Bix Fund Summary

The Base of the Pyramid Impact Exchange Fund, or BIX Fund, catalyses the use of impact certification mechanisms (such as the voluntary carbon credit market) to improve the availability and affordability of essential energy products for low-income households in emerging markets.

Market Need

The ability to monetise the social or environmental outcomes that social enterprises deliver has the potential to dramatically improve the financial viability and scale-up potential of models designed to serve low-income consumers.

Take for example, the carbon market. Modern energy products that replace biomass, kerosene or diesel generate significant carbon savings over the course of their lifetime which can be certified and pre-sold, representing a major source of revenue for social enterprises.

BIX Fund will provide upfront finance to social enterprises delivering social and environmental impact in emerging markets, which will be repaid as these impacts are monetised

Unfortunately start-up and growing enterprises face major barriers to realise this value. End-to-end value chains rarely exist to access the rural customers who need these products most. Collecting and auditing the data required for carbon accreditation is also a costly, time-consuming process (typically with a two year lag) and requires the support of distributors, retailers and customers alike.

The evolution of a new pre-finance facility for energy enterprises

In 2010, SF established a $5 million pre-finance facility with our long-term partner Envirofit. This worked by providing finance to Envirofit – repayable from revenue linked to carbon – to overcome barriers to carbon monetisation in the clean cookstoves sector. The model was a first of its kind, piloting a need for the wider industry, for carbon pre-financing.

     
  Envirofit used the facility to register and track the sale of over 200,000 stoves (benefitting one million people) across 10 countries that will save over two million tonnes of carbon in the next five years.  
     


In early 2013, SF moved the management of this facility from Envirofit to Cardano Development, a Netherlands-based foundation with a track record for establishing innovative financial instruments, in order to create an independent entity that could scale the facility and serve the wider market.

Business Model

BIX Fund was established with the same $5m seed funding and has leveraged a further $10m, building on strong interest from leading social investors. The Fund will provide upfront finance to social enterprises delivering social and environmental impact in emerging markets, which will be repaid as these impacts are monetised.

Pre-finance must be used to improve the availability and affordability of the social impact product in question (such as clean cookstoves or solar lights) enabling producers to:

     
 
  • lower prices to stimulate demand and achieve economies of scale
  • enhance value chain margins and credit terms for distributors and retailers to open new sales channels
  • stimulate product innovation by supporting R&D and monitoring and evaluation
 

BIX Fund has since recruited a small staff of social investment experts and has developed a pipeline of enterprises that will be eligible for pre-funding – with an initial focus on the clean cookstove sector. Their short-term goal is to deliver over two million stoves into emerging market homes by 2018.

By creating a mechanism to strengthen the value chain and affordability of social impact and modern energy products, BIX Fund aims to be a major catalyst of the accelerated growth of social enterprises serving low-income households throughout the developing world.
 

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