Verde Ventures 2012 Overview


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2012 Overview of the Verde Ventures Fund at Conservation International

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Verde Ventures 2012 Overview

  1. 1. Verde Ventures:Building Healthy SustainableEconomies by Investing inSmall and Medium Enterprises Cheung 2009 Neel Inamdar Fund Manager
  2. 2. •  Fund Overview•  VV Monitoring & Evaluation•  VV Coffee Portfolio Impacts VV
  3. 3. Fund Overview
  4. 4. Verde Ventures invests in smallbusinesses that contribute to greeneconomies in Conservation Internationalsglobal priority areas Our Mission
  5. 5. •  3 main investors•  $19.2 million invested•  48 entities supported, 104 loans, 13 countries •  91% of repayment rate•  55,544 direct beneficiaries•  464,144 hectares directly impacted •  16.4 million hectares indirectly impacted•  482 Red-listed species•  $134 million in sales generated by clients VV Results
  6. 6. 2012 vs. 2011- TBL comparison
  7. 7. Investment  by  Sector   79%    Cocoa      Coffee      Ecotourism      Natural   12%   Products     3%   5%   0%    NTFP     Investment by sectors
  8. 8. •  SME Loans: US$30,000 to $500,000 for infrastructure, working capital, trade finance for business development in rural communities. •  Technical Assistance: Accounting, marketing, business plan development•  Monitoring: Triple-bottom line monitoring (Environmental, Social and Financial) Our Tools
  9. 9. •  Long Term: infrastructure, equipment and crop maintenance•  Short Term/Trade Finance: working capital, harvest finance. Type of Financing
  10. 10. International Finance Corporation (IFC)•  l’Agence française de développement (AFD)• •  Fonds français pour lenvironnement mondial (FFEM) •  United Nations Foundation (UNF)•  Daiwa Securities •  Global Environment Facility (GEF) •  KfW Entwicklungsbank (KfW)•  Gordon and Betty Moore Foundation (GBMF)•  Overseas Private Investment Corporation (OPIC)•  Starbucks Coffee Company Key Partners
  11. 11. Why Verde Ventures?•  Conservation-based employment is essential to provide economic incentives for conservation•  The small business sector is a key partner in the intersection between human welfare and conservation•  Lack of available, affordable capital is a major constraint to building green economies Facts
  12. 12. Hotspots + wilderness areas populated
  13. 13. VV Project Map
  14. 14. Capturing the Value Maturity Marketplace of the Building Marketplace Uncoordinated Innovation “Marketplace Building” involves: •  Building efficient intermediation to unlock latent supply of capital •  Building enabling infrastructure for the industry SME Microfinance
 •  Developing absorptive capacity forConservation (today) investment capital FinanceFurther behind today than microfinance was in 1999, and is perhaps 10 years behind
  15. 15. Sustainable Agriculture– VVhas continued to invest in sustainableand responsibly grown coffeecooperatives and estates as well as inother agricultural products inCentral, South America, and Africa.Investments in this sector aretypically designed to enhance habitatconservation, and provide water andfood security benefits.     Sectors
  16. 16. Name of Investment Central Agropecuaria Perla del Mayo (CAPEMA)Sector/Country Coffee / Peru – Alto Mayo RegionAmount 150,000 USD CAPEMA represents 150 coffee producers from 6 communities in the Alto Mayo Protection Forest’ buffer zone. After cattle, coffee production is one of the main agricultural activities that represent a risk for conservation in the Alto Mayo watershed. Certification programs demand an improvement on agricultural practices such as soil erosion prevention, prohibition on agrochemicals use, agroforestry systems establishment and waste water management.Conservation/Social Fair Trade certification also assures a minimum price and demandsImpact that the organization maintain an annual premium (US$10/coffee bag) for AGM agreed social investments. Associates’ families depend on coffee production and commercialization through CAPEMA as one of the bigger incomes during the year. They also produce some other crops for their own food security. VV Deals – CAPEMA / Alto Mayo
  17. 17. Alto Mayo, Peru
  18. 18. Alto Mayo, Peru
  19. 19. Name of Technoserve Ethiopia Coffee CooperativesInvestment Sector/ Coffee / EthiopiaCountry Amount 400,000 USD – Loan Guarantee Three major impacts are envisaged: •  Protection of natural forests through the development of sustainable small businesses that enable coffee farmers to earn more income and keep growing coffee •  Adoption of good practices for sustainable, certified, or conservation friendly coffee •  Reduction in freshwater consumption by coffee cooperatives Conservation/ With only 3% of the surface area of the country covered by natural forests, theSocial Impact conservation of these areas and the reduction of the demands made on these ecosystems are a conservation priority. As in many developing countries, there are very few economic options available to local populations who rely, along with a number of important species, on the ecosystem services provided by these forest areas. In Ethiopia, no less than 80 percent of the rural community and a significant proportion of the urban dwellers depend on herbal medicines for their primary health care delivery system. In addition to foods, medicine, fuel wood, and construction materials, forests provide wildlife habitat and recreational opportunities, prevent soil erosion and flooding, and help provide clean air. VV Deals – Ethiopia Coffee Cooperatives
