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Portfolio For The Planet At EcoEnterprises Fund

For 15 years, EcoEnterprises Fund, a venture fund for nature, has provided growth capital to community-based sustainable companies so they can achieve scale. By funding companies which might otherwise not have access to investment, EcoEnterprises Fund is having an impact both socially and environmentally.

Please tell us more about EcoEnterprises Fund.

We are committed to working with companies which offer sustainable livelihoods to bottom of the pyramid communities, while encouraging the management of natural resources in areas with high biodiversity. For the first fund, we invested in 23 companies in 10 countries. The first fund was proof of concept that demonstrated the success of business models to achieve positive conservation impacts. At that time we invested in the first movers and pioneers in market niches, for example, the first organic flower company and the first organic shrimp company. Now in 2014, the market has evolved with great consumer demand and awareness of sustainable products with certifications, such as organic, fairtrade, bird-friendly, etc.

We launched our second fund about two years ago. Some of the companies in the second fund are success stories from the first fund, such as a leader in the acai business. For the second fund, we are looking at making greater impacts given the environmental and social challenges of our time. Moreover, we are aiming for higher returns for investors by scaling up company business models. We are investing in 10-12 companies in the second fund. The first fund had, on average, investments of $250,000 and the second time around we are investing an average of $2.5 million.

In our first fund, many of the entrepreneurs approached their businesses as visionaries guided by their passion for the environment and community. Now we are seeing a trend of professional managers, existing entreprenuers and business school students from regions in Latin America who are pursuing businesses with a social and environmental mandate.

How do you fill the financing gap that exists for eco-enterprises to succeed?

Capital markets in most of the countries in which we work (and in emerging markets in general) lack the depth and breadth of services that are provided to small to medium-scale businesses in the USA — funding from R&D to angel; and mezzanine to equity financing. For example, look at a company in a country in Latin America, where EcoEnterprises Fund works. If the business has collateral such as a building or land, they may be able to access 3-year financing from a local bank. If they have no history or collateral, it is almost impossible.

Increasingly as we have seen in Latin America as economies advance and there is a strengthening of the regulatory and legal business environment, there are more opportunities for investors. Concurrently, with the demand for goods and services which have positive environmental and social impacts, there are greater investment prospects for impact investors.

There is a lot of variation in the countries where EcoEnterprises Fund works. After the security situation in Columbia improved, the economy is now booming. In regions like Africa, certain countries are much more amenable to foreign investment than others There are many investors in the impact space that want to invest in Africa. Overall, impact investors must determine their respective risk profile for their portfolio.

Portfolio For the Planet – Lessons From 10 Years of Impact Investing.” (Earthscan/Routledge Press)Curious about the partners. How long did it take you to develop these resources?

For the most detailed description of the internal monitoring and evaluation tool used at EcoEnterprises Fund, please see the book, “Portfolio For the Planet – Lessons From 10 Years of Impact Investing.” (Earthscan/Routledge Press)

Organizations, such as GIIRs and impact industry-wide metrics systems based on IRIS have enhanced the standardization of metrics and reporting. This is important for the mainstreaming of the industry and increased investors attraction to the space. With that said, at present many impact investment firms still use internal scorecards because they collect data beyond what GIIRs and IRIS is looking at. This is a very company specific process. For example, consider the differences between ecotourism and forestry products, both sectors have different evaluative criteria.

Does your organization try to foster entrepreneurs to participate in new eco-ventures?

We work with groups like, New Ventures, Village Capital and Agora Partnerships which are business incubators that provide the hand-holding companies need. We do, though, identify companies of interest and then work with them with business planning, accounting, organic certification financial management to strengthen the investible opportunity from our perspective.

How can business best contribute to the conservation of natural resources?

What needs to happen is happening in some places on an accelerated basis. Today there is much more acknowledgement of the challenges at hand. It is quite evident in the coverage of climate change or limited access to water, or droughts that this is the case. Even on a corporate level there is talk. For example, a few weeks ago an article was published in the New York Times about how a company like Coca Cola is worried about their water supply in some places. The pressure is on, but is there enough happening to stem the tide?

Education and research are very important. All international and local conservation organizations are working diligently at varying aspects of the issue and together are making progress.

