The challenge Verde Ventures: Investing in Healthy Sustainable Economies • • • • High rates of habitat loss Species extinctions Population growth Poverty, security Hari Balasubramanian 03/01/12 Photo 1 4.2” x 10.31” Position x: 4.36”, y: .18” Photo 2 5.51” x 10.31” Position x: 8.53”, y: .18” Why Verde Ventures? • Conservation-based Why Verde Ventures? employment is essential to provide economic incentives for conservation • The small-medium business sector is a key partner in the intersection between human well being and conservation • • • Population density and biodiversity value show high correspondence Grant based solutions are insufficient to address magnitude of challenge Traditional finance largely miss SME financing needs The opportunity Verde Ventures invests in small businesses that contribute to green economies in Conservation International's global priority areas • Lack of available, affordable capital is a major constraint to building green economies The opportunity • Mission aligned SME Loans: US$30,000 to $500,000 for infrastructure, working capital, trade finance for business development in rural communities to advance mission. • Technical Assistance: Accounting, marketing, business plan development • Monitoring: Triple-bottom line monitoring (Environmental, Social and Financial) Our Mission Our Tools and approach • Long Term: o Infrastructure, equipment and crop maintenance • Short Term/Trade Finance: o Working capital, harvest finance • • • • Sustainable agriculture Ecotourism Energy (e.g., charcoal substitution) Fisheries *Any triple bottom line enterprise aligned with mission Current investment allocation by dollar value • Grant funds: o Business development support (BDS) o Technical Assistance o Monitoring and evaluation 78% Cocoa Coffee Ecotourism NTFP Other • Innovative packages: o Mezzanine, quasi-equity, other … Types of Financing 12% 3% 2% 5% Key sectors • Transparent screening criteria and due diligence checklist, includes: o Environmental screen o Social screen o Financial due diligence • Outlines, demonstrates and tests key hypotheses: that VV investments support improved TBL impacts • Willing to take higher business risk for increased social / environmental benefit • Embedded within management structure • Review process: o Conservation committee o Investment committee Investment link to mission • Portfolio-wide monitoring o All deals o Basic TBL information that aggregates across o Yearly snapshot of TBL progress • Project specific monitoring o Subset of portfolio o Specific TBL conceptual models and indicators o Demonstrates key links between nature and people o Tailored indicators VV’s M+E Framework: 2 Levels • Estimates substantive impacts • Delivers accurate and timely reporting • Transparency measures built in for accountability VV M+E Framework • 3 main investors • $18,480,820 • 44 entities supported, 99 loans, 13 countries • 92.8% of repayment rate • 54,608 direct beneficiaries • 465,078 hectares directly impacted • 16.4 million hectares indirectly impacted • 549 Red-listed species • $48 million in sales generated by clients VV Portfolio Results Summary December 30th 2011 Socioeconomic Targets Environmental Responses/Strategies Targets December 30th 2010 Hypothesis Percent Invested of Available Funds 35.9% 42.9% Total Invested to Date $18,480,820 $16,274,406 Capital Currently Outstanding $2,303,780 $2,414,714 Principal Repaid to Investors $3,503,094 $3,291,227 Number of Entities Supported 44 36 Number of Countries 13 13 Number of Loans 99 87 Repayment Rate 92.8% 92.3% th Summary Triple Bottom-Line Results September 30 2011 September 30th 2010 Environmental 453,782 Direct Hectares Impacted 465,078 15,031,687 Indirect Hectares Impacted* 16,498,711 512 IUCN Red-listed Species Impacted 549 Financial $31,786,841 Sales generated by Businesses Supported $48,499,071 $3 million Leveraged Funding $4.7 million Social 53,039 Total Direct Beneficiaries 54,608 212,156 Total Indirect Beneficiaries** 252,371 30% Percentage of Female Direct Beneficiaries 20% Stresses Pressures/Threats Outside of Scope of Intervention Stresses VV Portfolio Results VV Project Monitoring indicator Finca Irlanda 09 10 11 12 n/a n/a n/a 87 06 07 08 83 88 88 80 80 80 10 11 12 Finca