Climate Technology Program | In Brief No. 4 Adapting Global Entrepreneurship Acceleration Models to Clean Tech in Developing Countries: The Ghana Climate Innovation Center In Ghana, the World Bank Group is showing that a business development model that grew out of Silicon Valley can be applied to clean technology business incubation in developing countries. A business “accelerator” exercise brought together a cohort of seven competitively selected firms as part of the new Ghana Climate Innovation Center. Lessons learned from this project are being applied across the World Bank’s network of seven Climate Innovation Centers and can provide guidance to any effort supporting innovation of new commercial solutions and businesses that address climate challenges in developing countries. Introduction addition to individual business successes, accelerators create a community of entrepreneurship and increase the number of Silicon Valley is famed as the birthplace of high-tech firms able to get over the initial hurdles of start-up and on a innovation and fast-growing technology firms. One important path to growth and job creation. invention from this region is the business accelerator, a new The World Bank Group’s Climate Technology Program (CTP) is model for entrepreneurial business development itself. Instead testing a fundamental question: Can the accelerator model, of focusing on a single business, accelerators bring together invented to help software and web-based firms in highly a cohort of promising start-ups for mentorship, coaching, and developed economies, work in developing countries in lines early-stage financing. From their recent beginnings in Silicon of business focused on hardware and geared toward growth Valley, business accelerator programs have spread worldwide in the green technology sphere? The CTP put this question to as a way for both established and developing economies the test in Ghana as part of an effort that culminated in 2016 to foster entrepreneurial business innovation and growth. with the launch of the Ghana Climate Innovation Center (GCIC). In contrast to traditional business incubators, accelerators Selected indicators for Ghana’s innovation ecosystem are bring together a cohort of carefully selected start-ups and shown in figure 1 . established firms for intensive coaching, mentorship, concept development, customer validation, and often seed financing Innovation of commercial climate-friendly solutions and the over a period of a few months. The goal is to accelerate the businesses to deploy them are both an urgent need and a transition from concept to flourishing business through great opportunity for the developing world. Climate change is sharing ideas and best practices and peer-to-peer learning. In disproportionately impacting developing countries. The means Figure 1. Selected Indicators Show Innovation Ecosystem is Growing in Ghana* Tech Start-ups Doing Business Broadband Internet Number per mn population 1=most friendly regulation Subscriptions per 10k pop. Rank: 20/106 (2013) Rank: 108/189 (2017) Rank: 124/151 (2016) 59.3 111 27.8 52.3 108 5.7 2010 2013 2016 2017 2008 2016 Source : Crunchbase Snapshot Source : WEF-GCI Report Source : World Bank WDI Scientists, Engineers Tertiary Education Venture Capital Availability 1-7, 7=best Enrollments in % of pop. Availability 1-7, 7=best Rank: 101/151 (2016) Rank: 126/150 (2013) Rank: 77/151 (2016) 15.57 3.23 4.01 3.56 5.84 1.97 2008 2016 2008 2016 2008 2016 Source : WEF-GCI Report Source : World Bank WDI Source : Meetup API * All data could be found at TCdata360 (http://tcdata360.worldbank.org/). In Brief No. 4|Page 2 of mitigating that impact, or adapting to it, must fit local circumstances best understood by local private and public Applying the Accelerator Model to actors. Rapid growth in climate business sectors combined with the importance of local knowledge add up to a great CICs opportunity for small firms and start-ups to scale up, create Building on its experience launching CICs in Africa, Asia, and jobs, drive economic development, and contribute to the the Caribbean, the CTP sought to test the accelerator concept global response to climate change. in the context of clean tech entrepreneurship in developing countries. A number of common threads would characterize Lessons learned from the Ghana pilot—the aspects that the accelerator pilot. Participating entrepreneurs, start-ups, worked well and the obstacles and areas for improvement—are and established firms would be selected through a highly being incorporated into accelerator programs across the global competitive process that considered business success to network of Climate Innovation Centers (CICs) supported by the date, the quality of the underlying product concept, the World Bank Group and can provide guidance for many efforts level of commitment to the program, and other qualities. to drive local innovation of businesses in this space. The accelerator would provide intensive mentorship drawing upon local and international experts in a variety of fields. What is an Accelerator? Participants would work together in open settings, sharing and Accelerators are a relatively new concept, developed over critiquing ideas, developing and testing products, and honing the last decade as an alternative to the traditional business skills needed to pitch potential investors. incubator model that works with a business over several years. However, a number of critical differences would distinguish the The accelerator concept involves not an individual business CTP’s accelerator concept from its famous counterparts in the but a “cohort” or group of companies and start-ups brought world’s high-tech centers: together for mentoring, instruction, and