Blog by Martin Hiller: PFAN - Looking Back and Looking Ahead

Sometimes you want a blog to appear right after an event, and the stars – or your own time management, the results are often the same – are simply aligned against you. But if the event is significant enough one can still blog about it two weeks later.

On 10 May, we launched the new platform for PFAN in Vienna, during an event which also included a Clean Energy Investment Forum (organised parallel to and in the context of the Vienna Energy Forum). What is PFAN? The letters stand for Private Financing Advisory Network, and PFAN offers indeed an original and unusual solution to the infamous ‘missing middle’: the fact that innovative entrepreneurs and interested investors, despite both being around in abundance, never seem to be able to find each other. This gap poses a major threat for all starting small- and medium-sized enterprises venturing into new energy solutions. PFAN comprises about 130 investment advisors and investors, many based in low- and middle-income countries, who are prepared to tackle business ventures seeking investments between 1 and 50 million USD. PFAN functions, therefore, as an accelerator for investment, focusing on those businesses, which offer climate-relevant solutions – renewables, energy efficiency, and adaptation to climate change.

Impressions from the PFAN Investment Forum & Relaunch

PFAN is unusual in the sense that it started almost ten years ago, supported by some donors – mostly the US government and Japan, as well as REEEP in previous years – and has by now facilitated over 1.2 billion USD of investment in over 80 closed deals. The projects and investment asks range from very small – in Vienna, the winning business looked for 700,000 USD to expand its operations selling a new type of biodigester to small farmers in Cambodia – to rather large, such as the 12.5 million USD biogas to electricity plant in Bronkhorstspruit in South Africa, a first for southern Africa.

Despite these successes, the donors realised two years ago that the set-up of the network needed a serious update in order to scale-up PFAN’s operations to their full potential. PFAN is a network without its own legal identity, needing a host organisation to offer a platform for contracting and grant management. So far, this was graciously provided by the Japanese government through the tech transfer specialist ICETT, which continues to be a key partner in the programme. But to really take PFAN to the next level, it was decided to add a multilateral with wide strategic outreach and the capability to establish a trust fund; and an agile behind-the-scenes organiser to implement automated workflow management, match this with state-of-the-art knowledge management and ensure that market intelligence from the supported projects is captured and put to good use. At the end of a tender process in late 2015, the decision-makers of the Climate Technology Initiative, a governmental body linked to the IEA and managing PFAN up until last year, decided that UNIDO and REEEP fitted the bill.

Impressions from the PFAN Investment Forum & Relaunch

What has changed, what will change? In the short term, the visuals have changed, ‘CTI’ was dropped from the PFAN name and logo, and the Network will experience a few minor adjustments. A new workflow management system will increasingly automatize various elements of the selection and coaching process. Importantly, more donors are supporting PFAN than ever before, and many who are not yet supporters have expressed their interest. The scale-up of PFAN is starting now: more deals per year, a larger network of advisors, lean and mean quality control, more help with financial modelling; these are some of the goals and elements that we are envisaging. Now, after the launch in Vienna, is the time when we finalise the transition and set our sights on the process of scaling. Good partnerships form probably the most important condition for success in that process - and we have started to reach out and make sure we work in context and cooperatively with all the others who are active in this space.

Impressions from the PFAN Investment Forum & Relaunch

So now here we are: amid our hard work on the development of the new systems whilst also keeping the flow of deals going – and preparing to increase its volume – we were happy to launch the new platform. Six projects were showcased during a special investment forum, the first one organised by PFAN in an industrialised country; the room was full and the money present was significant; and the political buy-in from our generous donors was evident. Norway’s Mette Møglestue, Chair of the PFAN Steering Committee, also represented the other four current donors, Australia, Japan, Sweden, and the US, and lauded the unusual cooperation between a network of private entrepreneurs – the PFAN investment advisors, a multilateral (UNIDO), and an international non-profit (REEEP).

Since this is my blog, I am allowed to quote myself: “We celebrate PFAN, but not with fireworks – they are bad for the climate; not with champagne – also too much CO2; but with six well-prepared, investment-ready, competent projects that combat climate change while offering financial returns. This is the way to go.”