Invested Development: October 2011

Friday, October 28, 2011

Weekly Review October 23-29

Several exciting headlines this week point to the adoption of clean tech as a affordable and scalable solution to the world’s energy problems.

“New Technology Could Double Solar Cell Efficiency” by RP Siegel on Triple Pundit

Although installed costs of solar photovoltaics have declined by over 43 percent since 1998, many who rely on fossil fuels are still reluctant to make the change to solar. Now, through advancement in the research and development of using so called “quantum dots”, several scientists at UT Austin have demonstrated how to increase solar panel efficiency from 31 percent to 66 percent, harnessing the previously illusive “hot energy” from the sun’s rays. These advanced developments and efficiency increases will likely drive down the costs, making solar energy more affordable for all.

“World Bank opens up $60m climate finance scheme to developing nations” on Business Green

A newly developed $60m fund by the International Finance Corporation will promote innovation in clean technology for emerging markets. Individual investments are expected to be in the range of $3 and $4 million. The fund will also support startups’ endeavors to reduce greenhouse gas emissions.

“Developing world ups ante in cleantech ‘arms race’” by Fiona Havey on The Guardian

Not surprisingly, the developing countries of the world are investing more and installing more clean technology than their counterparts in the developed countries. Specifically, China added 19GW of wind generating capacity, while India met targets of about 10GW. The Global Wind Energy Council wrote in its annual report that the demonstrated growth in wind capacity “puts an end to the assertion that wind power is a premium technology only for rich countries which cannot be deployed at scale in other markets.”

“Massachusetts Celebrates Green Technology with 2011 Clean Energy Week”

The Seventh Annual Conference on Clean Energy is happening in Boston on November 1. The Massachusetts Technology Transfer Center and The Massachusetts Hydrogen Coalition host the event as part of Massachusetts Clean Energy Week. Our own Miguel Granier is a panelist on “Energy Solutions for Developing Countries,” alongside Sam White, Co-Founder of our portfolio company, Promethean Power. Check out the agenda for all the details, including pitch sessions and lots of exciting panels.

“Selling Home Solar Like a Cell Phone Plan” by Brian Merchant on TreeHugger

It’s no secret that the two biggest obstacles to scaling clean technologies are cost and access. TreeHugger points out that it’s important to invest in renewable energy sources but also to experiment with pricing models that will allow people at all income levels to afford and access sustainable energy. Our portfolio company, Simpa Networks, tries to combat the financial barrier by allowing users to pay for energy just as they would with a mobile phone. Watch Brian Merchant’s interview with Paul Needham, Simpa Networks founder and a new PopTech Social Innovation Fellow.

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Tuesday, October 25, 2011

An ID Update

After a busy summer that included the official launch of our BETA initiative, we aren’t ready to slow down. This fall we continued our growth by opening our first in-country field office and welcomed a new team member.

Sean Smith, our Investment Analyst, has moved to Nairobi, Kenya, to open the first Invested Development outside of Boston. Sean will continue to source pipeline from around the world, but will add even deeper insight into the needs of the underserved on the Continent and the creative start-ups addressing them. If you’re in Greater Nairobi and would like to meet up with Sean, please reach out to us on Twitter. Watch out for a post in the coming weeks from Sean on this blog as he gets settled and learns more about the innovation that’s stirring in Nairobi.

Back here in Boston, we’re very pleased to announce the addition of Alex Bashian to the Invested Development team. Alex joins us as the Senior Investment Analyst after several years of experience in finance and clean technology. He is a graduate of Columbia University’s esteemed MPA program in International Energy and Economic Policy, a recovering Wall Street analyst, and an experienced alternative energy consultant and advisor. We couldn’t be more excited about having him on board.

In addition to our growing team and global presence, we have some great things planned for the upcoming quarter. Make sure to keep up with us on Twitter and subscribe to our blog to stay updated with all the latest news. Thanks for your continued support of Invested Development.

Monday, October 24, 2011

Poverty-Fighting Mobile Transaction Systems (Part 1): Leveraging Mobile Ubiquity at the BoP

The ID team spends a lot of time discussing and studying the mobile technology industry. The driving force behind our focus on mobile technology in emerging markets has been the explosive growth of mobile phone penetration rates and the potential for mobile transaction systems to reduce poverty.