  20. 20. Ethiopia Cooperatives, Ethiopia
  21. 21. Ethiopia Cooperatives, Ethiopia
  22. 22. Name of Ten Senses Africa Investment Sector/Country Macadamia Nuts / Kenya - AfricaAmount 75,000 USD The investment in Ten Senses Africa represents an opportunity to support a socially responsible enterprise currently enhancing the life of approximately 1,800 farmers in key areas for biodiversity by providing an economic justification to maintain tree cover in an important water tower and a region where most trees are threatened by charcoal burning. The upper Tana region is a critical fresh water resources in Kenya, important for the ivelihood of local farmers. The rivers are indispensable source of water for crops, livestock, wildlife, and human use, not only within the mountainConservation/ vicinity, but also for farther arid and semi‐arid lands. The upper Tana regionSocial Impact also hosts several reserves and parks. They contribute to Kenya’s economy in the ecotourism industry and also provide direct or indirect stream of revenues to the surrounding communities. Strategies to protect this rich region include alleviation of poverty. In fact, over the years, it has been proven that poverty is as a key driver in over‐ exploitation of the ecosystem. TSA’s activities in the region and its commitment toward certification (fair trade and organic) enable the rural communities to improve upon their living standards and conserve their natural habitat. VV Deals – Ten Senses Africa
  23. 23. Ten Senses Africa, Kenya
  24. 24. Ten Senses Africa, Kenya
  25. 25. Sustainable Tourism – VV hascontinued to invest in priorityecotourism enterprises in Africa and inCentral and South America. Sustainable,responsible tourism continues to be animportant component of manysustainable economies and is aneffective mechanism to secure bothcritical habitats and provide alternativeeconomic opportunities to localcommunities in many parts of the world.     Sectors
  26. 26. Name of Playa Viva LLC Investment Sector/ Tourism / MexicoCountry Amount 200,000 USD Playa Viva is within CI’s Mesoamerican Hotspot and directly involved in supporting a turtle sanctuary with high egg counts of 5-10 nests of leatherback turtles (Red List CR), about the same number of green turtle nests (RL EN), and 2,000 nests of Olive Ridley turtles (RL VU) and low hatch rates. In addition, the developer has demonstrated a commitment to tackle habitatConservation/ restoration and ecosystem function. As the only formal employerSocial Impact on the beach, they play an important part in providing alternative incomes and capacity building to the rural community. This presents a unique opportunity to maintain a conservation presence on an otherwise unmonitored stretch of tens of kilometers of beach. The initiative has been reviewed by the Conservation Committee, and approved on Dec 2, 2009. VV Deals – Playa Viva
  27. 27. Playa Viva, Mexico
  28. 28. Playa Viva, Mexico
  29. 29. Clean Energy – Addressing energycleanliness is a key component ofdeveloping a sustainable green economy.Verde Ventures is committed to tacklingthe challenges of energy poverty andthe related health, climate anddeforestation impacts prevalent in manyhotspots.     Sectors
  30. 30. VV Monitoring and Evaluation
  31. 31. •  Outlines, demonstrates and tests key hypotheses: that VV investments support improved TBL impacts•  Estimates substantive impacts•  Embedded within management structure •  Delivers accurate and timely reporting •  Transparency measures built in for accountability VV M+E Framework
  32. 32. •  Portfolio-wide monitoring o  All deals o  Basic TBL information that aggregates across o  Yearly snapshot of TBL progress•  Project specific monitoring o  Subset of portfolio o  Specific TBL conceptual models and indicators o  Demonstrates key links between nature and people o  Tailored indicators VV’s M+E Framework: 2 Levels
