Climate Innovation Center Business Plan: India. Contributing Authors: Anthony Lambkin Ashok K Das Julian Webb

Transcription

1 Climate Innovation Center Business Plan: India Contributing Authors: Anthony Lambkin Ashok K Das Julian Webb

2 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.

3 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

4 Innovate, 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 Facilitating Communities of practice Providing Training, Toolkits and Advisory Services Building Local Capacity Catalyzing Innovative Solutions Donors and partners infodev Pioneering Experiencedbased Research

5 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

6 The India CIC: Mission, Objectives and Impact Mission 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 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. Impact 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 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

7 Feasibility study process Stakeholder identification and outreach Stakeholders Technology prioritization Entrepreneur Sector mapping: Main issues Workshop 1: Brainstorming and networking Follow up: Quantitative analysis Workshop 2: Model design and working groups Develop proposal with key stakeholders and government endorsement 19% 5% 10% 12% 15% Industry Gaps analysis 12% Workshops 27% Surveys Model design Proposal 70% 60% 50% 40% 30% 20% 10% 0% Academia Finance Government/Policy The following are available to Cleantech SMEs, entrepreneurs Incubatorand innovators NGO Initial/start up/risk capital Facilities to build prototypes Information access/dat abases on technology Implementation

8 Example gaps preventing climate innovation in India Technology Supporting local and adapted technology innovation 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 the Standardize contractual agreements and commercial terms market with industry Company Building workforce capacity and a pipeline of sustainable enterprises 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 Finance Ensuring access to flexible risk capital 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 Gaps Technology entrepreneurs and innovators often lack market information to create viable business Markets Creating new and expanding existing local and global markets Needs Research and tracking of market demands and trends Identify market needs, and match them to available technologies Policy Informing, linking and transforming innovative policy mechanisms Gaps Needs Lack of policies to create viable clean technologies Provide market and technology inputs from industry and experts markets in the SME sectors to policy makers Work with policy makers and government to raise awareness

9 Mapping Market Gaps to Center Business Model Gaps Solutions Technology Finance Company Market Regulatory Access to Finance Advisory Services Enabling Environment Access to Information Access to Facilities 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.

10 The India CIC: Business Model

11 Finance Risk Capital Fund Investment Facilitation Capacity Building Mentor Training Education and Events The India CIC: Business Model Ecosystem Development R&D Collaboration Markets and Policy India CIC A hybrid approach: Central hub and networked cells. Advisory Services Innovation Cell Network Central center based in Delhi 1 Industry Service providers Mentors Facilities Cells formed in major cities as hubs for service delivery, linking and accrediting existing service providers: Building capacity where needed 2

12 Implementation and Oversight infodev C C Oversight Board Government of India Partners Private Sector Partners Management Team Investment Committee Finance Capacity Building Ecosystem Development

13 Implementation Timeline

14 Governance Staffing 9 staff in years staff in years 1-4 Oversight Board 9 seats representing various industries/sectors Rotation every 3-4 years Ideally some sponsorship for board seats Investment Committee 4-5 individuals Experienced financiers Incorporation and Ownership Non-profit entity: Either trust or private company Charitable or institutional tax registration possible Ownership managed by oversight board

15 Organizational Structure Cell Network Capacity Building Collaborative ecosystem Finance Monitoring & Evaluation Oversight Board GoI Partners Private Sector Partners Front Office CEO Marketing and Communications Officer COO Investment Committee Support Staff International Partnerships Partnership Development Manager Technology Analyst Fellows Technology Analyst Project Manager Case Manager Investment Officer Investment Analyst Partner Organizations, Universities, Institutions, Facilities & Industry Partnership Development Manager (city 1) Innovation Cell Network Partnership Development Manager (city 2) Partnership Development Manager (city 3) Beneficiaries Technologists, Entrepreneurs, Start-up firms, SMEs, Industry

16 Impact, M&E and Risks Environmental Mitigating up to 2.2 m tons of 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 jobs at 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

17 Financial Plan 55% of the total 4 year budget is allocated to direct investments into high impact technologies $6,000,000 $5,000,000 $4,000,000 CIC Budet: Years 1-4 $5.71M $4.55M $4.22M Implementation Facilities Percentage Allocation to 4 Year Budget Implementati on 8% Facilities 2% Staff 15% $3,000,000 Investments $2,000,000 $1,000,000 $1.48M Programs Staff Investments 55% Programs 20% $0 Y 1 Y 2 Y 3 Y 4 Center Sustainability: Almost 70% self sustaining after 10 years $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 Year 1 Year 4 Year 7 Year 10 Total CIC Annual Budget CIC Annual Investment Annual Investment Revenue

18 Appendix

19 How CICs can commercialize new technologies Company: InnovLite Entrepreneur: B R Raghav Clean Technology: LED lighting Barriers to scale-up: Technology Journey High costs of components: Basic and copper, aluminum Development alloys and Applied Research and lenses demonstration Service delivery and distribution Scale-up model Commercial Company Journey Lack of talent and know-how in Entrepreneurs lack Individual related Start-up industries (e.g. semiconductors) Growth Established business acumen Finance Journey Government Investors seeking Venture Financing guaranteed returns Public Equity Markets Credit (Debt) Markets Market Journey Policy Journey Low understanding of No Technology push Benefit benefits quantified vs. costs by Market Pull Feedback incentive users mechanis ms to Price of adoption General Sector Technology drive Comprehensive Regulation Regulation vs traditional Specific Regulation demand Framework bulbs/fuels

20 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 Beneficiaries: Building a Pipeline of New Ventures Barriers Lack of risk capital Technology Business support Equipment and tools Solutions Center could offer start up risk funding. Center could facilitate networking with technology providers Center could provide business training, market data etc. Center could provide facilities where entrepreneurs can test their products and provide certified results to the market

21 Technology Priorities of CIC TR MD AF RS BM IR EC WF PO EI GI SI AT Evaluation Criteria Technology Readiness Market Demand Availability of Funding Clear, Ready Stakeholders Business Model Leverage of Indigenous Resources Entrepreneurial Capacity Workforce Policy Economic Impact GHG Impact Social Impact Already on Track Stakeholder Feedback Prioritized Technologies 1. Water 2. Energy Efficiency 3. Agriculture 4. Solar 5. Transportation 6. Bio-energy