peer-to-peer learning • The accelerator would be based in a relatively poor Sub- on everything from customer analysis to product development Saharan African country. and testing to investor pitching to accessing finance. For- profit accelerators such as Y Combinator, launched in Silicon • Whereas the established accelerator model focused on Valley in 2005, and Techstars in Boulder, Colorado, in 2007, software and web-based firms, the CTP’s would develop bring together carefully selected groups of entrepreneurs primarily hardware-focused products, such as solar- for four or five months of intensive training and mentoring. powered pumps and energy-efficient cook stoves. One The participants move to the area, share meals, and work limitation is that software companies have in general collaboratively on honing ideas, analyzing markets, testing much more in common than hardware companies, and products, and moving toward production and sales. Dubbed clean tech accelerators should be aware that exchange of by Fortune magazine as “a spawning ground for emerging ideas and cross fertilization are less likely to happen. tech giants,” the list of companies that have emerged from • CTP accelerator participants would focus exclusively in the Y Combinator’s accelerator includes Dropbox, Airbnb, and green-tech field. Reddit. The accelerator model has been replicated in the • A longer mentorship period—six months instead of the United States and around the world through such forums as more typical four—would be built into the program the Global Accelerator Network (GAN), which brings together to accommodate the typically longer startup phase of more than 70 accelerators in over 100 countries working in hardware based companies. seed-stage mentorship with start-ups and entrepreneurs. • The CTP accelerator would offer participants no immediate The goal of accelerators is twofold: for participating firms, equity investment, thus simplifying the terms of entry it is to speed their entry into markets with innovative and into the program. Admission to the accelerator is for profitable products; for investors, it is to make available a free: no payment nor equity share is required from the carefully vetted set of firms with the potential for high return entrepreneurs. on investment with reduced risk of outright business failure. In Brief No. 4|Page 3 These unique features clearly added a level of challenge to the CTP accelerator endeavor that would show up in some of Box 1. Accelerator Helps Solar Firm Shift the lessons learned. But they did not prove to be crippling to Strategy for Nearer-Term Sales the concept, and both the lessons learned and the progress The opportunities and challenges inherent in the Ghana achieved in the pilot accelerator are being applied actively in accelerator can be seen through the lens of one of the accelerators being prepared by other CIC teams. participants, Atlas Business and Energy Systems (ABES) Limited (see the photo below). ABES won the solar category The Ghana CTP Accelerator of the Green Innovators Boot Camp. Established in 2010 as an equipment manufacturer in the renewable energy sector, As the newest CIC, Ghana emerged as the preferred site for ABES is the first company to design and assemble solar the CTP’s first accelerator. Figure 1 shows that the innovation modules and charge controllers in Sub-Saharan Africa. The ecosystem in Ghana is growing over the past few years. company, with three full-time and two part-time employees, The accelerator program preceded launch of the Ghana CIC was having difficulty competing with importers. In addition in order to begin working with local firms while the CIC’s to competition issues, ABES faced difficulties attracting staffing and program designs were being completed. One investors, bureaucratic red tape, staff management issues, of the desired outcomes of the experiment was to identify a an underutilized assembly plant, and high costs of after- cohort of businesses that could continue to work with the CIC sales services. With the help of the accelerator, ABES once it was launched. The accelerator also helped speed the developed a strategy to shift from manufacturing and launch of the Ghana center itself by generating interest and assembling solar products to becoming a wholesaler and enthusiasm in both the public and private sectors. The model retailer in the field. The plan helped speed the move toward piloted in Ghana will now be tested in other established CICs, sales and turning a profit. Activities during the accelerator and new centers may organize accelerators as one of their first included development of sales and marketing materials, operational activities. improving the firm’s website, advertising, and generally An initial solicitation for participants in a two-day green tech working to increase name recognition. Longer term, the business innovation boot camp drew some 90 applicants. firm is open to the possibility of returning to manufacturing The initial pool was reduced to 20 participants in the boot or assembly, with a focus on unique products for Ghana. camp, and from that group seven companies were selected for participation in the accelerator based on a pitch in front of a judging panel. Like the accelerators operating in high-tech centers, the Ghana accelerator worked with participants on business ideation, team building, preparation and testing of product prototypes, fund-raising, and development of a compelling “pitch day” presentation. See box 1 for a short story of how the accelerator helped a participant shift its business strategy. As stated earlier, the Ghana accelerator’s longer six-month time frame was due to the longer time needed to develop physical, hardware