Climate Technology Program | In Brief No. 5 Bringing Climate Opportunities to Entrepreneurs: Lessons Learned from the Caribbean Climate Innovation Center The Caribbean Climate Innovation Center was launched in January 2014 to help local companies build their businesses in climate-related sectors. In a region with great vulnerability to climate change—and very high energy costs—new clean technologies hold tremendous promise. This In Brief draws lessons from the center’s operation, focusing on how the idea generation sessions were essential to seed local companies with climate- related business opportunities and introduce new ideas to local climate markets. Climate Challenge and to the World Bank report Latin American Entrepreneurs: Many Firms but Little Innovation , almost 70 percent of Caribbean Opportunity for the Caribbean business owners opened a business out of fear of losing their job or because jobs were not available. 1 In addition, clean tech The Caribbean region faces serious climate change risks is a rather new concept in the entrepreneur community, and it disproportionate to its small global greenhouse gas footprint: is difficult to identify high-quality entrepreneurs with sufficient sea level rises, extreme weather events, and many other climate knowledge and business skills and to develop support climate-related problems threaten to cripple key industries programs accordingly to help them grow their green ventures. such as tourism, fishing, and agriculture. In addition, Against this backdrop, the Climate Technology Program dependence on expensive and volatile imported fossil fuels (CTP) of the World Bank Group’s infoDev unit established the have led to some of the highest electricity prices in the Caribbean Climate Innovation Center (CCIC) in January 2014. world ( figure 1 ), which act as a major drag on economic The CCIC’s objective is to support Caribbean entrepreneurs and development. Although these challenges have undermined new ventures to develop and commercialize locally appropriate the region’s competitiveness, they also present excellent solutions to climate-related problems. This In Brief outlines the market opportunities for innovative entrepreneurs interested CCIC’s business model and shares key lessons learned from its in renewable energy, water management, sustainable three years of operation. agribusiness, and other clean tech sectors. Although the Caribbean has a vibrant entrepreneurial culture, 1. Lederman, Daniel, Julián Messina, Samuel Pienknagura, and Jamele Rigolini. 2014. Latin American Entrepreneurs: Many Firms but Little Innovation. https:// many Caribbean countries suffer from an unfavorable business openknowledge.worldbank.org/handle/10986/16457. environment and a lack of innovation. For example, according Figure 1. Domestic Electricity Tariff (US ¢/kWh) for Selected Caribbean Countries and the U.S. In 2012 Caribbean Countries U.S. 49.90 40.22 40.33 41.40 37.88 38.27 38.72 34.05 34.17 18.50 12.33 4.51 4.60 . a a t as a a a t da d am e U. S lize aic uci en am Ne vis ti gu i nic ad e rra ni n Be Jam L nc h An Gre n nts Tr i uri St. . Vi Ba om S St D Mo Sources : CARILEC Annual Report 2012 (http://wrld.bg/MDmm308vEuI); U.S. EIA (http://wrld.bg/FwwI308vEBh). In Brief No. 5|Page 2 CCIC Phase 1. Launch and Early CCIC Phase 2. Enhanced Business Implementation Model and Service Offering The CCIC was launched in January 2014 as one of the After a little less than two years of operation, the CCIC main pillars of an umbrella World Bank program called the undertook a strategic reevaluation of its business plan to Entrepreneurship Program for Innovation in the Caribbean account for the three primary lessons learned operating in the (EPIC), which aims to support the development of an region: enabling ecosystem to foster innovative and growth- 1. Most entrepreneurs are not aware of clean tech market oriented enterprises in the region. The CCIC focuses on problems/opportunities and think of clean tech as simple establishing regional capacity to support clean tech start- “applied science” that requires little local innovation ups and early-stage companies and on contributing to the efforts. emergence of new domestic green industries. The CCIC is one of seven Climate Innovation Centers (CICs) established 2. Small CARICOM countries with prominent political and by the CTP; it is also a member of the CIC Network run by socioeconomic differences are scattered across the the CTP to connect global resources to the CICs. Caribbean Sea, which makes it more difficult to develop a business support model that works for this fragmented The CCIC serves all member countries of the Caribbean market. Community (CARICOM) except Haiti: Antigua and Barbuda, The Bahamas, Barbados, Belize, Dominica, Grenada, Guyana, 3. The clean tech ecosystem is very nascent, and most Jamaica, Montserrat, St. Kitts and Nevis, St. Lucia, St. Vincent local stakeholders in this space have little experience in and the Grenadines, Suriname, and Trinidad and Tobago. nurturing clean tech entrepreneurship and innovation. It is managed by