Can you share some resources you find helpful for learning about impact investing?

There are increasingly many go-to sites and informational material on impact investing, including industry trade groups which publish studies, books and research. Here are a few to choose from:

Aspen Network of Development Entrepreneurs
Global Impact Investing Network (GIIN)
Impact Assets

Ecology and Economy: A Discussion with Professor Rodgers

Professor Rodgers Teaching

Professor Rodgers Teaching

It is unique to have an ecologist teaching at a business school. How did your career path lead you from a Ph.D. in Forest Ecology and Biogeochemistry to Babson?

Yes, I certainly did not ever picture myself being so happy at a business college. As I was preparing to finish my PhD, I started looking for part-time teaching positions to gain some additional classroom experience, but also have some flexibility while finishing my publications and looking after my first child. As luck would have it, the professor who taught Environmental Technology was going on sabbatical and Babson needed a one-year replacement. I took the position with a mind-set that after 1 year, I would apply elsewhere. However, once I began teaching at Babson, I realized that the ideal position I had been seeking was right in front of me. During those first few weeks to months at Babson starting in September 2007 I came face to face with the vitally important (and oftentimes missing) link between science and business education. I saw students’ eyes light up when I discussed new potential renewable energy options and I found myself truly enjoying the challenge of teaching science to non-majors and guiding them toward the direct application of science in their everyday lives and in their business pursuits.

Boston Area Climate Experiment in Waltham, MA

Boston Area Climate Experiment in Waltham, MA

Please tell us about your research.

I am a forest ecologist, trained in plant-field methods and soil biogeochemistry. Broadly my research is focused on understanding the numerous effects humans are having on our various natural ecosystems, especially the forests of New England. I am interested in plant and soil responses to all aspects of global environmental change; including invasive species spread, land use shifts, nitrogen deposition, and climate change. I have performed extensive research investigating the ecosystem impacts of invasive species spread within Massachusetts and Connecticut. More recently I have been working at the Boston Area Climate Experiment (BACE) in Waltham, MA testing the effects of simulated climate change (warming and rainfall manipulation) on plants and soils. I consider myself very lucky because my research allows me to spend the majority of the summer outside playing in the dirt.

Professor Rodgers at the Boston Area Climate ExperimentThe classes that you teach bring a very interesting perspective to the Babson community. For example, you teach a class called “Economic Botany.” Can you tell us how this class came about and what your students learn?

Yes, I have developed 5 brand new courses so far at Babson and Economic Botany is my 4-credit advanced elective course and I love it. I have designed this course to introduce students to plant biology while also investigating some of the major ways we utilize plants: food, materials, perfumes, drugs, and medicines. Throughout the course we discuss the role plants have played in influencing economics, language, arts, and religion. We specifically focus on ways we can use plants as more sustainable alternatives to business pursuits. I bring in hands-on activities every class and we have a number of interesting guest speakers and field trips.

What are some big picture takeaways that you hope your students will leave Babson with?

  • Basic important scientific concepts to create conscientious global citizens
  • Inquiry-based problem solving skills
  • The value and applicability of science to everyday life and business pursuits
  • Understanding the science behind environmental issues (which is sadly often misunderstood by many people)

Can you share some examples of the positive impact your students are having on the environment, whether through Babson or their own projects?

I have had a number of Babson students perform summer field research with me, which has been a fantastic experience. Every semester I have growing numbers of students who get jobs within environmental sustainability-focused companies. I also have a number of students working to implement ideas we discussed in class within their companies, whether they are environmentally-based companies or not. My students are what help to keep me an optimist.

Where do you see opportunity for the business community to solve environmental problems?

I see business as leading the way for environmental change in the future. Sadly politicians are never able to make change fast enough, so the burden for change comes from consumer desires and business leaders. There are unbelievable opportunities for development with the integration of new renewable energies, climate change mitigation, and new strategies for product development that involve using waste products. All very exciting stuff.

By |February 6th, 2014|Categories: Uncategorized|Tags: |0 Comments

Interview with Pieter Hoff of Groasis

Trees now growing in the Groasis Waterboxx. Sahara desert, Morocco.

