12 Jul Strategies for Impact Investing in the Blue Economy
The World Bank defines the blue economy as the sustainable use of ocean resources for economic growth, improved livelihoods, and jobs while preserving the health of the ocean ecosystem. Coastal communities globally, especially in Asia, sustain themselves on small and medium-sized businesses (‘SMEs’) related to the oceans, such as fisheries and tourism. The OECD notes that the ocean economy is estimated to grow to $3 trillion by 2030.
However, the marine ecosystems and the oceans at large are plagued by several issues, including overfishing, the exploitation of marine resources resulting in ocean pollution and biodiversity loss, as well as climate crisis. Now, more than ever, there is a need to address these challenges and arrive at appropriate solutions to preserve and regenerate our precious oceans.
This need also offers the potential to implement sustainable business solutions for the blue economy, such as waste management, sustainable fisheries, low-carbon shipping and responsible tourism, among others. Several SMEs already exist in the blue economy but need access to catalytic and growth funding. The ADB reports that there is a gap of $5.5 trillion in blue financing – a majority of this gap comprises funding access for SMEs.
Impact investing can provide opportunities for sustainable growth in marine ecosystems globally. The High-Level Panel for a Sustainable Ocean Economy suggests that investing one dollar in certain ocean themes can yield at least five dollars in benefits over the next 30 years. Impact investors can contribute positively towards creating healthy and regenerative oceans while earning responsible returns.
Investment Readiness for SMEs
Ennovent recognises that SMEs in the blue economy may not precisely match the investment criteria that funding organisations seek. These SMEs miss crucial financing because funders have several criteria for due diligence, monitoring, and risk assessment. SMEs often don’t have the capacity to meet all the investment readiness criteria by themselves. Ennovent acts as the bridge between these SMEs and the funding organisations by preparing the enterprise for investment readiness. We work with the startup on all aspects of their business to help them meet the due diligence criteria. We support their business and financial planning and simultaneously help them secure the required permits and licences to make it truly investment ready. Our investment readiness service can be customised for startups directly or offered as an indirect service via funders and enablers.
Recently, Matanataki enlisted Ennovent’s support with the investment readiness of Waste Recyclers, an autonomous private company focused on collecting, sorting, processing, and exporting recyclables from Fiji. The Pacific Rise Program, a five-year program of the Australian Government’s Department of Foreign Affairs and Trade, wanted to pilot new ways of attracting appropriate capital for investment in social enterprises, such as Waste Recyclers. Along with Matanataki, Ennovent supported Waste Recyclers in implementing a viable business model for its growth strategy and negotiating and structuring a management buyout deal with a renowned impact investor from the blue economy space.
Read more about this project in our recent case study.
Pipeline Development for Impact Investors
The sizeable opportunity presented by the blue economy has attracted the interest of impact investors who are utilising diverse financial instruments to deploy funds in the startup ecosystem, be it grants, equity, debt, and other blended finance solutions.
Ennovent also offers pipeline development services directed at impact investors who wish to deploy investment in these SMEs. Ennovent identifies, nurtures, and prepares a series of startups to be investment ready for impact investors. This is either available to be offered for a cohort or as targeted investments.
Between 2021 – 2023, Ennovent, through its partner Matanataki, worked with the Global Fund for Coral Reefs and Joint SDG Funds to develop a technical assistance facility in Fiji designed to nurture a pipeline of bankable transactions for investment in Fiji’s Great Sea Reef seascape. Ennovent primarily assisted with the formulation of operational and pipeline development strategies for the facility, as well as in the delivery of investment readiness support for one of its principal transactions. Through this support, the Global Fund for Coral Reefs and Joint SDG Fund identified a vetted deal flow pipeline of 30 potential transactions and deployed investment readiness grants into two deals.
Our latest case study describes the support provided in further detail.
Ennovent works with SMEs and impact investors to support and offer services to invite more sustainable businesses into the blue economy. If our investment readiness or pipeline development services interest you, contact us at email@example.com.