NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Editor’s Note: This post was originally published in Spanish on NextBillion Español.

Since late 2010, Guatemala has been home to Alterna, a center for innovation geared toward social and environmental entrepreneurship. I recently had the opportunity to speak with Daniel Buchbinder, co-founder and business director at Alterna.

The Motivation and Origins

The Alterna Team is multidisciplinary and international; it consists of eight professionals, several of them previously employed with international NGOs that worked on projects on appropriate infrastructure, with presence in Guatemala and Haiti.

Alterna recognizes the enormous opportunity that entrepreneurship presents for Guatemala. According to the 2009 Global Entrepreneurship Monitor report, Guatemala has the second highest rate of entrepreneurship worldwide. While this attitude is latent and many enterprises develop out of necessity (not by chance), there is a large gap in appropriate training and professional assistance that leaves these enterprises unable to achieve growth or maintenance.

In addition to this gap, there are a number of challenges and opportunities in Guatemala with social, environmental, and innovational themes. For Buchbinder, these challenges have to do with the waste and misuse of natural resources, either by overuse, such as firewood, or because many lack the awareness of a resource’s potential. Some data that illustrates this: Guatemala has the highest rate of population acceleration and one of the highest rates of deforrestation in Latin America. As Buchbinder said, “Guatemala in the last 20 years has practically doubled its population and reduced 20-30 percent of its timber.”

These characteristics that converge in Guatemala make Alterna consider social and environmental entrepreneurship as an excellent choice for meeting opportunities and needs, fighting poverty, and making the most of the entrepreneurial potential of Guatemalans.

How Does Alterna Function?

Alterna’s mission is to “develop technologies and build local businesses that satisfy basic needs and provide economic growth opportunities for the Guatemalan people in an environmentally sustainable way.” Although there is little to celebrate after one year of operation, Alterna is already initiating some projects with external financing.

Alterna functions with an intra-entrepreneurship program through which it develops projects aligned with its mission as an organization, such as efficient wood stoves, micro-hydro electric systems, and biodigester systems. They also include an entrepreneurship program with which they strengthen and encourage local entrepreneurs who are in various stages within their social/environmental enterprises, as is the case with the microenterprises in the organic fertilizer value chain. The entrepreneurship program includes the Idea Incubation model through which they select and refine business plans until, as Buchbinder says, “they reach a point of independence and can operate alone.”

What are the Challenges and Plans?

The challenges that Alterna faces are conceptual, organizational, personal, and financial. One of the most interesting and important challenges, says Buchbinder, is “demonstrating (conceptually and practically) the potential that social and environmental enterprises have in Guatemala, knowing that these profitable enterprises have a social purpose and create value throughout the entire chain.” This will let them strengthen the entrepreneurial ecosystem and obtain impact investment funds.

Alterna’s work aims to reveal opportunities that exist so that there is increasing investment in social enterprises in Guatemala. The issue of impact investing is challenging, even when Alterna is supporting enterprises that can be placed in the low range. The issue of impact investing is challenging, even when Alterna is supporting enterprises that can be placed in the low range, ranging from $5,000 to $200,000 to start up.

At the organizational level, the challenge is to attain self-sustainability. In this sense, under the sustainability model there is primarily betting on the success of the enterprises, and additionally, developing Alterna Foundation, which is based in the U.S.

Finally, in regard to the staff, it is essential to build a team of people “who understand what a long-term multidisciplinary process that requires a lot of commitment is. In a context in which there isn’t a homogenous framework or specific careers oriented at social entrepreneurship, this is a challenging subject.” Buchbinder believes that “we are crossing a bridge, and while we are crossing it we are also building it.” It is time to take a risk, support and generate social enterprises.

We will be paying attention to Alterna’s projects, hopefully it will encourage the social enterprise movement in Central America. I invite you to explore Alterna’s website, where you can find out more about their projects, donate, get involved, join the network, or contact them.