1. The Impact of Technology in Agriculture
2. Energy in Kenya and the Potential for Renewables
3. The Benefits of Informal Savings Groups
4. Introducing the Impact Factoring Fund
5. Renewable Energy in Kenya: Policy Tools and Anticipated Effects
One of the ways the technology startups can maximize their social impact and achieve success is by learning from the mistakes and successes of other organizations. Below are a few pieces of advice, opportunities, and lessons learned that startups should keep in mind.
“An Inside Look At Running a Cleantech Startup in India” by Rupesh Shah on GreenBiz
In order to ensure that a startup is moving in the correct direction, it is important for the leadership to agree and align on four areas:
1. What is the mission and why do you exist?
2. What are your values?
3. What are your core capabilities?
4. What will success look like?
By aligning on these four core beliefs, management can easily prioritize and build their company, while still remaining true to their mission. Rupesh Shah, Vice President of customer experience, product, and marketing at our portfolio company Simpa Networks, emphasizes the importance of balancing short-term objectives with strategic longer-term objectives in order to build a sustainable business.
“Pivot East 2014: Calling For Applications” by Sheilah Birgen on iHub blog
The Pivot East mobile startup competition will be held in June in Nairobi, Kenya. The series of conferences, as well as the competition, aim to “facilitate discovery of the next wave of high potential mobile startups in the region.” Startups will be judged on their effectiveness in describing customer pain, the startups solution, revenue streams, team composition and commitment, market traction, short-term projections and milestones among other aspects. These are all important aspects in building a successful technology startup and will help to streamline the business’s effectiveness.
“Hip Gadgets For The Developing World Won’t Solve Global Poverty: Stop Making Them” by Hugh Whalan on Fast Co.Exist
When developing a product, it is important to emphasize the usability and accessibility to the desired market. While new high-tech products are interesting and “sexy” to U.S. investors, it is not worthwhile if there is no way for it to reach consumers in impoverished rural villages. Many products developed in the U.S. have received positive press, however, their failure to address the supply chain and distribution needs to the target market have led them to an be unsuccessful. Conversely, organizations that do incorporate these components into their business models are much more likely to be successful, as well as address true social needs.
P.S. Did you catch our post on the nitrogen paradox this week?
Since 1960 we have increased global food production by 2.5X (FAO) and more than doubled our population. One of the biggest contributing factors to our increased crop production is Nitrogen and the Nitrogen-enriched fertilizer that is produced from it. Nitrogen is one of the basic building blocks of amino acids: a fundamental part of any organic organism and hugely beneficial to crop growth. However, it can have detrimental effects on the global ecosystem when used incorrectly or in excess. In order to balance the benefits and risks associated with Nitrogen use in agriculture, we’re looking towards innovative technologies in precision agriculture.
Originally discovered in 1908 by Fritz Haber, Ammonia, and subsequently Nitrogen-enriched fertilizer, was one of the most influential scientific discoveries for modern agriculture. Previous to Haber’s discovery, farmers relied on naturally occurring Nitrogen-rich fertilizers, which were expensive and ineffective. The most important test for synthetic fertilizer came in the mid-1900s with the Green Revolution. Hoping to increase outputs for farmers throughout the developing world, Norman Borlaug, father of the Green Revolution, introduced hybrid seeds and Nitrogen-enriched fertilizer. Borlaug is widely credited with saving a billion people from starvation by helping to increase the world’s grain output by more than 150% per acre (Miller). Today it is estimated that Nitrogen-enriched fertilizer is used to produce crops that feed over 3 billion people (Pearce).
The introduction of Nitrogen-enriched fertilizer has had a significant impact on agriculture, both positive and negative. The problem, according to James Galloway, a Professor of Environmental Science at the University of Virginia, Charlottesville, and a leading nitrogen researcher is determining “how to maximize nitrogen’s benefits while diminishing its negatives – especially waste” (Clayton).
Eager to reap the benefits of Nitrogen-enriched fertilizers, farmers have started overusing it, as shown by the dramatic increase in its use in the US over the last 50 years. It is estimated that less than 21% of the 80 million tons of fertilizer that farmers apply to their crops is actually absorbed, in other words nearly 63 million tons of the fertilizer is wasted (Pearce). As one Iowa corn farmer explained, “They say you only need a hundred pounds per acre. I don’t know. I’m putting on closer to one hundred eighty. You don’t want to err on the side of too little,” (Pollan).
If current trends continue, the amount of Nitrogen present in the natural environment is set to reach over 220 million tons by 2050: more than six times the safe threshold (Pearce). While the use of Nitrogen in agriculture is paramount in increasing crop yields, there are also very serious consequences to the overuse. As an accelerator of organic life, high levels of Nitrogen can disrupt entire ecosystems by reducing biodiversity, expediting climate change, and reducing oxygen levels to the point of acidifying and killing aquatic ecosystems.
One of the most shocking effects of Nitrogen runoff is the “dead zones” that now appear in oceans and other large bodies of water. Dead zones appear when Nitrogen levels are so high that they suppress the oxygen in the water, which results in the reduction of biodiversity to the point that the area is no longer able to support life. For example, the Gulf of Mexico’s dead zone can be traced directly back to the runoff created in America’s Corn Belt and throughout the Mississippi River Valley in many Midwestern states. The number of dead zones is quickly increasing and now covers over a quarter of a million square kilometers of ocean (Pearce).
