Private Equity (PE) is another form of private investment that can be described as follows: “the injection of institutional and retail funds targeting investment in privately owned businesses… Private equity seeks to provide growth capital or support buyouts of unlisted entities with a view to securing strong returns on behalf of their investors over a pre-determined (investment) lifetime.” (Adapted from Deloitte, 2017). There are few PE firms focused on nature such as Blue Oceans Partners, which works to invest in sustainable fisheries, aquaculture, renewable energy, and plastic pollution mitigation, but some large investment firms have PE funds targeting different forms of sustainability such as The Rise Fund of TPG. While sharing some similarities to VC, PE typically targets fewer but larger scale and lower risk investments, investing in businesses at a further stage of development compared to a VC. Even for the smallest PE investments, a business typically needs to demonstrate a steady stream of revenue as a pre-requisite for investment.
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.
Biodiversity Business Incubator
Business incubators are institutions that provide technical or financial services to strengthen startup 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.