a consortium consisting of the Caribbean A benchmarking analysis was undertaken on the CCIC in Industrial Research Institute (CARIRI) in Trinidad and Tobago November 2015. It found that the CCIC needed to adopt a and the Scientific Research Council (SRC) in Jamaica. The more structured approach and supplement its grant-making CCIC has also partnered with like-minded business support activities with other services, including business education, organizations and established a network of 13 hubs to coaching, and access to professional or technical services. The better serve the scattered CARICOM countries. CCIC intended to use the PoC grant competition as a way to As the only clean tech incubator in the Caribbean, the source promising portfolio companies. However, the success CCIC itself is like a start-up operating in an unknown of these activities was constrained by the general lack of environment. In its first two years of operation, the center clean tech entrepreneurs and the overall immaturity of the focused on setting up its physical infrastructure and regional clean tech ecosystem. One central conclusion of the governance structure, identifying a pipeline of clean tech benchmarking analysis was that the CCIC needed to build the entrepreneurs, and developing and testing business support ecosystem from the bottom up by supporting entrepreneurs services for these entrepreneurs. at much earlier business stages, such as those working on idea generation. The CCIC centered its support efforts on the proof- of-concept (PoC) grant competition. In the first PoC Following up on the recommendations of the analysis, the competition, held shortly after the CCIC’s launch, 11 CCIC hired a clean tech incubation specialist from New York entrepreneurs from seven countries out of 300 applicants to strengthen its strategies and service offerings. The center were awarded grants of up to US$50,000. The CCIC also has since developed a suite of service offerings that target offered a number of other services, including in-house entrepreneurs at different stages of their business journeys: business advisory, training on investment readiness, and • Idea Generation Session (IGS): Exposes inexperienced networking events. entrepreneurs to climate-related market problems by In Brief No. 5|Page 3 connecting them to market leaders and thus creating The accelerator program was launched in June 2016. Three transparency around these problems. companies have been accepted, and a second cohort is being selected. • Boot Camp: An intense three-day session to help entrepreneurs turn ideas into concrete business plans. At See figure 2 to learn more about the phase 1 and phase 2 of the end of the boot camp, start-ups should have a business the CCIC. plan, a business model, and basic market research. • Accelerator: A six-month program that offers standardized How to Run an Idea Generation services on the development of market, product, and company infrastructure. Start-ups should be incorporated Session for Climate-related and close to having a pilot by the end of the program. Opportunities The CCIC has learned many important lessons from its three years of operation. This In Brief focuses on the Idea Generation Session program because the program responds to a typical awareness problem common in nascent or emerging clean tech innovation ecosystems across the developing world. Climate change undoubtedly threatens all the Caribbean countries, but do entrepreneurs know enough about climate- related problems to develop local solutions that effectively address these issues and, at the same time, make business sense? Unfortunately, there are few ways for Caribbean entrepreneurs to connect with experts and learn about local climate-related market problems. Prior to the launch of the CCIC, the CTP conducted a survey with over 150 The Winning Teams of a CCIC Boot Camp Pitch Competition. clean technology stakeholders throughout the region to © The Caribbean Climate Innovation Center identify the gaps in the ecosystem. More than 85 percent of respondents considered a lack of regional information for The CCIC uses its hub-and-spoke model and partnerships to designing clean tech products and services a major hurdle disseminate its offerings throughout the distributed CARICOM that hinders climate and clean energy innovation (with about countries. The center, located in Jamaica, is responsible for 30 percent strongly agreeing). designing and testing the above support programs; the 13 The CCIC fills this awareness gap by running IGSs. Idea hub partners implement and scale these services across the generation sessions are a tool incubators and other Caribbean. The old PoC initiative did not provide an effective business support organizations use to prepare potential opportunity to engage country hubs, but the new programs entrepreneurs. Entrepreneurs sometimes do not fully have enabled hubs to tap into their local networks and involve understand the significant hurdles of launching a new ministries of governments in carrying out CCIC mandate. By company: market