This category covers a wide range of funding and support options for early stage companies and projects. This early stage funding includes a range of means for financing “startup” or young companies and can include support ranging from subsidized working space, mentoring, grants, fellowships, through debt and equity financing as described elsewhere. Angel investing refers to private, mostly equity investments in early stage companies done by “angel investors” who tend to be high net worth individuals who are not professional investors. Angel investors often work within networks of investors to identify and co-invest in young companies. Incubators are defined as a “facility established to nurture young (startup) firms during their early months or years. It usually provides affordable space, shared offices and services, hands-on management training, marketing support and, often, access to some form of financing.” (BusinessDictionary.com, accessed November 16th, 2019). One example of an incubator for conservation is CFA’s recently announced virtual incubator for conservation finance which provides mentorship and grant funding. Another example is the partnership between The Nature Conservancy and Techstars Sustainability Accelerator.
Venture Capital (VC) is a formal investment approach for young business that involve professional investors – venture capitalists – often working through a team or a VC Firm, that make strategic investments in startup companies. There are a growing number of VC firms with an interest in sustainability but very few that are focused on nature (Conservation International, accessed January 10th, 2020). Typical VC firms seek very high returns and will accept a high level of risk to achieve strong returns. They are most commonly focused on technology or other types of companies that can provide the rapid growth needed for a high return on investment. Nature based companies that focus on sustainability may find it difficult to identify business opportunities that produce the level of rapid growth needed to satisfy the target returns of traditional VCs. While not taking a traditional VC investment approach which is mainly equity-based, Conservation International Ventures, CI Ventures LLC, is an example of an investment fund that finances early stage conservation ventures. Other funds that are less directly involved in conservation (including many sustainability focused VC funds) can be highly relevant to conservation by investing in technologies that can be used for conservation activities or may reduce environmental impacts.
Biodiversity Business Incubator
Business incubators are institutions that provide technical or financial services to strengthen startups and early stage enterprises. Incubators can support companies with an explicit commitment to biodiversity by hosting them in their premises and facilitating matching capital from angel investors, state governments, economic-development coalitions and other investors.
An example of a Biodiversity Incubator is the Incubator for Nature Conservation (INC) that is operated by the International Union for the Conservation of Nature.
Venture Capital
Type of equity financing that responds to the need of companies that due to size, assets or stage of development cannot seek capital from more traditional sources, such as public markets and banks. Venture capitalists play a more active role in the companies they invest in, mostly small, early-stage and high-growth companies. They are also ready to face higher risks on a longer investment horizon. Venture capital strategies are suitable for higher-risk developing countries' markets or for targeting business opportunities in new and innovative niches and products. Venture capital has been relatively limited to date for biodiversity businesses.
Conservation International Ventures (CI Ventures) is an investment fund that provides loans to small and medium sized enterprises that operate in the forests, oceans and grasslands where Conservation International works. Read more about CI Ventures here.
Biodiversity Enterprise Funds
Biodiversity Enterprise Funds are highly flexible investment funds that provide debt or equity to companies that sustainably use or protect biodiversity, such as sustainable agriculture and forestry, non-timber forest products, and ecotourism. Funds are structured to cover the typically unmet capital needs (debt, equity, quasi-equity) of a wide range of biodiversity-related businesses. They are for-profit investment vehicles that provide financial returns to their investors.
Aqua-Spark is a global investment fund based in Utrecht, the Netherlands that makes investments in sustainable aquaculture businesses that generate investment returns, while creating positive social and environmental impact. Read more about Aqua-Spark here.