product prototypes compared to most software products. The Ghana accelerator offered tailored mentoring and support on a one-to-one basis. Contests with recognition and prizes were a feature for the enterprises that showed the best performance for impact, market potential, and innovation. The © InfoDev/The World Bank Group In Brief No. 4|Page 4 program included a public relations component, including a stage firms that could be viable investments. high-visibility awards event, participation in the launch of the The Ghana accelerator hosted seven companies representing Ghana Climate Innovation Center, investor pitching sessions, several clean tech sectors. Figure 2 briefly describes the and a high-profile showcase for new products and services. participants. Five companies produce tangible products, Private sector accelerators in developed countries typically such as bamboo charcoal briquettes and liquid fuel derived offer an equity investment in which the accelerator provides from plastic waste; one delivers both products and services seed funding (in addition to mentorship and other services) in (energy audits as well as smokeless institutional cookstoves); exchange for a percentage ownership of the resulting firm. In and one is involved in advocacy for green buildings. The Ghana, this equity funding mechanism was not made available goal and expectation of the accelerator effort is not so much to participants, but it may be in future CIC accelerators. The that one of these firms will become the next Uber or Apple CTP’s clean tech accelerator concept shares with its more (though it is not completely out of the question). Rather the established counterparts the idea that the accelerator’s idea is that incubation of developing country enterprises purpose is not just to help start-ups improve and hone their through the accelerator process will help create a climate for concepts but also to help potential investors identify early- innovation, investment, and business growth in the green Figure 2. Summary Table of the Participants in the Ghana Accelerator Company Name Sector Brief Description The enterprise aims to commercialize a liquid fuel produced from plastic waste. Comeph and Waste Management and They joined the Accelerator to test the market and create awareness for their Associates Biogas product. The enterprise develops high biomass yielding bamboo plantations and sells Kwamoka Farms and Agroforestry sustainable bamboo and bamboo products. They joined the Accelerator to test Processing Ltd. and prepare the market for bamboo poles. The enterprise sells solar panels, photovoltaic components and complete solar Atlas Business and Solar products such as solar street light. They joined the Accelerator to increase sales, Energy Systems increase brand recognition and assess the feasibility of new business lines. Best Performance The enterprise conducts energy audits for organizations and designs and Engineering Services Energy Efficiency constructs smokeless institutional cook stoves. They joined the Accelerator to and Solutions Ltd. increase sales and expand into new markets. The organization specializes in advocacy for green buildings and generate Ghana Green Building Green Building revenues from certification of Green Buildings for a fee. They joined the Council Accelerator to promote its rating tool and assessment and certification service. The enterprise focuses on the production of bamboo charcoal and briquettes, but also produces other bamboo products, such as furniture and mats. They Global Bamboo Ltd. Climate Smart Agriculture joined the Accelerator to produce prototypes, create awareness, test the market and optimize the products. The organization provides sustainable green products, such as recyclable Green Ghanaian bins, and services to event organizers to make their events as environmentally Other Initiative friendly as possible. They joined the Accelerator to fine-tune their business model. In Brief No. 4|Page 5 technology space that does not yet exist, and that these test it and get customer feedback, and use the feedback to business improvements may have spillovers into other areas guide further product development. Experience in Ghana beyond the clean technology field. A further goal is to scale showed that the lean start-up concept might be challenging up climate innovation, with the help of accelerators, to the in the context of clean technology in developing countries. As point of having significant and measurable beneficial impact Charlotte Benedicta Ntim, one of the managers of the Ghana on reducing greenhouse gas emissions. accelerator, noted, “In the sphere of climate innovation, the largest obstacle in Ghana is that of attitudinal change. For Lessons Learned many companies, it quickly became clear that ‘green’ is not only a concept that is hard to sell in this context but, at times, The key takeaway from the Ghana accelerator experience was can actually be an impediment due to the perception that that this approach can work in developing countries provided climate-friendly is analogous to more expensive.” that organizers and participants adjust to the challenges particular to incubating clean technology start-ups in more In addition, the Ghana accelerator attracted a range of challenging economic environments. One key adjustment innovators, from very early startups to small early-revenue to make relates to an underlying theme that drives most companies. They are mostly “the usual suspects” that know the accelerators: focus on customer development rather than development communities well. This does not fit the Silicon product development. Start with a quick and dirty prototype, Valley model, because the Ghana accelerator participants are