  33. 33. 70 Indicators (13 Social, 20 financial, 37 environmental)39 compliant with IRIS 2.2 taxonomy 1.  Organiza=ons   members   13.  Indirect  Beneficiaries   24.  Addi=onal  finance   mobilized   36.  Number  of  farms   48.  Total  Conserva=on   Area   61.  CI/CELB  par=cipant   2.  Organiza=ons   14.  Total  Revenue   25.  Wages  paid   37.  Ecotourism  Area   49.  Area  Sustainably   62.  Water  use     members:  Female   Managed     3.  Full-­‐=me  Employees   15.  Earned  revenue   26.  Direct  customers   38.  Ecotourism  Clients   50.  Area  Directly   63.  Water  conserva=on     Impacted   4.  Full-­‐=me  Employees:   16.  Cost  of  goods  sold   27.  Buyer  contracts     39.  Produc=on:  Honey     51.  Area  Indirectly   64.  Water  treatment     Female     Impacted   5.  Part-­‐=me  Employees   17.  Gross  profit   28.  Average  price   40.  Produc=on:  Wax   52.  Distance  of  water   65.  Solids  treated     bodies  permanently   protected   6.  Part-­‐=me  Employees:   18.  Net  income   29.  Local  market  price   41.  Beehives  Managed   53.  Number  of   66.  Energy  produc=on     Female   cer=fica=ons   7.  Temporary  employees   19.  Net  worth   30.  Producer  Price   42.  Produc=vity:  Honey   54.  Area  cer=fied   67.  Energy  consump=on     Premium   8.  Temporary  employees:   20.  Fixed  assets   31.  Total  interest  repaid   43.  Lobster  Traps   55.  Area  cer=fied:  Fair   68.  Renewable/Non-­‐ Female   Managed   Trade     Renewable  energy   sources   9.  Permanent  employees   21.  Value  of  collateral   32.  Amount  of  principal   44.  Produc=on:  Lobster   56.  Area  cer=fied:  Utz     69.  Names  of  Important   repaid   Adjacent  Conserva=on   Areas   10.  Permanent   22.  Return  on  equity   33.  Net  cash  flow   45.  Scale  of  Lobster   57.  Area  cer=fied:   70.  Number  of  IUCN  Red   employees:  Female   Produc=on   Organic     List  Threatened  Species   Impacted   11.  Direct  Beneficiaries   23.  Interest  Expense   34.  Produc=on:  focal   46.  Area  dedicated  to   58.  Area  Cer=fied:   71.  CO2-­‐equivalent   crop     focal  crop   Rainforest  Alliance     Emissions  Avoided   12.  Direct  Beneficiaries:   35.  Produc=vity:  Focal   47.  Total  Produc=on   60.  Area  cer=fied:  Bird   Female   crop     Area   Friendly     VV Portfolio Monitoring
  34. 34. §  US $19.2 M invested in 13 Countries §  464,144 ha protected in 9 hotspots §  55,544 jobs supported, 29% women Impacts
  35. 35. •  Feasibility •  VV client screening/environmental indicators •  VV due diligence checklist •  Value Chain Ranking Matrix •  Conservation Memo •  Investment Memo •  Implementation •  VV Annual Impact Survey •  Assessment Tool •  Certification Audit Review •  Analysis •  Cost effectiveness •  Frequency distribution •  Performance Indices •  Other initiatives •  GIIRS •  IRIS VV’s Management Tools
  36. 36. •  Quarterly Triple Bottom Line Report•  Annual Impact Report•  M E Update•  Pipeline Report•  Dashboard Report VV Reporting
  37. 37. •  GIIRS Pioneer Fund•  Aligned with IRIS, FAST, ANDE•  Active at SOCAP, SVN, Investors Circle, etc  Impact investing linkages
  38. 38. VV Coffee Portfolio Impacts
  39. 39. Indicator 2011 Total  Area  Cer6fied  (ha)   13,408   Area  Cer6fied  Fair  Trade   10,132   Area  Cer6fied  Organic  (ha)   7,741   Area  Cer6fied  Rainforest  Alliance  (ha)   4,139   Area  Cer6fied  C.A.F.E.  Prac6ces  (ha)   1,397   Area  Cer6fied  Bird  Friendly  (ha)   854   Total  Water  Conserva6on  (L)   154,716,796   Total  Water  Treated  (L)   29,549,064   Total  Solids  Treated  (T)   39,175   Energy  Produced  (KwH)   1,205,010   Energy  Consumed(KwH)   613,607   Average  Producer  Price  Premium   18.3%  Summary of VV Coffee Portfolio Impact
  40. 40. •  There is little scientific consensus on whether these agro-ecological systems provide tangible benefits to maintaining ecosystem services/biodiversity and should be considered areas of conservation significance•  Although shade grown coffee cultivation is no substitute for natural forest in terms of biodiversity conservation and ecosystem service production, this form of land use provides a viable compromise between the economic needs of local communities and global conservation priorities. Rationale for Coffee Investment
  41. 41. Coffee portfolio status in FY10 FY11 Coffee Portfolio Indicators
  42. 42. Indicator   Life  of  Fund   2010   2011   Total  Coopera=ve   Average  Per  Client:  1,243       3,351   2,546   Members   Average  Price  ($/kg)   $4.53   $3.98   $5.22   Average  Price  Premium   18.3%   (for  Cer=fied)   Total  Produc=on  (kg)   Unknown   8,252,716     6,879,494    Avg.  Produc=vity  (kg/ha)   667   871   537  #  of  Farms  Contribu=ng   Unknown   880   1,308   to  Produc=on   Emissions  Avoided   15,510,578.08  Mg  CO2   3,305,026.9  Mg  CO2   5,010,522.08  Mg  CO2   Certification Programs
  43. 43. The majority of investmentsin the Verde Ventures coffeeportfolio fall into two broad categories: 1.  private landholders 2.  organized groups of small holders (cooperatives or associations). VV Coffee Investments
  44. 44. In addition to the reliance oncertification programs,VV hasintegrated the following criteriainto our process of investmentselection: §  Location §  Alternative Land use §  Historical land use §  Cluster Strategy for Investment
  45. 45. Proportion of clients under each certification in 2012 and 2011 Certification Programs
  46. 46. Please Thank you!