

Providing Training,

Toolkits and Advisory Services

Pioneering Experienced-

based Research

Facilitating Communities of practice

Donors and partners

Climate Innovation Centers

Key Success Factors:

• A coordinated and holistic approach to innovation

• Based on local context, market needs and

opportunities

• Aggregates existing country initiatives

• Leverages public-private partnerships and resources

• Networked nationally and internationally facilitating

collaboration

The India CIC: Mission, Objectives and Impact

To create, leverage and aggregate a holistic portfolio of programs, services and financing in India that bridge local market gaps and support the accelerated

growth of innovative technology enterprises for low-carbon development

Mission

Objectives

1. Provision of access to flexible

finance at a number of

strategic levels

2. Capacity building of new

and existing enterprises

3. Facilitation of interaction of

innovative ideas , technologies and

enterprises with large industries

4. Collaboration and support to an

ecosystem that aggregates

existing players

5. Creation of regional clusters of innovation to leverage existing

resources and infrastructure.

Environmental

Mitigating up to 2.2 m tons CO2

• Providing over 1b kiloliters of clean water to over 1.5m Indians

• Providing increased energy

access to 1m people through

installed capacity of 94MW.

• Improving agricultural efficiency in over 56,000 farms

.

Financial

Providing finance, technical

assistance & mentoring to over

70 Indian climate ventures

Achieve a 100% leverage ratio

with the private sector for 30% of

the investment funds

Achieve an overall 50% leverage

of the entire cost of the center

Social

Impact

Generating over 1000 direct

jobs and 3800 indirect jobs

Generating over 1100 jobs for

women and 1200 jobs for youth

Creating over 36,000 jobs over

10 years at cost of less than USD

900 per job

Stakeholders

15%

27%

12%

12%

10%

5%

19%

Entrepreneur

Industry

Academia

Finance

Government/Policy

Incubator

NGO

Feasibility study process

Implementation

Develop proposal with key stakeholders and government endorsement

Workshop 2: Model design and working groups

Follow up: Quantitative analysis

Workshop 1: Brainstorming and networking

Sector mapping: Main issues

Stakeholder identification and outreach

Technology prioritization

Gaps analysis

Workshops

Surveys

0%

10%

20%

30%

40%

50%

60%

70%

The following are available

to Cleantech SMEs,

entrepreneurs and

innovators

Initial/start

up/risk

capital

Facilities to

build

prototypes

Information

access/dat

abases on

technology

Model design

Proposal

Example gaps preventing climate innovation in India

Gaps Needs Lack of Valley-of-Death financing Bridge ‘valley of death’ funding gaps with earlier stage financing

options

Fragmentation of existing financing sources in market Reduce fragmentation and lack of knowledge of funding options available

Lack of debt finance from banks Standardize contractual agreements and commercial terms with banks

FinanceEnsuring access to flexible risk capital

Gaps Needs

Technology entrepreneurs and innovators often lack market information to create viable business

Research and tracking of market demands and trends

Identify market needs, and match them to available technologies

Gaps Needs R&D conducted in isolation without market inputs Reduce fragmentation and lack of knowledge of R&D

opportunities

Many technologies stuck in labs and never see themarket

Standardize contractual agreements and commercial terms with industry

Gaps Needs

Lack of end-to-end support Contracts between service providers and service users can be standardized

Financing paired with credible services providers to ensure symbiotic use of funding and advisory services

Gaps Needs

Lack of policies to create viable clean technologies markets

Provide market and technology inputs from industry and experts in the SME sectors to policy makers

Work with policy makers and government to raise awareness

MarketsCreating new and expanding existing local and global markets

TechnologySupporting local and adapted technology innovation

CompanyBuilding workforce capacity and a pipeline of sustainable enterprises

PolicyInforming, linking and transforming innovative policy mechanisms

Mapping Market Gaps to Center Business Model

Technology

Finance

Company

Market

Regulatory

Access to Finance

Advisory Services

Enabling Environment

Access to Information

Access to Facilities

Gaps Solutions

Case Study: Company Gap

Husk Power Systems, India: Founded 2007

The company is at a critical stage of growth with an aim to expand from 30 to

2,000 systems sold within 4-5 years in order for the company to successfully scale

and achieve a tangible impact on rural electrification. A key barrier to market

expansion for Husk has been the limited access to mentoring and business

advisory support, which is often inaccessible to start-up companies in India; a

gap that Climate Innovation Centers will be well positioned to fulfill.

The India CIC: Business Model

Industry

Cells formed in major cities as hubs for service

delivery, linking and accrediting existing service

providers: Building capacity where needed

Service

providers

Facilities

Mentors

2

Central center based in Delhi

Finance

Risk

Capital

Fund

Investment

Facilitation

Advisory

Services

Mentor

Training

Education

and

Events

Ecosystem Development

Markets

and Policy

R&D

Collaboration

Capacity Building

Innovation Cell Network

The India CIC: Business Model

India CIC A hybrid approach:

Central hub and networked cells.

