Signposting Support to Early-Stage Climate Entrepreneurs

By Jeremy Gorelick , Climate Finance Accelerator Strategic Advisor

I am regularly approached by early-stage climate entrepreneurs looking for my advice on financiers that are prepared to make investments into their promising ventures.? My typical response is to encourage them to first make sure that they have well-articulated business plans and robust financial models that demonstrate the long-term prospect of success.

The struggle to find support

Unfortunately, less than 10% of the entrepreneurs I have encountered have sufficiently strong plans and models, and the remainder often struggle to identify technical assistance providers that can help to strengthen their respective business cases.? Intrigued, and as part of the work of the UK Government’s Climate Finance Accelerator (CFA), I worked with a small team of expert researchers, guided by in-country experts across the CFA’s portfolio in Latin America, Africa and Asia, to investigate and categorize the support from a wide range of technical assistance providers.

Ad hoc assistance

We quickly recognized that we needed to identify the various types of technical assistance offered to early-stage entrepreneurs, recognising that we needed to differentiate typical jargon on the finances required; most entrepreneurs seek advice on how to raise money but do not necessarily appreciate the various pre-capital-raising activities required (to build a business case, to further identify competitors, and many more).? This prompted us to create a new taxonomy, which we divided as shown in figure 1 below.

Having agreed on a classification that we felt accurately represented the different types of technical assistance available, we interviewed and desk-reviewed over 200 accelerators and incubators identified in each of the Climate Finance Accelerator’s nine active countries: Colombia, Egypt, Mexico, Pakistan, Peru, South Africa, Türkiye, Uganda and Vietnam [1]. These accelerators and incubators deliver a range of activities from helping start-up companies to formalize their operations, through to developing business plans and financial models, and ultimately accessing the finance required for sustained and predictable growth.?

The results of our research told a more ad-hoc story of technical assistance to early-stage climate entrepreneurs than we had originally envisaged.?

Views from technical assistance providers and entrepreneurs

When we interviewed the technical assistance providers and the beneficiary entrepreneurs, we were struck by two key observations.

• The concentration of technical assistance for early-stage companies. As can be seen from figure 2, around 87% of technical assistance support available in the nine countries considered is for early-stage companies and projects. Around 10% of the support is available for companies at?the ‘flowering’ stage and 3% for companies at? the ‘fruiting’ stage - of the countries under consideration only Colombia and Türkiye had accelerators to support companies at the ‘fruiting’ stage.

• A lack of coordination between technical assistance providers. In particular, referrals between providers of technical assistance support are limited. In practice,?this means a lack of clear pathways for entrepreneurs to access the support needed to progress through different stages of the development.

More coordination needed to deliver success

Following the compilation of these results, we engaged with other technical assistance providers. We? found that there is a strong belief in the need for better coordination between accelerators. This would have the dual benefit of increasing the effectiveness and efficiency of development partner support by reducing unsuitable applications and improving the project pipeline as well as improving the likelihood of success for climate entrepreneurs.

Call for action

This common challenge has prompted us to issue a call to providers of technical assistance in climate finance. We aim to explore the potential for a better coordinated offering to entrepreneurs, supporting them to? to attract much-needed finance for initiatives that have potential to scale and offer impact.

We invite individuals and organisations who believe that better coordination between climate accelerators and incubators is essential to deliver for the planet to get in touch with the CFA team via [email protected]

Footnote:

[1] Technical assistance providers were identified by in-country delivery partners responsible for the implementation of the CFA.? Following the creation of the long list of providers, CFA team members researched the offerings from each entity through a combination of online desktop review and targeted interviews.

?