Climate-Smart Impact Investment Fund: Extending capital to SMEs in emerging markets | Climate Finance, South Africa 2019
SEED Practitioner Labs Climate Finance in South Africa engaged financial institutions, funders, intermediaries and other SME ecosystem stakeholders over a multi-step process to co-create innovative climate finance products and mechanisms that extend access to long-term financing opportunities for “missing middle” small and growing climate-smart enterprises that struggle to advance beyond the start-up stage and multiply their contributions to climate-smart and socially inclusive economies.
In light of the core challenges to “missing middle” climate-smart SME financing and the development of relevant impact investing opportunities in emerging markets, the solution for an Impact Investment Fund for Climate-Smart Entrepreneurial Solutions, developed by Hivos Impact Investments, brings together networks of active impact investors and potential future investors to de-risk and deliver equity to climate-smart SMEs in their efforts to reach commercial scale. The fund brings together networks of active impact investors and potential future investors to de-risk and deliver equity to climate-smart SMEs in their efforts to reach commercial scale by:
- Creating a collaborative impact-investing ecosystem for climate-smart entrepreneurship through ecosystem building activities that build a common understanding of investment opportunities and develop financing models specifically catered to climate-smart small and growing enterprises in emerging markets.
- Developing a pipeline for investment-ready climate-smart SMEs by engaging enterprises throughout their lifecycles to access the necessary technical assistance and business development services to improve their ability to attract growth capital.
- Delivering capital investments to target SMEs that mitigate the risk to financiers by leveraging development funding in a risk facility, thereby building a long-term investment case and improving the financial risk appetite of investors.