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Whether it’s at the country, corporate or individual level, this blog considers how to gauge and measure impact.

Tuesday, January 10, 2012

A New Direction in South-South Collaboration at the 6th Annual New Ventures India Investor Forum

By Logan Yonavjak

Sinen En-tech, a Beijing-based company that produces waste treatment technologies for industrial boiler system steam, has enjoyed great success in its home market of China. A long-standing New Ventures portfolio company, Sinen has an impressive growth history and plans to launch an IPO in the next three to five years. Its founder and CEO, Yucheng Yang, was featured on the cover of Forbes China Magazine in 2008, and has a vision for his company to become the most recognized brand name in the energy-conservation sector in China, and potentially internationally. Sinen's technology enables its clients, several of whom are in industries such as steel, iron and thermal power, to save significant amounts of water and reduce emissions.

In order for Yang to reach his vision and ensure his company's continued growth trajectory, he knows Sinen must explore opportunities in other emerging markets, such as India. "In-house we don't have the capacity to examine these markets that we are looking to expand into," says Yang, "but we believe it is instrumentally important for Sinen to expand our business to key emerging markets like India and Indonesia; fortunately, institutions like New Ventures have an international platform we can leverage for to find partners and investors."

We often hear the term "South-South Collaboration" tossed around in the impact investing space. But what does it actually mean? To me, it's about finding functional ways for successful SMEs in developing markets to enter new emerging markets by getting access to the right partners (i.e. marketing or distribution) and/or the right investors who are willing to take a risk in that particular market. However, it's one thing to think about the process from a big-picture perspective, but quite another to meet entrepreneurs in-country, like Yang, who are actively trying to enter new, emerging markets, like India.

Forbes China cover

Last month, New Ventures India held its 6th annual Investor Forum, which showcased 17 environmentally-beneficial SMEs to investors and business leaders in Mumbai. For the first time, the forum included several sessions dedicated exclusively to South-South collaboration, which gave eight international companies from across Asia and Africa the chance to present their case for entering India to prospective investors and partners. This cohort included Yang from Sinen, accompanied by New Ventures China Country Director Walter Ge, who traveled from Beijing to Mumbai in order to present Sinen to the forum's impressive audience, which included dozens of investors, from banks to VC funds.

New Ventures India staff led the efforts to select these companies for the forum, "we came up with this initiative because the New Ventures program runs in six major emerging economies and because the challenges and opportunities that exist for entrepreneurs in these economies are similar in nature," says Sanjoy Sanyal, the New Ventures India country director, "we hope that by initiating this collaboration, we will see a lot more partnerships that are aimed toward addressing critical issues such as clean energy and water access for all."

Finding the right partners and investors is critically important for companies entering new markets. It is well known that SMEs face significant challenges to their survival, and a significant portion close within the first five years of operation. In addition to a lack of business skills and access to capital, this high failure rate is largely due to a lack of access to markets, and many emerging markets lack the necessary support infrastructure for environmental SMEs to flourish and grow.

(Pictured left: The Forbes China Magazine cover story featuring Yang and Sinen En-Tech).

Therefore, in addition to building in-country support networks in six emerging economies (Brazil, China, Colombia, India, Indonesia and Mexico), New Ventures has recently focused more deliberately on creating a vibrant and strong global network for environmental SMEs. This network aims to give companies the connections needed to scale up their businesses. Companies are able to leverage New Ventures' global network to improve their visibility through global media coverage, secure international buyers and enter new markets via South-South collaboration.

One of the major components of this South-South collaboration are Forums like the India Investor Forum, where enterprises, partners, and investors from different emerging markets can get together in person in one space to focus on exploring ways to enhance enterprise collaboration and expansion.

Other companies that presented at the New Ventures India Investor Forum included:

Waste2Watts, a for-profit social venture aimed at addressing energy poverty in emerging markets;

Tough Stuff International, a company that produces affordable solar energy products (check out a NextBillion feature on Tough Stuff here);

Fenix International Inc, a company that targets BoP consumers who are off-the-grid mobile subscribers;

Landwasher Environment Technology, a company that produces environmentally responsible toilets that utilize a water-free flushing system;

Shenyang SMEs Credit Guarantee Center, an institution that provides financial services such as credit guarantees for SMEs in China;

NavSemi Energy Private Limited, a solar energy harvesting Company offering a number of solar products; and,

Tera-Barrier Films Private Limited, a company that manufactures gas barrier films for flexible solar and plastic electronics applications.

Like Sinen En-Tech, each of these companies sees a strong market in India for their products, but needs local market knowledge and the help of local investors and partners to make expansion feasible.

Investors find these events very helpful in locating a strong pipeline of deals. For instance, The Asian Development Bank gave the companies present from India an open invitation to join ADB's Clean Energy for All Initiative. "One of the core values of New Ventures for development banks like ADB, and other investors, is that we don't have the human or capital resources to scope individual countries for credible energy access enterprises. The effective process by which New Ventures India selected and mentored the companies that presented at the India Investor Forum helps institutions like ADB feel confident in 'delegating' the role of enterprise identification, which allows us to focus on one of our core strengths - catalyzing private sector participation in the clean energy access space," says Charles Navarro, Access to Energy Expert at the Asian Development Bank. The Africa Enterprise Challenge Fund was another investor keen to speak with several of the companies who presented to come to Africa.

Forums like the India Investor Forum are critical to help environmental enterprises link up with the right partners and investors in order to scale up their impact on emerging market ecosystems like India. As Andrew Tanswell, CEO of Tough Stuff, mentioned to me during the forum, "Though there is huge demand for our products in India, it is not necessarily an easy market to enter without the right partners, so we are taking our time to find the right people and organizations to work with. The New Ventures Investor Forum was an important part of this process." 

(Above: Andrew Tanswell, CEO of Tough Stuff, addresses the forum. Image credit: New Ventures).

But annual forums alone aren't enough. Organizations like New Ventures are working to build other opportunities for cross-country collaboration opportunities for portfolio companies to gain access to new markets, including direct matchmaking opportunities. "Going forward, New Ventures' Global Hub in Washington, DC will continue to play a critical role in convening and coordinating this kind of collaboration among enterprises from our different Local Centers," says Tao Zhang, Chief Operating Officer of New Ventures. To this end, New Ventures is exploring the idea of building a Global Green Entrepreneurs Network where more cross-border opportunities can be created, even customized based on needs of different stakeholders in the network.

For more information about the New Ventures India and the New Ventures India Investor Forum, please visit: http://www.newventuresindia.org/index.html and www.investorforumindia.org

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