Our most popular post on this blog is “Mobile Phones at the Base of the Pyramid: Accessibility and Affordability” published in June 2010. In that post, we outlined why mobile phones matter, citing examples of connectivity and mobile access increasing income at the bottom of the pyramid. Since then, we’ve narrowed down our focus even more. Every day we learn about new mobile transaction systems and applications that change the way people at the base of the pyramid live and work.

Over the past few years we have learned that the key to mobile transaction systems is the exchange. As Dr. Harish Hande, founder of SELCO-India and the winner of the 2011 Ramon Magsaysay Award said in his keynote speech at ForSe2011, the poor must be “asset creators”. It’s not just about selling to the BoP, it’s about letting them sell to us as well. This means that when we drive products, information, thoughts, and opinions to the BoP, we should allow the flow to be reciprocated. Everything that flows “down” must flow back “up” for a sustainable cycle. This includes money, information, and social capital.

In that 2010 post, we also looked at the demonstrated market growth for mobile phones. We consistently monitor the penetration rates of mobile phones in emerging markets. The World Bank Database is a reliable resource, currently offering data through 2009. Based on that data, we projected the penetration rates for 2010 and 2011(using a conservative diminishing returns formula for the falling year-on-year growth averages). The chart below shows the number of mobile phone subscribers per 100 people in Latin America & the Caribbean, India, and Sub-Saharan Africa. We compared these three emerging market regions with the United States, the European Union, and the world as a whole.

Mobile Subscriptions per 100 Inhabitants

Even at slowing growth rates and our conservative estimates, we can see that access to mobile technology in the developing world has increased tremendously over the past decade. Now, social entrepreneurs are leveraging these high penetration rates to create businesses and wealth that enable sustainable development. Muhammad Yunus, Nobel Peace Prize winner and founder of Grameen Bank, famously said: ”When you get a mobile phone it is almost like having a card to get out of poverty in a couple of years.” There are a variety of tools, applications, and services that mobile technology provides to empower the BoP and, here at ID, we strive to understand each of them.

Over the next few weeks, we will post the different examples of mobile transaction systems and the ways they empower the world’s poorest citizens by creating exchanges. Up first on the agenda is Mobile Money Transactions, check back next week for the first examples.

Update:
Part 2 - Mobile Money
Part 3 - Information
Part 4 - Social Capital

Friday, October 21, 2011

Weekly Review October 17-21

Source: Wikimedia Commons

This week we’re highlighting the importance of enterprise level development and impact investing in India. Several newsworthy excerpts describe the myriad opportunities emerging from the growth of social enterprises, impact investing, and the use of technology in the region.

“Could impact investing help India’s poor” by Shilpa Kannan on BBC News, Delhi

A massive existing population in India coupled with robust economic growth expectations and a changing investor appetite for disruptive innovation in emerging markets has driven growth in social enterprises opportunities. Impact investors are seeking cutting edge local entrepreneurs and business innovators in India for the development of the region. In late 2010, JP Morgan was one of the first to formally acknowledge that this sector is more than an emerging trend but rather a unique and emerging asset class all its own, a notion that supports the Times of India Social Impact Awards. As the article reports, it is becoming increasing clear that the potential and support for impact investing in India is huge. This investment class is both a solution for the risk-averse private sector and compliments the already exhausted resources coming from many governments and donors.

“Cheap tablet computer leads India’s drive to tackle rural poverty” by Charles Arthur on The Guardian

The Indian government is buying £30 tablets, the “Aakash,” from a British manufacturer, DataWind. The government will use the tablets to supply rural schools and universities with modern technology “to help lift villagers out of poverty.” This is an effort to get 220 million children of India online and close the gap between the burgeoning rich and the underserved poor. Currently, “only 7% of Indians graduate from high school” and the government aims to increase enrollment to 30% by 2020. DataWind tablets enable teachers to access important teaching resources and give students a taste of technology.

“How billions without electricity will benefit from clean energy” by Charles Kenny on Grist

“Just as many [governments] in developing countries skipped landlines and went straight to mobile phones,” many developing countries will also skip coal and go straight to clean energy. Clean technology and alternative energy sources are the competitive choice for under electrified countries in emerging markets. Especially in India, where the population is so large, the benefits of clean and safe energy sources will be significant. For example, there are about 2.5 million burn cases in India alone each year due to the use of kerosene lamps. Also in India, solar panels are priced around $300, the equivalent of a year’s supply of kerosene. Strengthened with innovative financing solutions like the Simpa Regulator Simpa Networks, India may reach its goal to produce 15% of its total energy from renewable sources by 2020. With the support of the public sector and the private sector, the second most populous country in the world can electrify the country with sustainable solutions.