research, product development, fund- December 2016, the CCIC had run seven IGSs and seven boot raising, and knowing how to effectively create a company. camps at the center in Jamaica and several hubs. In 2017, the Clean tech entrepreneurs often face additional challenges, CCIC will develop the necessary training materials to help the such as a general lack of knowledge regarding current remaining hubs each stage a boot camp, so that each hub will and actionable market problems, difficulty in accessing have executed at least one boot camp by September 2017. customers, and limited access to hardware support such as testing, prototyping, and manufacturing. In Brief No. 5|Page 4 Figure 2. Phase 1 and Phase 2 of the CCIC PHASE 1 PHASE 2 Orgnization Structure A Spoke and Hub Model 1 program manager and 3 staff, , including a marketing 2 consortium members who established the specialist who strengthens CCIC’s promotional efforts in an Center and oversees its operation; ecosystem unfamiliar with clean tech terminology. 1 CEO and 2 staff; The Center: designs, pilots and develops 1 center in Jamaica and 13 hubs. programs and trains hubs to implement. 13 hubs: scale up incubation programs across the Caribbean and provide testing facilities for local entrepreneurs. Service offerings Local entrepreneurs. Proof of Concept (PoC) grant competition, A Suite of Services for Companies at Different Business Stages some business advisory services and networking events. Idea Generation Boot Camp: An intense Accelerator: A six- Session: Expose three-day session to month mentorship- participants to help entrepreneurs heavy program that climate-related to turn ideas into offers standardized market problems and concrete business plan. services on the entrepreneurship. Launched in Jamaica development of market, Portfolio Companies Launched in Jamaica in Feb. 2016, followed product and company in Feb. 2016, followed by 6 other boot camps infrastructure and ends 300 companies applied for the PoC by 6 other sessions across the Caribbean, with a demo day to the competition, and 11 companies received in Trinidad, St. Lucia, attracting 260+ investor community. grants of up to US$50,000. Dominica, and other entrepreneurs. Launched in Jamaica in hubs, attracting 400+ June 2016. entrepreneurs. Partnerships and Network Partnerships with Like-minded Organizations Consortium members: SRC and CARIRI Consortium members: Scientific Research World Bank programs: EPIC and the CIC Network Council of Jamaica (SRC) and the Other Existing and Potential Partners: Antigua and Barbuda Investment Authority, Caribbean Industrial Research Institute Business Builders Global, Caribbean Centre of Excellence for Sustainable Livelihoods, (CARIRI). Institute of Sustainable Livelihood Leadership & Exchange, National Development Foundation of Dominica, Dynamic Youths of Grenada, Institute of Private Enterprise Development Limited, Jamaica Business Development Corporation, Montserrat Development Corporation, Quıntessence Consultıng Inc., St. Lucia Coalition of Services lnc., the Coalition of Services Industries, Guguplex Technologies SAC, Start-Up Jamaica, and the Branson Center of Entrepreneurship. In Brief No. 5|Page 5 The CCIC designed the IGS program to help entrepreneurs water shortage problem: (1) incentives for people to stop identify environmental problems and brainstorm effective wasting water, and (2) development of new technologies start-up ideas to address them. This is done via a panel to produce water for households, such as desalination. with market experts who discuss actionable problems in After careful discussion with the experts, participants their respective fields and a follow-on session on business came up with some promising solutions. For example, one ideation and brainstorming. See figure 3 for details of how group decided to develop a gauge device that tracks water the IGS works. usage from households, which could be used by the water For the IGS held in Trinidad and Tobago, the CCIC invited company to enable communication between utilities and the country’s water authorities, and the government customers and create incentives for people to save water. officials informed the entrepreneurs of the water The CCIC had run seven IGSs by December 2016 and consumption issues the country currently faces. The cost of attracted more than 400 participants, including university pumping water in Trinidad is so low that people have been students and graduates, young professionals, first-time using water frivolously. However, as the aquifers become entrepreneurs, and experienced entrepreneurs. Both empty and the price of electricity rises, the cost of water experienced and inexperienced entrepreneurs found the will skyrocket. The current water consumption pattern will IGSs very useful. They left the sessions with a much deeper not be sustainable in the long term. understanding of climate problems and potential business The government representatives believe there are at least solutions to address them. two key aspects that need to be addressed to solve the Figure 3. How