Small and growing businesses (SGBs) tackling climate change face a familiar paradox: demand for environmental solutions is rising, but many of the ventures creating them struggle to survive long enough to scale.
Sujata Rathi sees this gap up close. As a director in FSG’s Mumbai office, she works with climate-focused enterprises across India that sit in the “missing middle”, too large for microfinance, too early or unconventional for most commercial banks.
Green SGBs could deliver meaningful progress across energy, water, waste, circular economy models, and regenerative agriculture. But many begin informally and grow into complexity fast, often without the financial management systems, compliance capacity, or strategic planning needed to attract capital and execute. Support is available, but it is not always designed for their reality, especially for enterprises with longer payback periods, hard-to-value outcomes, or higher costs tied to verification and impact measurement.
The finance gap is real and it’s not just about money
Access to capital remains one of the steepest barriers. Lenders hesitate when business models are still being proven, cash flows are uneven, and collateral is limited. Meanwhile, much “green finance” continues to concentrate in established sectors, such as large-scale renewable energy and infrastructure, leaving early-stage and adaptation-oriented ventures with fewer options.
But capital alone rarely solves the missing middle. Support systems matter just as much: peer networks that surface practical market intelligence, partnerships that open distribution channels, and forums that elevate green enterprise priorities with investors and policymakers.
That’s where ecosystem approaches become critical because no single actor can address financing, capability gaps, and market barriers in isolation.
What ecosystem support can look like in practice
ANDE’s Climate & Environment Learning Lab is designed around that premise. The program combines capacity building (training, tools, and shared learning) with ecosystem building, bringing ecosystem players into conversation with each other. Learning forums create space for SGBs and players to compare what is working, name common bottlenecks, and form relationships that can outlast the sessions themselves.
How FSG supports green SGBs
FSG, a global social-impact consulting firm, works with foundations, businesses, and nonprofits on systems change strategies. For green SGBs, that often includes hands-on support to strengthen business models and improve how support organizations serve entrepreneurs.
Rathi describes the work as practical and iterative: engaging directly with founders to understand constraints, testing approaches with them to check fit, and using ongoing learning and evaluation to improve program effectiveness.
FSG also convenes stakeholders across value chains to co-develop solutions. In Bengaluru, for example, the firm helped launch Saamuhika Shakti, a collective working to improve conditions for waste pickers. Workshops on circularity and just transitions bring together entrepreneurs, funders, and support organizations to shape strategies and then share lessons through field-facing knowledge products.
The throughline is an ecosystem lens: ventures need strong unit economics and execution capacity, but they also need an enabling environment, financing instruments that match early-stage risk, market infrastructure that supports adoption, and policy conditions that make green innovation easier to build and sell.
- Focus on sectors where environmental impact and market demand align, and where customers can pay.
- Validate customer needs early and continuously; refine the offering through structured feedback loops.
- Map the system around your business model: suppliers, distribution, partners, and constraints that shape scale.
- Track impact regularly, but translate it into business terms, risk reduction, cost savings, productivity gains, or revenue potential.
- Build relationships with peer SGBs and ecosystem actors; networks accelerate learning and unlock partnerships.
If you’re building a green business: Look for programs that offer both skills support and ecosystem access. Prioritize long-term partners over one-off workshops. Join peer networks where founders share operational realities, not just success stories. Measure impact with discipline, and communicate it in language investors can underwrite.
If you’re funding or supporting green ventures: Recognize that green SGBs often face different timelines, risk profiles, and verification costs than traditional startups. Build your team’s capacity to assess emerging climate business models. Create platforms for cross-sector collaboration, and design support that founders help shape.
If you’re shaping policy or investment strategy: Treat green entrepreneurship as an ecosystem challenge. Convene stakeholders across the value chain, test solutions with entrepreneurs before scaling, and make room for adaptation and nature-based models, not only mitigation.
The opportunity is clear: green SGBs can deliver environmental impact while building viable businesses. But they will scale faster when the infrastructure around them, finance, capability-building, market access, and policy, matches their potential.