Trees now growing in the Groasis Waterboxx. Sahara desert, Morocco.

Pieter Hoff is the inventor and entrepreneur behind the Groasis Waterboxx, an anti-desertification technology product that allows for planting in dry, rocky, and eroded areas. Pieter, a former lily breeder, grower and exporter, learned that worldwide groundwater levels were declining with high speed, and he concluded that mankind would be out of irrigation water within a few centuries unless changes were made. This awareness drove Pieter to found his company Groasis to offer customers the Groasis Waterboxx, which utilizes water from air – rain and condensation – in order to grow plants and restore soil where it was never thought possible.

Groasis is a company with a significant social and environmental vision. During the last 2,000 years, people have cut over 2 billion hectares of once healthy forests, and these lands are now non-productive, infertile deserts that create poverty. One could say “man made deserts”. The use of the Groasis Waterboxx in these areas is a way to provide wealth and food for entire communities, while solving environmental problems like climate change and desertification. The ultimate vision of Groasis is to replant man made deserts and eroded areas by restoring the vegetation cover, to make these lands productive with fruit trees and vegetables, and ultimately to feed the world. If trees once grew there, they can grow there again.

Interview by Lauren DiPerna:

Pieter, can you tell us about your journey from lily breeder to Groasis?
As a lily breeder I had clients in over 50 countries buying my exclusive varieties. All of them were using drip irrigation and all of them were complaining about dropping water tables. In some countries more than 4 meters per year. So I started to think about a way to solve this and in 2003 I decided to dedicate the rest of my life to bring a solution to this problem.

Can you illustrate how your flagship product, the Groasis Waterboxx, works by taking us through the story of a project where it was used?
During the last 10 years I have developed a whole new way of planting, I call this the Groasis Technology, of which the Waterboxx is the central part. We dig a hole of 30 inches broad and 10 inches deep, add 40 liters of water to it in order create a column of humidity of approximately 4 meters. This is called a ‘capillary column’. Then we add some mycorrhizae that help to develop better roots. Then we plant the tree. And here I did an important discovery: while producing plants in nurseries, the roots grow horizontally and rounded in the pot. After planting this never recovers and that is why so many trees are blown away during a storm, their primary root has never grown downwards to anchor the tree. So I learned to prune the roots which causes that they resprout vertically downwards towards the watertable. Then I put the Groasis Waterboxx around the tree. The Waterboxx protects the tree against the sun giving it a shadow, the water in the box absorbs the heat so that the soil remains cool, and it adds each day a bit of water to the capillary humidity column. So the roots have humidity and moderate temperatures and start to grow with a speed of 1 cm vertically downwards. After one year they find sufficient humidity deep in the ground – over 4 meters – to keep the tree alive. We then lift the Waterboxx and plant the next tree.

Trees Growing in the Groasis WaterboxxWhat has been the most exciting part of your experience as an entrepreneur with Groasis so far?
The most exciting part is that almost daily I have more people supporting me starting their own programs. As an example I attach a photo of the work a Dutch woman who founded a foundation to help poor people in the Sahara desert in Morocco. The photos speak for themselves. I hope to inspire so many people in the end, that we will be able to replant the world before 2050. I see it as my task to offer the Groasis Technology that is so secure, and so cheap, that in the end everybody, governments, farmers, civilians, will start to implement it.

How about the greatest challenge?
The greatest challenge is to create the belief that we can do it.

There is an instrument in nature that can help solve what I call the “7 world problems”: the Tree. FAO and IUCN have published that we have over 2 billion hectares of man made deserts. So if this area was once green, and we were able to cut it, then this area can be green again, as we are also able to plant it. This is what happens with the “7 world problems” if we implement the Groasis Technology:

  • Erosion – trees will cover the soil and make it fertile again.
  • Poverty – each hectare of trees creates approximately 10K US$ of revenues. That is 20 trillion US$ extra economic development.
  • Food crisis – each hectare of fruit trees can produce 5 tons of sound food. 2 Billion hectares is 1 trillion tons of extra food.
  • Climate change – 2 billion extra hectares of fruit trees disconnect each year 10 billion tons of CO₂. That is more than we annually produce with fossil fuels. So we can neutralize all the present CO2 pollution to zero with planting trees producing food.
  • Unemployment – each hectare of trees creates one direct and indirect job. 2 Billion hectares of fruit trees create 2 billion jobs.
  • Rural-urban migration – when there are 2 billion extra jobs in rural areas, people will migrate back to the rural areas.
  • Sinking ground water levels – trees change the eroded soil into a sponge again and water tables will rise instead of drop.