“Aavishkaar raises $62 Million in Series D Funding” on Silicon India

Aavishkaar, a Mumbai-based venture capital firm, has raised a new $62 million fund that will focus on early-stage firms serving the base of the pyramid in India. In a similar fashion to Invested Development, Aavishkaar India emphasizes the importance of solutions that are affordable and scalable. The fund will serve a wide range of industries in India, including: healthcare, water and sanitation, education, agriculture, and renewable energy. VineetRai founded Aavishkaar in 2001 with the vision of enabling and harnessing the entrepreneurial spirit found at the base of the pyramid to promote sustainable and self-sufficient economic development.

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Monday, October 17, 2011

EGG-Energy Development Innoventures Salon

A few months ago, we highlighted EGG-energy's innovative pricing and distribution strategy for the Base of the Pyramid. If you like EGG-energy's business model or discussing BoP strategies in general, then we recommend attending EGG-energy's upcoming brainstorm session in Cambridge, MA, hosted by the Development Innoventures Salon. The session will open the conversation around three main topics:

Pricing Strategy
Marketing and Sales Strategy
Growth and Distribution Strategy

It's important for EGG-energy to grow sustainably and scale its model in order to create maximum impact in the vastly unelectrified Tanzania. Less than 10% of the Tanzanian population has access to reliable energy. EGG-energy's business has the capacity to change that with a "portable grid." The key is being able to offer scalable and affordable solutions with a low upfront cost.

If you're interested in the for-profit social enterprise space, the BoP, innovation for development, and a "Netflix for batteries" business model, then please attend the brainstorm session on Thursday, October 20th at 6:30 pm. Details are registration information are available here.

About Development Innoventures Salon:

"DEVELOPMENT INNOVENTURES SALON is a new forum bringing together Boston's Innovation-for-Development community. We brainstorm with emerging impact entrepreneurs attempting novel market- or technology-based solutions to intractable problems in the developing world. Salon participants problem-solve around key challenges these innovators face in launching and scaling their enterprises. The SALON aims to convene a multidisciplinary group of entrepreneurs, visionaries, business professionals, development professionals, investors, practitioners, technologists, academics, students, and polymaths."

Friday, October 14, 2011

Weekly Review October 10-14

A cornerstone of Invested Development’s strategy is that mobile phones facilitate information, participation, and transactions in emerging markets. This week’s articles demonstrate examples of how mobile phones can do so.

“Mobiles: The Hub of a Global Information Society” by Melissa Ulbricht on Mobile Active

Like us, Mobile Active is a proponent of the basic feature phone’s potential for impact by distributing information. A new report, “News on the Go: How Mobile Device Are Changing the World’s Information Ecosystem” by the Center for International Media Assistance (CIMA) discusses and examines how the implications that mobile penetration has for politics, education, economies, society, and most importantly, the global disbursement of news and information. The report focuses on smartphones, but Mobile Active smartly lists a collection of case studies focused on more basic phones. Both smartphones and more basic phones create opportunities as Mobile Active and CMIA demonstrate in their publications. Check out the Mobile Media Toolkit for case studies focused on basic phones and download the CIMA report to get a sense of the impact, no matter what kind of phone.

“Reach the Next Billion Through Mobile” by Grant Tudor on Next Billion

Nathan Eagle, a local MIT professor and co-founder and CEO of Jana, was profiled in The Economist in January and more recently in Next Billion as a “radical innovator capitalizing on the rapid and broad-based distribution of mobile technology.” Jana, formerly Txteagle, is a mobile-phone-based platform that allows global organizations to reach and engage consumers in emerging markets. Jana has Research and Marketing arms across 80 developing countries, allowing consumers to actively participate and leverage their own influence over the market. Jana allows businesses to collect data on the wants and needs of their target markets at the BoP by distributing surveys on mobile phones and offering a promotional incentive for doing so. In the case of Jana, mobile phones change the way we look at and do business with BoP markets.

