Verde Ventures 2: Scaling Up the Verde Ventures Fund A Collaboration of Conservation International, the KfW Development Bank, and Starbucks Coffee Company
Building on a nine year track record of successfully engaging small- and medium-size enterprises (SME) in biodiversity conservation and healthy ecosystem focused investments, Verde Ventures is working with KfW and Starbucks to establish Verde Ventures 2 (VV2). This is a new facility with a capitalization goal of $100 million.
Designed to significantly scale up the impact of Verde Ventures, the innovative new facility is focused on supporting private sector investment in areas where there are critical ecosystems to build healthy, sustainable economies and promote biodiversity conservation. The facility seeks engagement of key sectors of national economies in sustainable development.
Proposed Mission
“Verde Ventures responsibly provides access to finance to sustainable businesses that contribute to healthy ecosystems around the world.”
Background and Results
Formally established in 2001, Verde Ventures (VV) is a program of Conservation International (CI) and a key component in the development and implementation of CI’s healthy, sustainable economies model1. Verde Ventures invests directly in SMEs by providing debt financing to businesses that benefit ecosystems and human well-being, such as sustainable agriculture, alternative energy2, agroforestry, ecotourism, sustainable harvest of wild products and sustainable fisheries.
Verde Ventures has successfully invested in more than $22.6 million in 50 enterprises, generating over $137 million in sales, employing more than 57,000 people directly, and positively impacting more than 228,000 rural beneficiaries in 14 countries. These SME partners have contributed to the protection of more than 513,000 hectares of critical habitats for 483 globally threatened species.
VV’s investments enable our SME partners to advance the important role of small business in conservation and sustainable development. They employ local people in jobs that give them and their communities a personal and economic stake in safeguarding their local natural resources. Verde Ventures contributes to successful conservation outcomes through economic incentives and efficient, people-focused solutions.
SMEs and other private sector entities can play a significant role in creating successful green economies by supporting poverty eradication and sustainable development. As key components of a healthy and thriving economy, SME’s are important drivers of employment, income and taxes, contributing more than half of the national economic output in high-and middle-income countries.
Given their prominence in national economies, SMEs can be key drivers in decreasing environmental impacts and ensuring a more sustainable economic development trajectory by ensuring the adoption of social and environmental good practices and making sustainable business decisions.
Despite their significant economic role, many SMEs continue to suffer from a lack of access to financing, which impedes growth and the adoption of sustainable business practices. Due to the impact of this sector on biodiversity and ecosystem health as well as human well-being, access to financing by SMEs has long been the focus of VV.
Main Features of Verde Ventures 2
KEY INVESTMENT FEATURES
Verde Ventures 2 is an impact investment fund focused on scaling investment in regions of valuable biodiversity to build healthy economies and promote conservation. The Fund will invest in small- and medium-sized enterprises and producer groups in Colombia, Mexico and Peru with expansion envisaged to other Latin American countries and Africa.
The Fund:
- Provides a new and unique platform to aggregate capital from a range of aligned investors and deliver a balanced portfolio of financial, environmental and social returns by efficiently deploying capital at scale.
- Offers a flexible structure which uses multiple products and vehicles to meet a wide range of investors’ needs.
- Enjoys the benefits of a Technical Assistance (TA) facility to ensure that capital deployed is most effectively used by investees.
- Provides partial backstopping of any potential losses of an anticipated USD $10 million in Class B equity to limit investors’ downside exposure if the Fund’s investments are not successful.
- Benefits from the deep expertise in conservation finance and the networks at both the local and global level of the VV2 investment team.
- The Fund will be GIIRS rated, use IRIS compliant metrics, and for a representative sample of the portfolio, put in place a rigorous monitoring and evaluation (M&E) process in collaboration with Conservation International.
SPONSORS
- KfW Entwicklungsbank - Owned by the German Government and established in 1948, KfW finances sustainable investments in Germany, Europe and developing and transformation countries by supporting and applying a broad array of financial instruments. KfW is one of the world’s leading financial institutions in supporting environmental, climate and biodiversity projects.
- Conservation International Foundation (CI) - Building upon a strong foundation of science, partnership and field demonstration, CI empowers societies to responsibly and sustainably care for nature, our global biodiversity, for the long term well-being of people. Founded in 1987, CI has headquarters in the Washington, D.C. area, and 900 employees working in nearly 25 countries on four continents, plus 1,000+ partners around the world.
- Starbucks - Since 1971, Starbucks Coffee Company has been committed to ethically sourcing and roasting the highest-quality Arabica coffee in the world. Today, with stores around the globe, the company is the premier roaster and retailer of specialty coffee in the world. Through our unwavering commitment to excellence and our guiding principles, we bring the unique Starbucks Experience to life for every customer through every cup. Starbucks takes a holistic approach to ethically sourcing the highest quality coffee. Our farmer loans program has been a key component of this effort for nearly ten years, working with organizations such as Conservation International and the original Verde Ventures. We are continuing to build on our investment in farmers and their communities by increasing our farmer loans to $20 million by 2015.
1Mittermeier, Gil and Mittermeier eds. 1997. Megadiversity: Earth's biologically wealthiest nations.
2Leading foundations and non-governmental organizations such as the Gordon and Betty Moore Foundation, the Packard Foundation, and Conservation International have successfully deployed funding for programmatic and other investments for conservation-linked enterprises. In addition, investment funds and other financiers such as Root Capital, EcoEnterprises and Agrobanco have developed successful models to fund such enterprises
KfW and Starbucks have expressed interest in a financial commitment to the Fund, subject to ongoing successful development of the Fund concept and satisfactory resolution of critical success factors prior to any formal commitment. In the case of KfW, that interest is also subject to approval of the German Federal Ministry for Economic Cooperation and Development.
For additional Information please contact:
Lorena Garcia-Bustos
Conservation International
Email: lbustos@conservation.org
703-341-2400