Figure 3. Adapting the Accelerator Model: External Factors Accelerator High-tech accelerator: Clean tech accelerator: Ghana accelerator factors Western model developing country model approach or issues Software and web-based high- Hardware-based clean tech Participants selected for concept quality Business focus tech business development business development and potential to impact climate change Highly developed economies Weaker economies and Keen private sector interest in climate Business with robust infrastructure, high infrastructure; less competition innovation and clean tech business environment levels of competition, wealth of but also fewer entrepreneurial development; need to build public sector entrepreneurial expertise experts support for climate innovation Adapt customer validation work to Robust consumption of tech Smaller markets; less disposable Customer particular challenges of local markets; innovation by businesses and income; some skepticism about environment ensure customer demand before consumers value of clean tech products commencing production Software and web-based start- Hardware-based start-ups No finance provided to participants; no % Financial ups need less capital; accelerators more capital-intensive; stake required by accelerator; World Bank factors offer mentorship in exchange for private financing environment Group may provide financing in future % stake in venture challenging accelerators Help foster the next generation Support clean tech start-ups Generate growth and create jobs; foster of high-tech giants; create a more in developing economies; business formation and formalization; Overall goals robust pipeline of tech start-ups; create jobs and growth while bolster country’s climate change create a support community for contributing to climate change contribution; help accelerate launch of tech entrepreneurship response Ghana Climate Innovation Center In Brief No. 4|Page 6 not potential “unicorn” companies with huge return prospects, but they could be the ones to make a significant environmental Taking the Pilot Global impact. The Ghana CIC has twin goals of fostering Across the network of seven Climate Innovation Centers, work entrepreneurship and creating climate impact, and it is still is underway to restructure the CIC operational model from one learning to find the right balance when assessing companies based on proof-of-concept competitions to a more targeted into the program. model consisting of ideation sessions, boot camps, and Figures 3 and 4 compare key elements of the accelerator accelerators. For example, in the Caribbean CIC, a new suite of model as applied in high-tech business incubation in services being offered includes accelerator programs involving developed countries with some of the differences and intensive mentoring, networking, and customization services. challenges present in clean technology accelerators in Graduates of the Caribbean CIC boot camp will be encouraged developing countries and the approaches to those challenges to apply to participate in an accelerator program. In early taken by the Ghana accelerator. The comparisons are divided 2016, more than 100 participants attended boot camps held into external factors relating to the business environment and in Jamaica and Trinidad and Tobago. The top three teams from internal factors relating to how the accelerators themselves each received grant funding to further perfect their business operate. model, and winning teams were guaranteed access to the accelerator program. Figure 4. Adapting the Accelerator Model: Internal Factors Accelerator High-tech accelerator: Clean tech accelerator: Ghana accelerator factors Western model developing country model approach or issues Highly competitive; participants Highly selective based on viability Boot camp model used to trim roster Cohort selected based on viability of of business model and potential of applicants down to manageable (7 selection business model, quality of proposal, climate change impact firms) roster of accelerator participants ability to raise capital 6 months: hardware companies Duration of 6 months in first pilot; duration may be 4 months need more time for R&D, program extended for more intensive mentoring sourcing, etc. Participants travel to accelerator site Cost issues relating to travel and Program did not require live-in Program and live in campus-like environment facilities may not support campus participation; accelerator participants logistics for duration of program approach commuted to program Accelerator participants often highly Limited entrepreneurial Participants not always able to devote Cohort experienced entrepreneurs and high- experience; participants often full time to program because of outside quality tech innovators single individuals work responsibilities Lack of data shifted due diligence Extensive economic and sector data Limited availability of hard data Data quality emphasis from number-crunching to available for conducting due diligence relationship building Experts available with experience in Less readily available mentors in Finding mentors with expertise Mentor tech entrepreneurship applicable to clean tech hardware fields that applicable to accelerator participants quality software and web-based businesses range from solar to cookstoves proved challenging In Brief No. 4|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 John Diamond with contributions from Michael Ehst, and Xue Zheng. Jonathan Coony oversees CTP Washington, DC 20433 knowledge activities. More on the GCIC’s programs and results can Website: www.infodev.org be found at http://ghanacic.org/ and www.infodev.org/climate. Email: info@infodev.org Twitter: @infoDev Facebook: /infoDevWBG