Jenny Everett

Cultivating Small Business and the Environment: Building on the work of New Ventures

Last month, I spoke at a World Resources Institute/New Ventures event to mark the launch of Voices of the Entrepreneurs, a new publication outlining both the challenges and solutions to the growth of environmental enterprises in emerging markets.

This report is a departure from WRI’s more traditional data-driven reports because it focuses on many of its successes and insights from working with entrepreneurs during the past 13 years. It also was a bit of a bittersweet moment because WRI has decided to conclude its role as the global coordinator of the six New Ventures affiliates, which will now continue as independent organizations.

As I reflected both on the work of New Ventures to date and the comments of panelists, I shared three thoughts with the group:

1) Stay ’Glocal’

Transitioning New Ventures from a centrally-organized, U.S.-based entity to six local organizations is an interesting decision, and potentially represents a model for other international organizations in the long term. The strategy clearly reflects the importance of having more locally-based organizations that are supporting businesses in their own communities. Currently about 70 percent of the Aspen Network of Development Entrepreneurs (ANDE) members are headquartered in the U.S. or Western Europe. And while it is great that so many international groups want to support small and growing businesses (SGBs) in emerging markets, if we really want to create thriving eco-systems then we need local investors and local capacity development providers to support them. This is one of the main driving factors behind the creation of our six local chapters, as well as our goal to increase membership from locally-based organizations.

At the same time, we still see the value in connecting local organizations to a global network — not only for the insights that local organizations can gain from their global counterparts, but also for the insights they can share. Several of the New Ventures affiliates have implemented successful efforts to develop local angel networks, and to educate local investors about impact investing and environmental entrepreneurs. This could and should be replicated. It is my hope that the six independent affiliates will continue to stay connected not only with each other, but with others in the global sector. Glocal is in!

2) Accelerate the accelerators

New Ventures has done a remarkable job helping to accelerate business around the world. But at the same time, the 367 businesses they have assisted is a drop in the bucket if we think about the millions of SGBs that need help accessing talent, markets and capital.

As an industry, we need to better understand what works when it comes to accelerating businesses, and then figure out how incubation models can be scaled. This is something we’re looking at very closely at ANDE. Over the coming year, we’ll work with several partners (including Village Capital, Emory University, I-DEV and Halloran Philanthropies) to expand on what New Ventures and many others have begun—and ultimately accelerate the accelerators. To do this we are looking at three key areas: pipeline (how do existing incubators find enterprises?); operations (what services are currently provided, and do entrepreneurs find them useful?); and evaluation (are they working?).

3) Promote environmental opportunities to local entrepreneurs

According to Jonathan Koomey in Cold Cash, Cool Climate, “if we are to stabilize the earth’s climate, it is rapid change that we need, and not just rapid technological change. We also need people and institutions to alter their behavior, and to do so in short order.” People who “carry the entrepreneurial spirit” are those most comfortable with this kind of rapid change.

He goes on to say that “using existing technologies, we should take immediate actions that enable learning quickly what works and what doesn’t.” This sounds very familiar to the mantra “good entrepreneurs fail often and fail fast, and learn from those failures.” So we as an industry need to improve our understanding of the impact of products and services (such as energy and water) provided by SGBs, compared to alternative sources available to the poor. To that end, we recently awarded a research grant to New Ventures India to study the effects of small-scale energy systems on rural communities in South Asia.

But more importantly, we as an industry need to stress the importance of environmental impact on every small business—not just the environmental entrepreneurs. Fifty-four percent of ANDE members reported “Environment” as an impact focus in 2012. But when we look at the data set of Impact Reporting & Investment Standards (IRIS) indicators that we have collected from our members so far, it contains 2,000 data points on revenue, 1,300 data points on employment, and only 69 on greenhouse gas emissions. There could be many reasons for this—reporting challenges, lack of appropriate metrics, lack of a solid business case for doing so—but the fact still remains that our ability to report on and understand environmental impact pales in comparison to our tracking of social impact.

Hopefully, this will change as more businesses go through the GIIRS rating process and examine their footprint in a more systematic way. But we need to be more cognizant as an industry about keeping environmental sustainability as part of the overall discussion.

Thirteen years ago, WRI set out to prove a new concept that “small and medium-sized businesses could make a profound difference to the health of the planet.” I don’t think anyone working in this space now would question that. The efforts of WRI and other early players have helped to lay the foundation on which we will continue to build the SGB sector. But as the sector grows, we need to be evermore aware about the potential challenges and opportunities for small businesses to provide prosperity for our people and respect for our planet.

Jenny Everett is the associate director of the Aspen Network of Development Entrepreneurs (ANDE), a global network of innovative organizatons that propel entrepreneurship in emerging markets.

impact investing, incubators