Irlanda Biodiversity Human well being Wildlife Works Biodiversity Area formally protected by SME (ha) 46 Land sustainably managed by SME (ha) 270 hunting pressure is reduced (zero incidence) n/a n/a n/a b/l # direct beneficiaries 280 # indirect beneficiaries 433 best practices are followed (i.e., certification n/a n/a n/a b/l maintained) % female employees 35% Area formally protected by SME (ha) Land sustainably managed by SME (ha) # direct beneficiaries # indirect beneficiaries % female employees 1,434 38,806 346 1,099 (100%) Biodiversity Human well being diversity of species occur on site (~87) daily income above average (70 pesos / day) n/a n/a n/a 80 indicator Human well being Sample sectors 07 08 09 Increase habitat extent (by 400 ha) b/l 253 253 253 253 253 Increase estimated population of Taita white 100 94 95 250 240 246 eye (measured in pair) Decrease poaching (incidents/month) 130 48 38 40 33 30 Decrease timber extraction (bags of 60 54 43 40 38 35 charcoal) Human well being daily income above average b/l ? ? ? n/a n/a Project Specific VV Project Monitoring Indicators that roll up to portfolio VV Project Monitoring Sustainable Tourism – VV has continued to invest in priority ecotourism enterprises in Africa and in Central and South America. Sustainable, responsible tourism continues to be an important component of many sustainable economies and is an effective mechanism to secure both critical habitats and provide alternative economic opportunities to local communities in many parts of the world. 06 Wildlife Works Biodiversity Name of Investment Playa Viva LLC Sector/Country Tourism / Mexico Amount Conservation/Social Impact 200,000 USD Playa Viva is within CI’s Mesoamerican Hotspot and directly involved in supporting a turtle sanctuary with high egg counts of 510 nests of leatherback turtles (Red List CR), about the same number of green turtle nests (RL EN), and >2,000 nests of Olive Ridley turtles (RL VU) and low hatch rates. In addition, the developer has demonstrated a commitment to tackle habitat restoration and ecosystem function. As the only formal employer on the beach, they play an important part in providing alternative incomes and capacity building to the rural community. This presents a unique opportunity to maintain a conservation presence on an otherwise unmonitored stretch of tens of kilometers of beach. The initiative has been reviewed by the Conservation Committee, and approved on Dec 2, 2009. VV Deals – Playa Viva • Efficient processes – due diligence, screening, legal, TA, etc • Justified proxies (e.g., certification) • Directionality between meeting criteria and achieving impact • Demand assessment for sustainability • Client access to market • Consistent packaging of tools (loan agreement, due diligence, TA, M+E) • Managing risk of diluting mission focus • GIIRS Pioneer Fund • Aligned with IRIS, FAST, ANDE • Active at SOCAP, SVN, Investors Circle, etc Challenges for scaling Impact investing linkages • Develop and Implement an Innovative Financial Mechanism for lasting ecosystem conservation “Verde Ventures responsibly provides access to finance to sustainable businesses that contribute to healthy ecosystems around the world.” • Attract Private Sector Capital to ecosystem conservation • Build a critical mass of triple bottom line investments supporting healthy, sustainable economies Proposed new fund mission Marketplace Building Capturing the Value of the Marketplace Why scale up? Maturity Uncoordinated Innovation SME Conservation Finance Microfinance (today) “Marketplace Building” involves: • Building efficient intermediation to unlock latent supply of capital • Building enabling infrastructure for the industry • Developing absorptive capacity for investment capital Further behind today than microfinance was in 1999, and is perhaps 10 years behind • • • • • • • • • International Finance Corporation (IFC) l’Agence française de développement (AFD) Fonds français pour l'environnement mondial (FFEM) United Nations Foundation (UNF) Daiwa Securities Global Environment Facility (GEF) KfW Entwicklungsbank (KfW) Overseas Private Investment Corporation (OPIC) Starbucks Coffee Company Key Partners Please visit www.conservation.org/verdeventures Thank you!