“The African Laptop Killer: Android and the Developing World” Claire Hunsaker’s presentation at Android Open 2011

Claire Hunsaker, Director of Marketing and Client Services at Samasource!, presented at the Android Open 2011 on mobile ubiquity’s impact in Kenya. Claire discusses how the ubiquitous presence of mobile phones contributes to the lifestyle of everyday Kenyans. Notably, cheap Android phones called “Kenya phones” are slowly rising in popularity in the market. Most importantly, she points out that 99% of new-paying Internet users access the web on their mobile phones. Hunsaker and Samasource!’s work focuses on the use of mobile phones for information, payments, and networking. This is a philosophy we share at ID. For example, the Mobile Media Toolkit and the Open Data Kit, accessible on a mobile phone, promote citizen journalism. For more examples on how information distribution is made possible through mobile phones in addition to payment and networking opportunities, watch her whole presentation and follow Samasource! on Twitter.

“A powerful combination: Radio and SMS promote open dialogue in Chad and Niger” by Prairie Summer and Lucy Lyon posted by Ken Banks of National Geographic Emerging Explorer on National Geographic News Watch

Prairie Summer and Lucy Lyon of Equal Access International (EA) leverage the technology developed by FrontlineSMS to educate and empower the BoP through media and community mobilization. That is to say, with mobile technology, they facilitate participation and information transactions. FrontlineSMS is a valuable tool for NGOs that allows group texting and two-way communication on a large scale. EA hosts six radio programs in Chad and Niger and communicates with its listeners using the FrontlineSMS technology. This allows the listeners to participate, share their views, and get their questions answered using a tool that is readily available. Check out the article to read first-hand accounts of user participation.

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Wednesday, October 12, 2011

WANTED: The World’s Most Unreasonable Entrepreneurs

Convinced you have the entrepreneurial mettle to improve the lives of millions of people around the world? Accelerate your venture with mentorship from 50 seasoned entrepreneurs and practitioners, ranging from a Time Magazine Hero of the Planet, to the CTO of HP, to an entrepreneur who’s lifted over 19 million farmers out of poverty. In the process, form relationships with 20 impact funds including Invested Development and our friends Acumen Fund, Good Capital, and First Light Ventures and pitch to hundreds of prospective partners and funders. Do it all while living under the same roof in Boulder, Colorado for 6 weeks with 25 entrepreneurs dedicated to defining progress in our time! Apply by November 10, 2011 to attend the 2012 Unreasonable Institute!

Watch the Unreasonable Trailer to see what its all about!
See an overview of the 2012 Unreasonable Institute!
ID Founder, Miguel Granier, participated as an Unreasonable Mentor and a Capital Partner in 2009 and 2010. View his Unreasonable profile here.
Download the press release here.

Friday, October 7, 2011

Weekly Review October 3-7

Last week we spoke to the impact that mobile technology can have for development. For the same reasons, our other investment focus is alternative energy. While alternative energy is traditionally expensive, many social entrepreneurs are creating clever financing models that deliver clean energy at an affordable price. The following articles detail why and how alternative energy can create such a significant impact at the BoP in emerging markets.

Source: Simpa Networks

“Could a Pay-as-You-Go Model Convince People to Go Solar?” by Sarah Laskow on GOOD Magazine

GOOD Magazine spotlights Paul Needham, co-founder of Simpa Networks, our portfolio company, and a member of the Class of 2011 PopTech Social Innovation Fellows. Paul understands that solar energy incurs an upfront cost that is too high for most users. So he and the team Simpa created the Simpa Regulator, which allows users to pay for the cost of a solar home system over time. Simpa smartly pegs its prices to be the same as kerosene, which most people at the BoP use for energy. This way, the Simpa Regulator not only delivers energy affordably, but it also delivers clean energy that isn’t damaging to personal health or the environment. Even better, Simpa’s light from SELCO-India’s solar panels is brighter than a kerosene lamp. Consumers get a safer and longer-lasting energy source for the same up-front price and ultimately spend less money over time.

“Pay-As-You-Go Makes Solar Accessible in Emerging Markets” by Sami Grover on TreeHugger

Simpa is not the only company offering pay-as-you-go models. A company called Eight19 creates solar film – or printable solar panels. In partnership with Solar Aid, the pair has developed IndiGo, a charging technology that is specifically designed to be affordable for the BoP. Users can add credit to their IndiGo box by using the codes sent to their mobile phones after purchase. Like Simpa’s Regulator, this model allows users to pay for their energy over time without the initial upfront cost.