1

Implementation and Oversight

Management Team

Oversight Board

Private Sector Partners

Government of India

Partners

FinanceCapacity

Building

Ecosystem

Development

infoDev

Investment Committee

CC

Implementation Timeline

Governance

• 9 staff in years 0 -1

•18 staff in years 1-4Staffing

•9 seats representing various industries/sectors

•Rotation every 3-4 years

•Ideally some sponsorship for board seats

Oversight Board

•4-5 individuals

•Experienced financiers

Investment Committee

•Non-profit entity: Either trust or private company

•Charitable or institutional tax registration possible

•Ownership managed by oversight board

Incorporation and Ownership

Organizational Structure

CEO

Oversight Board

Investment

Officer

Support Staff

Innovation Cell NetworkPartner

Organizations,

Universities,

Institutions,

Facilities & Industry

Beneficiaries Technologists, Entrepreneurs, Start-up firms, SMEs, Industry

Monitoring &

Evaluation

International

Partnerships

Private Sector Partners

GoI Partners

COO

Investment

Analyst

Case

Manager

Project

Manager

Partnership

Development

Manager

Technology

Analyst

Fellows

Technology

Analyst

Marketing and

Communications

Officer

Partnership

Development

Manager

(city 1)

Partnership

Development

Manager

(city 2)

Partnership

Development

Manager

(city 3)

Investment Committee

Cell Network

Capacity Building

Collaborative

ecosystem

Finance

Front Office

Impact, M&E and Risks

Environmental

Mitigating up to 2.2 m tonsof CO2

•Providing over 1b kiloliters of

clean water to over 1.5m Indians

• Providing increased energy access to 1 million people through installed capacity of 94MW.

• Improving agricultural

efficiency in over 56,000 farms

Financial

Providing finance, technical assistance & mentoring to over 70 Indian climate

technologists, innovators and new ventures

Achieve a 100% leverage ratio with the private sector for 30% of the investment funds

Achieve an overall 50% leverage of the entire cost of the center via local cash and in-kind contributions

Social

Generating over 1000 direct jobs and 3800 indirect jobsat a cost of less than USD

3,300 per job

Generating over 1100 jobs for women and 1200 jobs for youth

Creating over 36,000 jobs over 10 years at cost of less

than USD 900 per job

M&E Internal databases and data collection Yearly annual report Focus groups and stakeholder follow-up Surveys and other quantitative

measurements where possible

Third party M&E assessments

Risk Management Center Risks: Finance, stakeholder support,

management and staff, market demand Market Risks: Finance, market supply,

market demand, regulatory environment, competition

55% of the total 4 year budget is allocated to direct investments into high impact technologies

Center Sustainability: Almost 70% self sustaining after 10 years

Financial Plan

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

Year 1 Year 4 Year 7 Year 10

Total CIC Annual Budget

CIC Annual Investment

Annual Investment

Revenue

Staff

15%

Programs

20%

Investments

55%

Facilities

2%

Implementati

on

8%

Percentage Allocation to 4 Year Budget

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

$6,000,000

Y 1 Y 2 Y 3 Y 4

CIC Budet: Years 1-4

Implementation

Facilities

Investments

Programs

Staff

$4.55M

$4.22M

$1.48M

$5.71M

Appendix

How CICs can commercialize new technologies

General

Regulation

Technology

Specific Regulation

Comprehensive

Framework

Sector

Regulation

Market Journey

Individual Growth EstablishedStart-up

Technology push Market Pull FeedbackBenefit quantified

GovernmentPublic Equity

Markets

Credit (Debt)

MarketsVenture Financing

Company Journey

Finance Journey

Policy Journey

Basic and

Applied ResearchScale-up Commercial

Development and

demonstrationTechnology

Journey

Service delivery

and distribution

model

Entrepreneurs lack

business acumen

Investors seeking

guaranteed returns

Low understanding of

benefits vs. costs by

users

Price of adoption

vs traditional

bulbs/fuels

Lack of talent and know-how in

related industries (e.g. semi-

conductors)

No incentive

mechanis

ms to

drive

demand

High costs of components:

copper, aluminum alloys

and lenses

• Company: InnovLite

• Entrepreneur: B R Raghav

• Clean Technology: LED lighting

• Barriers to scale-up:

• Country: India

• Company: Sun Air Power

• Entrepreneur: incubated by IIM(A)-

CIIE

• Clean Technology: Solar and wind

• Current capacity: Minimal, in the

start up phase

• Employees: 5

Barriers Solutions

Lack of risk

capital

Center could offer start up risk funding.

Technology Center could facilitate networking with technology providers

Business support Center could provide business training, market data etc.

Equipment and

tools

Center could provide facilities where entrepreneurs can test

their products and provide certified results to the market

Beneficiaries: Building a Pipeline of New Ventures

Technology Priorities of CIC

1. Water

2. Energy

Efficiency

3. Agriculture

4. Solar

5. Transportation

6. Bio-energy

TR Technology Readiness

MD Market Demand

AF Availability of Funding

RS Clear, Ready Stakeholders

BM Business Model

IR Leverage of Indigenous

Resources

EC Entrepreneurial Capacity

WF Workforce

PO Policy

EI Economic Impact

GI GHG Impact

SI Social Impact

AT Already on Track

Evaluation Criteria Stakeholder Feedback Prioritized Technologies