Finance Track 2: Building a Green Impact Investing Network for the Mediterranean 20th October 2016

1. Finance Track 2: Building a Green Impact Investing Network for the Mediterranean 20th October 2016 #switchmedconnect @switchmed

2. Green Impact Investing Network Aim: Engaging investment networks and creating platforms with local financiers for enhancing access to finance for Green and Young Entrepreneurs in the Mediterranean. In partnership with the Federation of Ethical and Alternative Banks.

3. In the search for innovative financing solutions for green entrepreenurs

4. Findings from Morocco • Small ecosystem to develop and finance startups in MoroccoFNAM, Al Baraka, INMAA, OCP Fondation, Drosos Fondation, AttijariWafa Invest, Endeavor, Cluster Solaire, MITC Capital, BMCE • The existing financial offer is not suitable for "green entrepreneurs". But new tools are in the pipeline either regarding both lending and equity. • VC products are in the pipeline. • Banks monitoring trends and considering new products but they are still very risk-averse. • Young Entrepreneurship is a political priority and green entrepreneurs could benefit from this agenda. • Unfortunately, there is too much emphasis on start-ups with high growth potential and award winners. • No solution availablefor smallerprojects

5. Mapping Instruments in Morocco Early phase Expansion phase Stock market Public-to-private Seed Start-up First stage 4th stage 2nd stage 3rd stage Standardization Launch Production Concept Scaling Venture capital Loan Finance Profit zone Micro Finance Business Angels Incubators Loss zone Foundations & Prizes Family & friends

6. Findings from Egypt • A small ecosystem to support, develop and finance start-ups is developing in Egypt: 138 Pyramids, CairoInvest, AIC Finance, INJAZ, Shekra, Flat6Labs, CleanTech Arabia, Social Fund for Development. • Funds are locally raised and investors tend to be either existing Egyptian Entrepreneurs who want to help develop new young Egyptian startups. • Focus on "cherry picking” and designed to foster the emergence of innovative and hopefully very successful startups. • Public policy in Egypt could be oriented towards fostering eco-innovation among potential green entrepreneurs, rather than on the promotion of tried and tested concepts. • International technical assistance and public funding could be used to establish a high-performing guarantee scheme for start-ups. • Technical assistance could also be used to help banks assess the risk and potential of green enterprises. • VC and incubation is available for innovative start-ups but no lending solution

7. Mapping Instruments in Egypt Early phase Expansion phase Stock market Public-to-private Seed Start-up First stage 4th stage 2nd stage 3rd stage Launch Production Scaling Concept Standardization Loan Finance Profit zone Venture capital Business Angels Incubators Loss zone Foundations & Awards Family & friends

8. Findings from Tunisia • Tunisia has a large number of Banks and yet very few financing possibilities for SMEs or Start-ups. • Banks are risk averse and financing seems to be a slow and bureaucratic process which requires a very high level of collateral. Not suited for Green Entrepreneurs (GEs) and start-ups . • There are some initiatives from non commercial Banking institutions regarding the green economy (Enda, BTS,) but Entrepreneurs seem not be aware of them. • Venture capital and microfinance, however are segments with a variety of providers present. Today they not adapted to Green Entrepreneurs, but are potentially interested in Green Entrepreneurship and a route worth exploring. • BTS, as a government Bank, is principle best suited to finance future Green Entrepreneurs, it is focused on mesofinance, so can provide larger loans and longer terms and can also take more risks by using existing public garanties. • Heavy bureaucracy is in any case hampering the development of green entrepreneurship and it affects financing too.

9. Mapping Instruments in Tunisia Early phase Expansion phase Stock market Public-to-private 4th stage Seed Start-up First stage 2nd stage 3rd stage Launch Production Scaling Concept Standardization Venture capital Bank Finance Profit zone Micro Finance Venture capital Incubators Loss zone Foundations & Prizes Family & friends

10. Findings in Europe • More than 15 financing institutions, development agencies and networks interviewed and to be interviewed: Banca Etica, Alterfin, CoopMed, Crédit Cooperatif, AfD, Comptoir de I’Innovation, FEFISOL, ResponsAbility, Etimos Foundation, ANIMA, Global Alliance – For Banking on Values (GABV), Global Impact Investing Network (GIIN), KfW, Hivos, Oiko Credit, Triodos Investment Management. • There is in principle interest to invest but the focus is on enterprises with a track record and potential for growth. The size of investments desired is often above the €1 million mark. • Attending events targeting financing institutions to promote green entrepreneurs, identify existing instruments and advocate engineering of new funds. • ALFI Impact Investing Conference – European Microfinance Platform, GIIN, LuxFlag • FEBEA General Assembly – in Croatia on 6th June • SANABEL Network Event – The Microfinance Network of Arab Countries, in Morocco on 1st-2nd November

11. Potential venues for GE funding

12. Potential venues for GE funding Potential for growth

13. CoopMed Fund Legal Status: Limited liability company established under Belgian law Target size: EUR 20 M in 2 steps: launch: EUR10,5 M (operational since 09/2015) Q2 2016: closing of the second part to reach a total of EUR 20 M A committed partner for local financial intermediaries: • To provide quasi-equity and long-term debt: CoopMed offers subordinated and senior loans • To finance the development of local activities through the financing of social economy, micro and small enterprises • To support our clients’ operations and growth (thematic credit line to develop targeted project/product, support to the implementation and the improvement of social performance management …) Area of intervention: • Beneficiaries located in countries of the Southern and Eastern shores of the Mediterranean: Morocco, Tunisia, Lebanon, Jordan and Palestine as the first zone of investments

14. CoopMed Fund

15. SWOT summary findings • Strength: General Interest in green economy and green entrepreneurship as a sector with growth potential (recycling, energy efficiency and production, eco-tourism, organic farming, etc) • Strength: potential financing sources in micro-finance, venture capital and crowdfunding platforms. • Weakness: Funding of small sized start-ups like the Switchers is a huge challenge. Almost no instruments are available in the countries of focus. • Weakness: Lack of social lenders/investors and social entrepreneurship agenda

16. SWOT summary findings • Opportunity: New financing pipelines from Europe to North Africa can be established (e.g. CoopMed). However, this needs intense facilitation. • Opportunity: Guarantee schemes and hybrid funding (grant+VC+Debt) are missing but badly needed. • Threat: Due to its innovative nature, failure of the “first wave” of Green Entrepreneurs can kill the interest in the sector as a whole. • Threat: Security and political instability does not attract investment.

17. What we would like to learn from you: • What are the main challenges and opportunities in financing green entrepreneurs in the Middle East & North Africa (SWOT)? • How can we get you involved in SwitchMed Initiative? • Given these findings, what could be the role of a Green Impact Investing Network for you?