Salutations, Agents of Impact! We are pleased to welcome you to the June edition of ImpactAlpha Latin America. Argentina is the favourite in futbol’s Copa America. Who are the impact investing winners of the Copa America? Send your picks to [email] and explain why you chose them.
Our ImpactAlpha Latin America Partners – FLII, New Ventures, Alterna, Latimpacto, Alianca pelo Impacto, Pro Mujer, Impaqto, and GSG NAB Chile – help us stay in the loop and connect with Agents of Impact throughout the hemisphere.
!Empecemos! – Dennis Price
This month’s newsletter
- New Ventures specializes in deeper impact
- Data can be used to reduce risk perceptions
- Building the Amazonian bioeconomy
- Amplifica’s gender-lens Portfolio
Featured: LP/GP
Rodrigo Villar, New Ventures, explains how he is specializing to have a deeper impact. Many impact fund managers are seeking scale by raising larger funds. New Ventures, based in Mexico City, is focusing on niche financing to deepen its impact. New Ventures’ Empodera Fund raises capital to provide flexible financing for healthcare solutions for Latin American women. Viwala is New Ventures’ lending facility. It has a mandate to finance solutions for transgender companies in Mexico and innovative ventures that conserve and restore oceans and corals. The first thematic fund New Ventures Capital which will manage a series of venture funds has backed over 10 early startups that have tech solutions for youth well-being. “One thing I like about focusing on a specific issue is that it’s not about the impact investing sector. You’re talking about the ocean or health industries,” New Ventures Rodrigo Villar said to ImpactAlpha at the fund manager’s celebration of its 20 years of building out Latin America’s impact investing ecosystem. “The impact industry is an ideology, a perception. I don’t think it will ever penetrate the traditional markets. You can do this if you choose a niche. You can break down those barriers in a more effective way.
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Building a ecosystem. New Ventures was founded in Mexico City, as one of the first accelerators for social and environmental entrepreneurs. It raised more than $60 million in two funds with Adobe Capital, before selling the revenue based finance fund manager Deetken impact in 2020. The entrepreneurial team distributed over 150,000 copies of Las Paginas Verdes to customers in Mexico, Colombia and other countries. More than 1,000 investors and practitioners exchange best practices and cut deals at New Ventures’ Foro Latinoamericano de Inversion de Impacto (FLII).
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Innovation and intentionality. Villar claims that too much capital is being invested in Latin America by managers who are not consciously pursuing financial products and impact that will meet the needs of the growing market of social and environmental entrepreneurs. He says the industry needs to expand beyond private equity funds. “You need financial institution, debt facilitators, and warranties.” We need to create a more complex ecosystem. Villar and his team discovered that the larger the fund was, the further away we were from the problem and dealflow. Specialized funds that target specific problem sets can be designed with the correct size, people, financial mechanism, and LPs. The problem-focus approach “opens a lot of new doors.”
- Continue reading. “ Go big by going niche : How New Ventures Rodrigo Villar is specialising for deeper impact ,” by Dennis Price, on ImpactAlpha.
Other ImpactAlpha pages.
- In Latin America investors view economic opportunities with a gender-lens. Pro Mujer’s Carmen Correa at this month’s Gender Lens Investing Forum Latam declared that “Pro Mujer won’t yield” in the pursuit of women’s economic empowerment. Dennis, reporting from Buenos Aires on the action agenda, said: “I personally will not yield either.” More women in leadership positions, more gender-smart funds strategies, and more financial innovations to bring more women into formal economy. Read more.
Signals for Bioeconomy Investment
Investing locally and at scale will help build the Amazon bioeconomy. Indigenous communities are responsible for 80% of biodiversity in the world – a valuable resource when faced with climate change. Both Indigenous communities and nature protection receive a pitiful amount of funding. A new report by social enterprise accelerator offers solutions for building sustainable bio-economies to satisfy local communities’ needs, create new opportunity and protect critical resources. In biodiverse areas like the Amazon, “there must be viable, sustainable and responsible ways to ensure the livelihoods of the people who live there,” says Kirsten dueck from NESsT. “It’s not just about conservation and preservation.”
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More than money. Since 2015, NESsT invested in and worked in 50 small businesses and co-operatives in the Amazon basin. The majority of these are Indigenous-led. The need for flexible and patient financing, building local networks, and strengthening value chains are all common themes. Dueck told ImpactAlpha that the question is not ‘how can we move more money’ but rather ‘what are the mechanisms to connect this money to the ground?’ Blended finance, for instance, can help funders and enterprises mobilize around a common mission and goal. NESsT’s Lirio Fund is backed by IDB Lab and supports small agribusinesses in Amazon Andes through a combination flexible debt, recoverable grant, and standard grants.
- Go deeper.