“Impact Investing in Energy Enterprises: A Three-Act Play” by Christine Eibs Singer, Executive Summary on the E+Co Blog

Christine Eibs Singer, the co-founder and CEO of E+Co, recently published a case study for the MIT Innovations Journal’s latest edition - SOCAP11: Impact Investing Special Edition. An executive summary is available on the E+Co blog. In the Case Study, Singer looks at the different stages that E+Co has gone through, and how the organization got to where it is now. E+CO started before “impact investing” was a buzz word. Despite the merge of impact-focused funding vehicles, the goal has always been to help energy enterprises grow and prove their worth, and ultimately create impact for the BoP. The full journal is available on Amazon and contains articles from many other industry experts including Kevin Doyle Jones, Phillip Auerswald, Antony Bugg-Levine, Mario Morino, and Ross Baird.

“Nepal on track to achieve MDGs: PM” on The Himalayan Times

The UN’s Millennium Development Goals seek to halve poverty by 2015. The Prime Minister of Nepal, Dr. Baburam Bhattari, noted that his country’s achievement of the MDGs is largely hindered by energy poverty, and in a broader sense, a lack of technology and innovation. Energy poverty occurs when there is limited or no access to electricity for cooking, heating, cooling, and/or lighting. Many people at the BoP in Nepal use unsustainable and harmful energy sources like kerosene. The Prime Minister addressed the “Sustainable Energy for All: Water, Food, and Energy Security” session at a UN Roundtable, where he suggested that the Nepalese government is accelerating efforts to scale sustainable energy solutions to fight against poverty.

“Can Microgrids Eliminate Energy Poverty?” by Christine Hertzog on The Energy Collective

A staggering 2.4 billion people in the world live in energy poverty - a way of life that is very unfamiliar to us in the United States. Almost a third of the world’s population lives with very limited or no access to electricity. This means that the time they can spend working or studying is limited, and it affects everything from cooking to communication to refrigeration. In other articles this week we discussed pay-as-you-go solar as a solution. Another solution to help bring energy access to the BoP is microgrids. General MicroGrids, Inc. is a company founded by Terry Mohn who is also the Co-Chair of the UN Foundation’s MicroGrid Work Group. He hopes that the company can deliver affordable and renewable energy to eliminate energy poverty and contribute to the goals outlined by the UN Campaign of Sustainable Energy For All. The three main goals that the UN is promoting to achieve by 2030 are: “1) Achieve universal access to modern energy serves; 2) improve global energy intensity by 40 percent; and 3) Produce at least 30 percent of the world’s energy from renewable sources.” Microgrids , according to Mohn, are a technological answer and solution that can meet the UN’s goals for energy.

Monday, October 3, 2011

Good News in the Portfolio

As we wrote about in a recent post, Cents and Responsibility, investors have a responsibility to entrepreneurs. The Weekly Review prior to that post highlighted the close relationship an entrepreneur must have with the investor to enable productivity and progress. We live by our own words. We have a close relationship with each of our portfolio companies and stand by them on both the highest of highs and lowest of lows. Although we don’t want our entrepreneurs to become self-licking ice cream cones, we can’t help but be excited for them when they are rewarded for their hard work. This week we’ve heard some great news all around and we’d like to share it with you.

Frogtek’s Tiendatek platform for micro entrepreneurs in Latin America won €150,000 (US$206,000) in Vodafone’s Mobile Clicks Competition 2011. Vodafone Mobile Clicks is an international contest for mobile start-ups. Frogtek made it through three rounds of judging based on the criteria of 1) originality, creativity, innovativeness, 2) technical and operational feasibility, 3) economic and financial viability, 4) value to end-users and 5) the quality of the management team. Frogtek’s target market is bottom-of-the-pyramid shopkeepers in Latin America; Tiendatek provides the shopkeepers with a valuable resource to enable them to manage inventory and sells and make smarter purchasing decisions. Venture Beat on the New York Times highlights Frogtek’s software and its prize here. The following video is an interview with Frogtek’s CTO, Guillermo Caudevilla.

Paul Needham, co-founder and president of Simpa Networks, has been named a member of the Class of 2011 Pop!Tech Social Innovation Fellows. This is an esteemed honor for Paul who has worked hard to create impact in India with the development of the Simpa Regulator, which makes solar home systems “radically affordable” for those living in energy poverty. The PopTech Social Innovation Fellows Program will give Paul and the other fellows the opportunity to connect and take advantage of “tools, insights, and [a] social network that can help them scale their impacts to new heights.”

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