the Idea Generation Session Works Basic training: Industry Specific 1 3 part 1). start-up 101 Breakout Groups: le. le. for participants who are Participants break into du du less familiar with the entre- groups and rotate, speak Mo Mo preneurship ecosystem; with different industry repre- part 2). ideation: why it is import- sentatives about additional market ant, when it occurs and how to problems, find out additional go through the process; Expert Panel: details on the problems, and part 3). examples to 5-8 experts, includ- get feedback on any of illustrate the Ideation their preconceived Ideation: ing government officials, process. solutions. Participants break into business leaders and academ- groups and go through the ide- ics, give insights into actionable ation process combined with market problems faced by their industries, problems presented in Modules such as transportation, water, Mo Mo 2 and 3 to develop potential energy production, energy business solutions. du du infrastructure and agri- le. le. culture. 2 4 In Brief No. 5|Page 6 Lessons Learned: Seeding Climate time to nurture clean tech industries from the ground up. Support organizations need to have patience and realistic Opportunities for Entrepreneurs expectations: most CCIC boot camp entrepreneurs will not be ready for the accelerator program over night. in Nascent Ecosystems 3. Adapt Global Best Practices to Seed Ideas to The CCIC is the first CIC under the CTP to include an idea generation program in its service offerings. The IGS has helped Climate Sectors the CCIC to promote its brand; build its network of mentors, To address the various issues identified in the ecosystem, coaches, corporate partners, and market leaders; and identify there is no need for the CCIC or other incubator programs existing and future entrepreneurs. At the same time, both the to reinvent the wheel. They have a wide pool of global center and the CTP have learned a lot from designing, testing, best practices to draw upon. For instance, the idea and scaling up the IGS. generation session was inspired by the XPrize Foundation’s incentivized competitions, which challenge teams from 1. Understand Private Sector’s Grasp of Climate- all over the world to develop solutions to market failures across a wide range of sectors, with the top teams wining related Business Opportunities a grand prize. The CCIC adopted this concept, adjusted the During the phase 1 period, the CCIC underestimated the model to fit the Caribbean context, and developed the IGS. immaturity of the Caribbean clean tech market and focused on the PoC grant competition to source promising entrepreneurs. The PoC model has worked well, and it attracted some good- quality start-ups in the Kenya Climate Innovation Center. However, the Caribbean has a vastly different ecosystem than Kenya: clean tech remains a novel concept, and there are many fewer entrepreneurs here who are interested and familiar with clean tech sectors to begin with. The IGS effectively fills in the gap by sowing the seed and preparing the first generation of clean tech entrepreneurs in the region. 2. Start from Step One in a Nascent Climate Innovation Ecosystem Similar to the initially PoC-focused CCIC, other incubation centers in the region have tried starting with later stage companies and run into similar challenges. In a nascent clean tech innovation environment like the Caribbean, it is necessary for the CCIC to build the ecosystem from the bottom up: start with a large pool of potential entrepreneurs via an IGS and select more sophisticated entrepreneurs to move on to a series of increasingly competitive programs—that is, boot camp, accelerator, and incubator. Through the series of programs, the CCIC aims to generate enough attention from other players interested in clean tech innovation to collectively build up a green innovation ecosystem. However, it takes In Brief No. 5|Page 7 Climate Technology Program In Brief About Us The Climate Technology Program (CTP) In Brief series is a publication of the World Bank Group’s Trade and Competitiveness (T&C) Global Practice and infoDev. infoDev’s CTP is managed by the Innovation and Entrepreneurship Unit of T&C. CTP focuses on the growing opportunities of the clean technology sector in developing countries. Through a global network of seven Climate Innovation Centers, the program provides local entrepreneurs with the knowledge and resources they need to launch and scale their innovative business solutions to climate change. CTP In Brief is a series of knowledge briefs highlighting important aspects of the CTP global and in-country operations and research. Learn more at www.infoDev.org/climate. © 2017 The World Bank Group Acknowledgements 1818 H Street NW This brief was prepared by Xue Zheng with contributions from Washington, DC 20433 Jonathan Coony, Michael Lightman, Diletta Doretti, and Elaine Tinsley. Website: www.infodev.org More on the CCIC’s programs and results can be found at www. caribbeancic.org or www.infodev.org/climate. Email: info@infodev.org Twitter: @infoDev Facebook: /infoDevWBG