Clean cooking – Investments and innovation
In the last few years the clean cooking industry has changed considerably due to the emerge and growth of innovative business models in developing countries and increased investments. Although access to finance remains a constraint for early-stage companies, the clean cooking industry is poised to transition from a long-standing development challenge to a market opportunity in the years to come. These are the highlights of a report from the Clean Cooking Alliance on sector investment and innovation.
Investments and innovation: types of funding and business models
Investors remain cautious, because of the unproven economic viability and scalability of business models and possible macro investment risks. At the same time, private sector investment in clean cooking solutions is starting to demonstrate the ability to stimulate important innovation.
Sector funding used to be highly impact-focused and often came in the form of grants. However, more commercially-orientated investors show their interest in certain business models. In particular, companies that sell both stoves and associated fuels have attracted increased visibility and investment in the past years. “Such businesses benefit from enhanced consumer data, a stronger customer feedback loop, a regular stream from fuel sales, and the ability to reduce the upfront cost of stoves”, the report says.
The clean cooking industry: a view on the future
A promising trend is the growing shift to commercial distributors, including off-grid solar companies and MFIs, who have existing routes to market and consumer financing products. The sector is professionalizing: public support is more informed, companies are professional, products are more valued by consumers and the potential for impact is growing. Combined with developments such as urbanization, poverty reduction and financial inclusion, the researchers are optimistic. “The clean cooking industry is poised to transition from a long-standing development challenge to a market opportunity in the years to come.