Unlocking Investments for Sustainable Forestry Firm in Kenya
Investment by Conservation International Ventures, the impact-investing arm of Conservation International (CI), has helped Kenya’s sustainable forestry firm Komaza attract significant new capital, putting it well on its way of planting a billion trees by 2030 and benefiting over 2 million farmers in sub-Saharan Africa.
In July Komaza secured US$ 28 million of its planned US$ 33 million Series B equity financing, nearly a year after CI Ventures disbursed a US$ 500,000 convertible note, or a loan that converts into stock after a company goes through its next round of funding. The note was to enable the company expand operations and attract larger environmentally focused impact investors.
“We sold our convertible note directly to a new investor into Komaza, and we spoke with a number of their Series B investors to help them understand the company and why we decided to invest, said Erica Flemming, CI Ventures Investment Officer in Africa. “CI’s reputation counts for a lot, and it gave comfort to other investors that we were supportive of Komaza.”
CI Ventures’ support for Komaza is part of the program’s 10-year target to channel $US 30 million and leverage US$ 200 million in co-financing to businesses that deliver measurable, meaningful environmental and social outcomes at scale but are unable to access commercial financing or secure micro financing, limiting their growth and financial sustainability.
“As the first group of companies proves that their business models can succeed, the hope is that larger investors will take them on for the next round of investments,” said Agustin Silvani, Senior Vice President of Conservation Finance at Conservation International during the program’s launch. “What we want to do is show that it can be done and let others then scale it up, and let the market sort of take over.”
Komaza’s model of planting trees within smallholder farms costs up to 80% less per acre than large plantations and puts money into the hands of households. It also unlocks more land for forestry, especially around major cities. The firm, which supports farmers from seedlings to sawmills, seeks to sustainably meet the growing demand for wood and minimize loss of primary forests.
The company has planted over 6 million trees with 25,000 smallholder farmers to date, with annual plantings nearly doubling Kenya’s rate of commercial tree planting.