The growing trend of precision agriculture encompasses a variety of techniques that can be used to optimize agricultural returns while preserving resources like Nitrogen. Equipment supported by Variable Rate Technology and Decision Support Systems work to collect data from the field, analyze that data, and determine the appropriate use of resources for each of the analyzed zones. By incorporating these data systems in farm management equipment, including seeders, sprinklers, and fertilizer equipment, farmers can ensure that their resources are utilized effectively. In a recent study utilizing precision agriculture technology, it was found that on-farm management of Nitrogen can cut Nitrous Oxide emissions by 25% without damaging crop output at all (Winiwarter, Ermolieva).
Precision agriculture is not new, but only recently have these tools be within reach of the 500 million smallholder farmers who produce 80% of the food consumed in Asia and Sub-Saharan Africa (IFAD). In order to support a rapidly increasing global population while mitigating environmental degradation and climate change, it will be necessary to increase the efficiency of farming practices, especially that of smallholder farmers.
As one of the largest factors in farm-related environmental degradation, Nitrogen-enriched fertilizers will again play a key role in an emerging Ag Revolution. This time, the focus is on appropriate technology in order to optimize returns on inputs while minimizing loss and runoff. We’re excited about the number of technologies and innovations that are in development to address this challenge as it will be one of the largest agricultural issues in the coming years. Contributing to issues of agricultural productivity, population growth, climate change, and environmental sustainability, precision agriculture technologies have the potential to fill a large market gap and huge social need.
Bruckner, Monica. “The Gulf of Mexico Dead Zone.” Microbial Life. Science Education Resource Center at Carleton College, n.d.
Clayton, Mark. “Earth’s Growing Nitrogen Threat.” The Christian Science Monitor. N.p., 12 Jan. 2010.
Fischer, G., W. Winiwarter, and T. Ermolieva. “Integrated Modeling Framework for Assessment and Mitigation of Nitrogen Pollution from Agriculture: Concept and Case Study for China.” Agriculture, Ecosystems & Environment 136.1-2 (2010): 116-24.
Food and Agriculture Organization of the United Nations, FAOSTAT database (FAOSTAT, 2014), available at http://faostat.fao.org/. February 2011.
International Fund for Agricultural Development. “Smallholders can feed the world.” IFAD Viewpoint. Retrieved from http://www.ifad.org/pub/viewpoint/smallholder.pdf.
Kaspar, T.C, Colvin, T.S., Jaynes, B., Karlen, D.L., James, D.E, Meek, D.W. 2003. Relationship between six years of corn yields and terrain attributes. Precision Agriculture, 4, 87-101.
Miller, Henry I. “Norman Borlaug: The Genius Behind The Green Revolution.” Forbes. Forbes Magazine, 18 Jan. 2012.
Ogburn, Stephanie. “The Dark Side of Nitrogen.” Grist. Grist Magazine, 5 Feb. 2010.
Pearce, Fred. “The Nitrogen Fix: Breaking a Costly Addiction.” Yale Environment 360. Yale School of Forestry & Environmental Studies, 5 Nov. 2009.
Pollan, Michael. The Omnivore’s Dilemma. New York: Penguin, 2006.
Zimmer, Carl. “Provocative New Study Warns of Crossing Planetary Boundaries.” Yale Environment 360. Yale School of Forestry & Environmental Studies, 23 Sept. 2009.
With our vested interest in alternative energy and emerging markets, we are always excited to see startups in and out of the portfolio recognized for their efforts, whether that’s through finding an investor match of simply receiving credit on well-respected publications. Below are some of the exciting developments in the alternative energy startup space over the past few weeks.
Ghana-Based Renewable Energy Startup Acquired in an Estimated 7-Figure Deal by Shea Gunther on Mother Nature Network
Impact Energies has been acquired by Persistent Energy Partners, a party to the former E+Co.. Impact Energies works to supply “nano-loans” for small-scale solar systems, like solar lanterns in Ghana. It is estimated that the value of the acquisition was seven figures, which is an indicator of the increased value of small-scale solar companies in underserved markets.
M-Kopa Solar Secures Sh1.7B in Funding to Reach 1 Million Homes by Ken Macharia on Capital Digital Media
A new solar model is proving to be successful with consumers as well as investors in Kenya. M-Kopa Solar, a solar system that specializes in supplying renewable energy to off grid households, has secured a Ksh 1.72 billion debt facility (almost $20M USD) from the Bill and Melinda Gates Foundation among others. In addition, M-KOPA Solar is partnering with Safaricom to expand payment options through M-PESA.
For-profit social enterprise d.light has announced the completion of an $11 million Series C financing. The company manufactures and distributes solar lighting and power products in the developing world. With a compilation of large impact investors contributing to their funding, d.light has raised a total of $40 million in capital from some of the biggest name investors in impact investing, including Acumen Fund and Omidyar Network.
New Financing Models Bring Greener Products to Developing Countries by Lindsay Clinton on The Guardian
Our portfolio company, Simpa Networks, which raised $2M from Asian Development Bank and others last year, has built its brand around innovative product financing that makes solar energy affordable to BoP consumers. After a small initial down payment for the solar system, customers activate the system in small incremental payments until the full price is paid off and the energy is free for the rest of its life. Based on this method of “solar leases”, Simpa Networks is able to deliver reliable renewable energy to low-income households and maintain a sustainable business model. We’re pleased to see Simpa recognized for its innovation on global platforms like The Guardian.