KCIC invests in Acacia Innovations with Early Stage Financing
Throughout working with climate entrepreneurs, KCIC began to notice that there was a gap in financing options for its clients. At the beginning stages, a startup is oftentimes dependent on grants as a means of funding its operations. However, when they are ready to move on from grants to other forms of financing, they are frequently still seen by investors as being “too small” for commercial investments. As a result, KCIC decided to do something to bridge that gap through creating its Early Stage Financing (ESF). One recent recipient of ESF was KCIC client Acacia Innovations.
Related article: Kings Biofuels receives Kshs. 5 million in investment
What is Early Stage Financing (ESF)?
ESF provides clients with financing of up to $100,000 USD in the form of a loan and/or equity. The funds are used for CAPEX (capital expenditure) or working capital. Furthermore, it also comes with technical assistance from KCIC, including support with setting up corporate governance structures, refining their business models and improving business systems.
In identifying which of its clients will receive ESF, KCIC takes into account a variety of factors. First, the client must have a working business model and a credible management team. They must also have a highly scalable business and, of course, be tackling a climate challenge through renewable energy, water management, or agribusiness. Previous recipients of ESF have included Exotic EPZ and Kings Biofuels.
Acacia Innovations as ESF recipient
KCIC saw a lot of potential in Acacia Innovations when selecting them for ESF. The enterprise manufactures and distributes Kuni Safi briquettes- a nearly smokeless alternative to charcoal and firewood made of sugarcane waste- and affordable Kuni Safi cookstoves. Their primary customers are institutions- including schools, hotels, and catering companies- as well as homes. The briquettes have many benefits, including:
- Economical: Cheaper per month than firewood, leading to cost savings of 5-80%.
- Reliable: Available year-round with no shortages during rainy season.
- High-quality: Produces more heat than firewood and burns for twice as long.
- Healthy: Cleaner smoke with less particulate matter, sulfur, carbon monoxide, and carbon dioxide emissions.
- Eco-friendly: Every ton saves 25 trees.
The company has been a benefit to the community as well, as they have already created employment for 70 people.
Related article: Kuni Safi Briquettes: an ecofriendly source of renewable energy
How ESF will help Acacia Innovations
“We’re excited to be partnering with KCIC on this,” says founder Elana Laichena. “We are planning specifically to use the loan to purchase a second briquetting machine for our factory, which will help us scale our production a lot to keep up with the demand. We’re really grateful for the support and are looking forward to growing to the next level.”
“Commercial banks, private equity funds and other investors might not be willing to invest in Acacia Innovations because they think it has not grown enough yet,” explains KCIC CEO, Edward Mungai. “But, we have believed in it. So, we have provided them with the ESF to help them scale their business, which will then hopefully make Kenya commercial banks and other banks show interest investing in their company.”
By: Alise Brillault