Climate Innovation and Center (CIC) Business Plan: Ethiopia January 2012
Recap: Why a CIC in Ethiopia? The Challenge: New technologies are essential to reduce the long-term cost of climate change and achieve Green Growth in Ethiopia however many barriers remain. The Solution: A Climate Innovation Center (CIC) that finances and supports Ethiopian innovators, entrepreneurs and SMEs, can help overcome these barriers and assist in creating climate solutions that meet local needs. The Outcomes: Growing private sector opportunities in Ethiopia to mitigate and adapt to climate change will also be an important driver of employment and economic development. 2
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
CICs fill gaps and complement existing downstream programs Low- Developing income IFI Existing Programs: Some basic programs Stage of Country Development Carbon finance, research in CICs CIF/CTF, GEF, IFI MICs; results Local and from Gap where promising lending some developed ------------------------------- developing country countries can multinational Some limited private be shared at innovation languishes private sector this level sector MIC Commercial debt Niche sustainable investors and public equity Govern Valley of Death ment markets and Industrialized Government --------------------------- other and Multinational VC and other early stage innovati academic technology private finance on basic R&D manufacturers progra ----------------------------------- ms (eg, Private technology US SBIR) innovators Conceptualization Early-growth Scale-up Full deployment Stage of Technology Development government = private sector = Mulitlaterals, IFIs = gaps in capacity =
Extensive six month+ process to develop Business Plan Business plan development process: bottom-up 150+ stakeholders engaged Sector Follow up: Develop Stakeholder Workshop 1: Gap Workshop 2: mapping and Quantitative business plan identification and & need Model tech analysis, 1on1 with key outreach identification design prioritization interviews stakeholders infoDev mobilizes a vast network of in-country partners including; private sector, government, financiers, NGOs, academia, entrepreneurs and incubators. (Sample of Ethiopian stakeholders)
Barriers cleantech ventures are facing in Ethiopia Country: Ethiopia • Company: Eco-Green • Entrepreneur: Kebede Lakew • Clean Technology: Organic • Liquid Fertilizer Barriers Solutions Lack of funding Access to proof-of concept funds Need for technology Center could offer entrepreneurs with a mechanism to transfer transfer necessary skills and technology Poor market promotion Center could raise awareness of the market about the locally produced product and support promotional efforts Lack of Quality Center could offer facilities and deliver information and assistance Improvement (R&D) in regards to continuous quality improvement
Barriers cleantech ventures are facing in Ethiopia Country: Ethiopia • Company: G.E.M Engineering • Entrepreneur: Girma Eshety • Clean Technology: Wind • Pumps and Wind Energy Employees: 27 • Barriers Solutions Lack of appropriate Raising Awareness and Creating Market Opportunities through the market Center Need for technology Center could offer entrepreneurs with a mechanism to transfer transfer necessary skills and technology to design wind pumps and generators Lack of Funding Center can provide access to funds to aid in improving existing factory in Dukem and purchasing necessary machienes Lack of business skills Center could offer entrepreneurs a network of qualified business mentors to work with
Technology Priorities of CIC Stakeholder Feedback Evaluation Criteria Prioritized Technologies TR Technology Readiness MD Market Demand AF Availability of Funding 1. Sustainable RS Clear, Ready Stakeholders BM Business Model Agribusiness IR Leverage of Indigenous 2. Biofuels & mass Resources EC Entrepreneurial Capacity 3. Transport-Tech WF Workforce 4. Micro Hydro PO Policy EI Economic Impact 5. Energy Efficiency GI GHG Impact SI Social Impact AT Already on Track
CIC Design Process Gaps Needs Solutions • Gaps identified include: Finance, Technology, Company, Markets, Policy • Identify stakeholder needs to address the gaps • Design solutions/activities to meet those needs
Example identified gaps: Technology Development Technology Supporting local and adapted technology innovation Gaps Needs Lack of access to equipment and labs for testing and Create partnerships with equipment and facility prototyping providers Provide funding for proof-of-concept Lack of access to international core technology and Provide database for sourcing quality technology associated know-how components Provide access to a network of technical expertise Limited coordination between industry and academia Create and facilitate university and industry partnerships Lack of technical skills and R&D (due to theory-based Partner with universities to provide specific training universities curriculums) curriculums, courses and seminars Lack of awareness in climate technology demand Provide mentoring and training services to final year (studies/research is not demand driven) engineering thesis students Insufficient R&D funding and standards Help to benchmark Ethiopia regionally and internationally with R&D investment best-practice Lack of finance using IP as collateral Facilitate bank financing through providing appropriate guarantees Difficulty in importing material(custom clearance, Coordinate with customs to provide updated product product database outdated, material confiscated) databases for climate technology imports Provide a channel for dialogue between innovators, SMEs and government Limited recognition of innovators Recognize innovators through competition and award and opportunities
The Ethiopia CIC: Business Model Access to Access to Access to Access to Policy Finance Mentoring Support Information Technology Policy Advocacy Market Analytics Mentor Networks Adaption Fund Diaspora-Investor Market and Sector Association Support Network Trend Reports Proof of Concept Grants: USD25-75k Mentor Policy Roundtable Network Series Technology Annual Innovator & Information Mentor Awards Innovation Catalyst Technology/IP International Fund database Collaboration Investment Advisory First-loss Equity: USD100-750k Fellowship Program Business & Financial Branding & Planning National Climate Awareness Innovation Event Seminar Series CIC Outreach CIC Network Linkages Access to Regional Partners Women and Girls Facilities CIC Activity Awareness University Partnerships Women-led Business Outreach Facility Provider Agreements Include targeted gender programs
CIC Financial Plan 47% of the total 5 year budget is allocated to direct investments into high impact technologies USD 15.9m Ethiopia CIC budget breakdown Ethiopia CIC budget breakdown Tech Adaption Grants Catalyst Seed Fund 5,000,000 7% 11% Catalyst Seed Fund Core staff & overheads 4,000,000 Mentoring/Advisory 18% Regional programs 3,000,000 Policy and Networking Tech Adaption Grants Information & Awareness 2,000,000 Policy and Networking 8% 36% Regional programs Global Network 1,000,000 6% Participation Core staff & overheads Information & Awareness - 8% 6% Year Year Year Year Year Global Network Participation Mentoring/Advisory 1 2 3 4 5 Center Sustainability: Replenishing 56% of entire costs and 100% of investment costs after year 7 $4,500,000 $4,000,000 $3,500,000 $3,000,000 CIC Budget $2,500,000 Invesment Budget $2,000,000 Investment Revenue $1,500,000 $1,000,000 $500,000 $0 4 5 6 7 8 9 10
CIC Fund Investment Criteria • Level of Innovativeness • Technology priority for country • Management experience • Competitive advantage • Market & growth potential • Uniqueness of business model • Quantifiable environmental benefits • Impact on gender and social inclusion
CIC Fund Structure Other Private info Dev & Other Partners Investors CIC Innovation Catalyst Fund Other CIC Programs 50% Post-investment Services Diaspora Networks Access to Facilities: Incubators and Networking Space, Facility Provider Agreements Market Analytics: Market and Investee Sector Trend Reports and/or Climate Tech 50% State Development Deal Mentor Networks: Diaspora- Companies Banks Investor Network, Business Flow Mentor Network, Technical Expert Network, Innovator & Mentor Awards Pre-investment Services Investment Advisory: Business Planning, Financial Planning, =Investment Seminar Series = Return on Deal Flow Technology Adaption Fund: Investment Proof of Concept Grants: USD25-75k
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