Our solution must be based on a sound business model. The challenge is too big to solve, if the solution is based on receiving subsidies. So I have worked on making the use of the Groasis Technology so cheap, that the one who uses it, is able to make money with it. If making money is possible, finding capital will be easier. I worked on the dream of finding a cheap solution to replant our man made deserts with economically and ecologically interesting trees. I hope that before 2050 the Groasis Technology has helped to change the world into a green and fertile area where people love to live, are able to feed and educate their children, and have decent lives. There are 300 million small farmers in the world. Just as small as my grandfather’s and father’s company when I was a child. If each of these small farmers plants 7 hectares of fruit trees, the job is done. The Groasis Technology is now available, it is up to our governments if they want to have it happen. Governments worldwide spent 8 trillion US$ since 2008, in order to save banks. We need only 2 trillion US$ while using the Groasis Technology in order to plant the 2 billion hectares with fruit trees. So money cannot be the problem. If we vote for governments who are willing to do this, then we will be successful. So to conclude, it’s up to you if you want to have it happen!

Where do you see the greatest future opportunities for Groasis?
Everybody who has a piece of unproductive wasteland, can make a good living through implementing the Groasis Technology. It is my challenge to reach and bring this message to them.

Please share some advice for aspiring environmental and social entrepreneurs.

  1. Invent something original that creates a benefit for users. Your idea can be fantastic, but if the users have no benefits, you will be unable to introduce it.
  2. Be patient. From invention to successful introduction will cost 15 years.
  3. See that you have capital to fund the ‘valley of death’. This is the period between development and successful market introduction. Estimate at least 1M costs per year. If you cannot finance this, somebody else will buy you halfway the ‘valley of death’ and he will have the fruit, and you will have had the costs.
  4. See that the patents are always in your personal name, not in the name of the company. License them to the company.
  5. Be prepared to work hard, sacrifice, fight disbelief and be open to positive critics or advice, in order to enjoy the fruit of success.

Learn more about Groasis by visiting the website.

A Summer with EDF and Ingersoll Rand

Over the summer our co-President Vikram Sokkalingam worked with the Environmental Defense Fund in their Climate Corps program. We caught up with Vikram this week to discuss his experience at EDF.

As one of two EDF 2013 Climate Corps fellows at Ingersoll Rand (IR), I, in collaboration with Mansoor Baloch conducted audits at two Trane facilities. We identified one water conservation and twelve energy efficiency and projects at these sites. The NPV of the projects is $340,000 with an initial capital investment of $310,000. The implementation of these projects will annually save IR $115,000 in utility expenses, 1.5 million kWh of electricity and 195,000 gallons of water while reducing IR’s annual GHG emissions by 690 metric tons.

In addition to the energy audits, I worked on three independent projects. Firstly, I studied the process of energy opportunity discovery and implementation in an industrial setup and developed an energy value chain model to map the impact of different types of investments on the KPI’s/Incentives of all stakeholders involved. Secondly, I studied the needs and perception of industrial customers in terms of energy related services and also identified how Trane had responded to the findings of similar past studies to come up with a strategic direction for Trane to increase its business in the industrial market. Finally, I analyzed the available Energy monitoring and project reporting software platforms for the internal needs of IR and as a part of ECAS client audit offering. Because EDF teams with companies to find opportunities to increase energy efficiency, many projects are focused on operations improvements. However, because IR had partnered with EDF for four years prior to my arrival, the implementable operations improvements had largely been explored and executed. This made our assignment more challenging but also gave us the unique opportunity to look at energy efficiency from a product strategy perspective. From the projects we looked at, to the management we worked with, to the final result, my time with EDF Climate Corps was an amazing experience.

By |November 11th, 2013|Categories: Uncategorized||0 Comments