Impact Voices: Impact Management
Data can be used to reduce risk perceptions in Latin America and Caribbean. Collecting data and measuring impact of investments. Accountability in due diligence. Transparency and standardization of reporting. “Data is essential to mitigate misperceptions of risk and unlock the full potential of impact capital deployment in Latin America and Caribbean,” writes Manuela Jimenezof Latimpacto. The organization conducts an investor survey every year to identify trends, obstacles, and opportunities. She argues that with such data-driven insight, “investors are able to make informed decisions, optimize their impact strategies, and drive positive change in the region.”
Measuring the impact of smallholder farmers in Latin America. Fundacion Alpina in Colombia supports smallholder farmers. The Foundation was looking for a tool that could measure the impact of its funding. They found Farmer Thriving Index based on a representative sampling of farmer voices. A study of 200 farmers in five Colombian regions found that almost four out of five farmers reported an increase in earnings as a result of Fundacion Alpina’s support. In a guest blog, Fundacion Alpina’s Carla Grados Villamar, and Camila aguilar of 60 Decibels explain that by creating standardized well-being measures, we can track our progress, identify areas of improvement, and ensure equitable and sustainable outcomes.
Dealflow: Financial Inclusion
Amplifica Capital, a first-time manager, has 25 deals to date that demonstrate its gender thesis. Investors questioned whether Amplifica Capital, which launched in 2020 would find enough deals to launch a Latin American venture fund with a gender lens. Since then, the team has screened 1,500 companies and diligenced 350. They have invested in 25. Amplifica’s founder Anna Raptis told ImpactAlpha that many people doubted whether we would have enough deal flow and what it meant to “invest in women”. The data speaks for itself. The early stage VC company invests at intersections of gender, climate and/or digital integration. It backs companies that are led or designed by women. Verqor , a Mexican company, provides farmers with access to credit and helps them adopt sustainable farming methods. Tani Salud gives surgical patients better information about their procedures and estimates of costs. MicroTerra partners with aquaculture farms to grow duckweed that purifies and nourishes these farms. The mature plants are then used to make sugar alternatives for food manufacturers.
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Keep it simple. Amplifica focuses its attention on Latin America’s economic sectors “fundamentals” that are less susceptible than the tech hype-cycle to volatility. Raptis said that “so many basic needs are not being adequately met, and this isn’t happening just at the bottom of the pyramid.” The middle class is also affected. Long-haul bus services Kolorsmake it easier and more affordable for Mexicans traveling between cities and states. They also partner with large companies that provide shuttle services to their employees in order to reduce traffic and help them get to work on schedule. Clupp offers affordable policies to combat the low rates of auto insurance in Mexico.
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Other recent gender-lens-deals: BancoSol issued a $30 million gender-bond in Bolivia; Wire Group made an investment in the fourth fund of EcoEnterprises Partners, a women-led organization that supports nature-based livelihoods as well as ecosystem protection.
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More deal activity:
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Agrifood investment. Brazil’s Mercado Diferente raised $1.6 million in funding from Collaborative Fund, Caravela Capital and a consumer marketplace that sells lower-cost organic products.
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Bond markets. Banco Promerica issued $50 million in sustainability-linked bonds with IDB Invest as the anchor investor… Chile sold two trillion in peso-denominated social bonds ($2.2 billion) in a two-part issuance that was oversubscribed.
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Climate resilience. Helda Gerdau Institute, Din4mo Lab and Vale launched RegeneraRS – a 100 million real ($19million) philanthropic trust for those affected by extreme flooding in Rio Grande do Sul.
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Financial inclusion. PayJoy raised 25 million dollars to provide “fairly and responsibly” digital and cash loan to customers who were accessing formal financial services, mainly in Latin America.
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Impact tech. Colombian HR technology startup Magneto raised 7 million dollars from ALIVE Ventures. Pashin, Impact Ventures PSM, and Latin Leap. “Accessing formal employment is a ticket to poverty,” said ALIVE’s Santiago Alvarez… Brazil’s Kanastra raised 20 million dollars from Kaszek and other investors for financial back-office infrastructure.
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Investing in health. Chile’s FarmaLoop has raised $900,000.00 to reduce pharmaceutical waste and assist chronic disease patients in reducing their drug costs.
- Regeneration. Brazilian Cosmetics Company Natura Launched Natura Ventures. A corporate VC fund which invests in diverse, circular and regenerative beauty brands in Brazil. Vox Capital, a manager of impact funds, will manage the fund. KPTL will expand its Amazon Bioeconomy investments outside Brazil. BTG Pactual’s Timberland Investment Group Brazil has signed an agreement with Microsoft to provide eight million carbon-removal credit through 2043.
Get in the Game
Step up
Alterna is taking applications to its Impact Fellowship Program. Alterna also has openings for other roles within the organization. 60 Decibels is looking for a business development assistant in Mexico. Quona Capital wants to hire an investment analyst for Mexico City.
PretaHub, a Brazilian social enterprise incubator, is seeking a human resource analyst in Sao Paulo… Impact Earth is also looking for a impact investment analyst in Brazil…Fundacion Ayuda en Accion in Nicaragua is hiring a private fundraiser technician.
Meet up
Don’t miss out on these upcoming ImpactAlpha Partner events: