Investment AND Incubation

Providing the critical enabling conditions
Each of the identified projects require at least one type of support to enable them to achieve investment-readiness.

HOW CAN WE DEVELOP INVESTMENT-READINESS?

 

Non-finaNcial needs

Projects typically have a series of common needs before they can become investment-ready.
Capacity building
Building business skills and delivering expertise within teams, enabling WWF and partner teams to better identify, develop and implement sustainable blue economy opportunities;
Technical support
Providing the technical skills specific to particular opportunity themes (for example, renewable energy technicians), which will enable design and delivery of operational models;
Business planning
Developing business cases, assess demand for products/services, and evidence outcomes that can be achieved, which will support the design and implementation of operational business models; and
Investment support
Help refine investment cases, co-develop financial forecasts/models, build compelling propositions to attract investment, and provide post-investment support (such as monitoring, evaluation and reporting), which will enable selected opportunities to access private finance.

Financial support

Development funding and seed investment
The ability to create investment-ready projects relies on proven revenue streams and a robust evidence base demonstrating targeted environmental outcomes. These are typically best evidenced through pilot projects before scaling up. Patient funding and seed investment is required to help projects prove outcomes and build evidence bases demonstrating their financial and technical performance alongside impact, supporting their attractiveness to potential investors.
Development funding
Seed investment

‘Bigger picture’ needs

Portfolio strategy and governance
While individual projects are being developed, coordination of pre- and post-investment support will serve to align project needs and objectives at a regional level and ensure that resources can be effectively distributed and prioritised across a portfolio of projects.

Supporting project level and regional governance is critical to success, to ensure local stakeholders are fully on board, and to minimise risks of unintended consequences. Governance needs to be designed carefully, taking into account local, regional stakeholders and investor priorities to ensure projects perform as intended.

Effective strategy and governance will also enable the pooling (or “aggregation”) of appropriate portfolios of projects to make them more attractive to investors, therefore improving investment case outcomes and helping to reduce transaction costs.
Portfolio-level strategy
Strategic governance
While civil society organizations often support these sorts of enabling conditions, It is important to note the key role local and district governments have to play.

PROJECT BUSINESS DEVELOPMENT STAGE

The “J-Curve”

STAGE OF DEVELOPMENT:
Each of the opportunities identified is measured against the business model development  “j-curve”: a visual approximation of how business models develop over time as projects grow from early-stage embryonic idea and concept through to fully operational businesses.

Portfolio Strategy and Governance

There is a clear gap in the market for an incubator programme designed to provide tailored support for marine and coastal livelihood projects to become investment-ready and access appropriate, dedicated sources of finance.

This demonstrates a critical mismatch between the demand for and supply of support. An incubator programme would therefore support community led projects across all regional seascapes to meet the spectrum of non-financial, financial and ‘bigger picture’ needs.

Incubator programme

IT IS IMPORTANT TO CREATE A DEDICATED PROGRAMME SUPPORTING THE FULL RANGE OF IDENTIFIED OPPORTUNITIES AND STRATEGICALLY AGGREGATE RELEVANT PROJECTS, WHILE DELIVERING A SHARED GOVERNANCE STRUCTURE. BY DOING THIS, A RANGE OF ADVANTAGES COULD BE UNLOCKED, INCLUDING:

  • Address economies of scale in delivering the financial and non-financial support to the opportunities identified across regional seascapes;
  • Aggregation of multiple small-scale projects to create investments of sufficient scale to improve attractiveness to investors and minimise the relative transaction costs (for example, shared investment documentation);
  • Alignment around quality standards to increase the value of products/services and improve outcomes (for example, by applying shared best practise across all regional seascapes);
  • Long-term source of support to enable projects to progress throughout their lifecycle, from early-stage concept through to investment-readiness, and ultimately mature operational business models; and
  • Shared strategic approach to sustainable funding across regional seascape teams, presenting well-structured investment opportunities to significantly increase the attractiveness to funders compared to disparate, uncoordinated approaches.
  • Championing infrastructure development at a regional level. Whilst an incubator may not be able to directly deliver some of the wider infrastructure needs identified by projects such as improved roads and medical facilities, it could provide the underlying data and a platform to highlight regional infrastructure needs.

CREATING A SELF-SUSTAINING INCUBATOR

Most existing support programmes rely on continued grant funding to support long-term operations. However, to ensure the incubator is able to continue providing support on an ongoing basis without the risk of failing to raise additional funding, the programme can be designed as a self-sustaining model. While non-repayable grant and concessionary finance are required to establish and operate the incubator, the programme can be designed to recover capital from a portion of the proceeds of successfully raised investment.