Claire Balbo: “I would very much like to see investors willing to take some level of risk”

Together with the Good Festival, we organised a Groundwork Day in late 2018 to brainstorm about how to better leverage entrepreneurs’ and investors’ ambitions. The afternoon offered an excellent opportunity to get a better understanding of each other’s perspective and needs. What do investors expect from entrepreneurs? And what do entrepreneurs expect from investors? Is there a role for enablers? We asked each of the groups present – entrepreneurs, investors and enablers – the same three short questions. Today, the enabler’s perspective. Here’s what Claire Balbo, Accelerator & Pipeline Manager at the Toilet Board Coalition, had to say:

 

Claire Balbo (second from left) with the 2018 Toilet Accelerator cohort of Sanitation Economy businesses 

 

Entrepreneurs need funds, investors are interested in what they call “bankable” enterprises in the water sector, but the money is not necessarily flowing, why?

I find the water – or, to speak directly to the Toilet Board’s expertise, the sanitation sector – an exciting area as it is relatively new from a market perspective. Because of this, we are having to develop a common language between entrepreneurs and investors, to meet each of their expectations. It seems obvious that investors need to “warm up” to the idea of this market which entrepreneurs and enablers are selling as “investable”, when in the past this sector has been seen as a social and health development bottleneck that required an ever growing amount of money from the public sector and aid funds. We are now seeing an increasing number of entrepreneurs in this space finding solutions to this challenge, leveraging on innovative business models to support their long term sustainability. What we are also seeing is a lot of these solutions working at small scale – and what is really needed now is for these solutions to serve more people, the 2.4 billion in lack of adequate sanitation! Funding – or investment- is required to support these entrepreneurs in taking their businesses to the next level. We therefore find ourselves in a chicken an egg situation of some sort: investors interested in scalable ideas, with a “guarantee” of some form of return, and entrepreneurs requiring those funds to confirm that return.

How can we overcome this barrier? What innovative approaches could we use? 

Investors seem to be looking for partners to reduce their risk levels. Innovative finance mechanisms, such as development impact bonds, seem to be trending in other sectors. I am not enough of an expert in this field to know if this will work in water and sanitation, but it is the intention of the SWEP members to help knit a system that can bring all stakeholders and interests together. 

What would you put on your wish list for the coming years? 

I would very much like to see investors willing to take some level of risk. Most entrepreneurs I have come across are not requesting for large amounts of capital, yet this could help them move to the next level. Organisations and enablers are here to support on the due diligence front, and bringing a pipeline of innovations that can truly make a difference for the people without sanitation solutions. The potential impact is huge, and the opportunity is there! 

Stay tuned for the investor’s perspective… in our next blog post!

Lars Willi on social entrepreneurship and barriers to investment

Read the interview