climate innovation center business plan: indiamarketing and communications officer partnership...
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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