Saludos, Agents of Impact! Welcome to July’s edition ofImpactAlpha Latin America.
One of our early features for this Latam newsletter was my report from Puerto Rico on the Platform for Social Impact’s push to mobilize billions for economic mobility, with a “child lens,” no less. It was great to see them close their $43 million raise for the Oasis community center in San Juan. My colleague Jessica Pothering reported on their very creative blend of financing.
As always, I want to say special thanks to our ImpactAlpha Latin America partners – FLII, New Ventures, Alterna, Latimpacto, Aliança pelo Impacto, Pro Mujer, Impaqto and GSG NAB Chile – who help keep us connected to the people and places driving impact in Latin America.
¡Empecemos! – Dennis Price
In this month’s newsletter:
- Circulate Capital brings its recycling strategy to Latin America
- Impact investing in biodiversity in Peru
- Streamlining solar in Mexico
- BancoSol’s gender bond in Bolivia
Featured: Circular Economy
With investment in Colombia, Circulate Capital brings growth capital to plastics recycling in Latin America. More than two dozen countries in Latin America have passed laws to reduce or eliminate single-use plastics. The surge in demand for recycled plastic has outpaced the capacity of recycling businesses to meet the new mandates, creating a dynamic market for recycling investments and acquisitions to scale up operations. “There’s a point where the current installed capacity to produce that volume is not there,” says Christian Urazan, a former plastics executive tapped by Circulate Capital to run its new Latin America strategy from Cali, Colombia. “You have a demand that will come and you have to be ready for it.” Circulate has raised a total of a quarter-billion dollars from some of the world’s largest plastic producers and users to step into the global opportunity, including $66 million for Latin America. The firm’s first swing in Latin America, shared exclusively with ImpactAlpha, is an investment in Polyrec S.A.S., a Barranquilla, Colombia-based recycler of flexible plastic, such as bags and wraps. Colombian legislation requires producers to use at least 30% recycled content in packaging by 2030.
- Policy tailwinds. Companies are responding to the aggressive Latin American plastics regulations, especially in the largest markets with the most advanced laws. Circulate will focus on Brazil, Mexico and Chile, along with Colombia. “There’s a high correlation between the laws that are being issued and implemented, and the dynamism of the sector,” Urazan tells ImpactAlpha. The investment in Polyrec aims to prevent 100,000 tons of plastic from reaching the oceans “and capitalize on the growing market opportunity for recycled plastics worldwide,” says Circulate’s Rob Kaplan.
- Recycling pipeline. Circulate has identified over 100 recycling companies in Latin America that require at least $240 million in growth capital. Earlier this year, Brazilian petrochemical company Braskem took a stake in advanced recycling company Nexus Circular. In Peru, Impaqto Capital backed recycling services Sinba, which had attracted early financing and an equity investment from IDB Lab, the venture capital arm of the Inter-American Development Bank Group. In 2022, Peruvian fund Nexus Group acquired Bogotá-based recycling company Apropet.
- Catalytic capital. Circulate’s funds earmarked for Latin America came from IDB Lab, family offices Builders Vision and Luna Capital, and corporate backers of the firm’s Asia strategy, including Chevron Phillips Chemical, Danone, Dow, Mondelez International and Unilever. In its annual report, Circulate says the $96 million it has invested in 16 companies in Asia has attracted another $250 million in co-investment. “This catalytic capital helps close the financing gap and helps make this sector interesting for traditional capital,” says Urazan. More than half of the companies in Circulate’s portfolio are led or founded by women; women also make up more than 30% of the companies’ workforces, an indication of “the kind of dynamism that the sector is having,” Urazan says.
- Keep reading, “With investment in Colombia, Circulate Capital brings growth capital for plastics recycling in Latin America,” by Dennis Price.
Impact Voices: Aliados de Impacto
Peru’s path to inclusive prosperity runs through biodiversity and social innovation. Over 350 Agents of Impact gathered this month at the first-ever impact investing summit hosted by Aliados de Impacto, Peru’s GSG national advisory board. Spotted in Lima: Leaders from the broader Latin American impact investing ecosystem, including Sebastian Welisiejko of GSG Impact, Pro Mujer’s Carmen Correa, and Borja García of Citi Social Finance, alongside local leaders Gianfranco Ferrari of Credicorp, Elvis Garcia of MINAM and Aimi Yamamura of COFIDE, the Peruvian development bank. “By fostering a robust impact investing ecosystem, Peru can attract the capital needed to drive sustainable development, create a more inclusive and resilient economy and reduce forest degradation and biodiversity loss,” Aldo Soto of Amazonia Impact Ventures and Marisela Vega of Aliados de Impacto write in a guest post on ImpactAlpha.
- Biodiversity assets. Over one-fifth of Peru’s economy is linked to biodiversity and the trade of biodiversity products. Soto’s Amazonia Impact Ventures is raising a $25 million impact-first fund to make innovative sustainability-linked loans to cooperatives and small businesses that protect forestland. KPTL venture fund will back early-stage companies creating high-value biotech, pharma, agricultural, cosmetic and food products. PROFONANPE, the Peruvian fund for protected areas, and the Amazon Business Alliance are working to improve sustainability in value chains. As Peru grapples with environmental degradation and other challenges, the authors note, “the momentum generated by this summit offers a hopeful path forward.”
- Keep reading, “Peru’s path to inclusive prosperity runs through biodiversity and social innovation,” by Aldo Soto and Marisela Vega.
Dealflow: Climate Tech
Mexico’s Popular Power raises capital to help solar companies manage their asset performance. Solar energy in fossil-fuel dependent Mexico last year reached nine gigawatts of installed capacity, or 6% of total energy generation. More than 8,000 solar installers work in the country. Popular Power’s software helps residential and commercial and industrial solar companies monitor and optimize the performance of their solar hardware. The year-old company services projects totaling 36 megawatts of solar capacity that serve 30,000 customers in Mexico, Colombia and other Latin American countries. Popular Power’s pre-seed equity round was backed by gender-lens investorAmplifica Capital, Dunn Family Impact Capital, Mercy Corps Ventures and other investors.
- Streamlined solar. Popular Power’s founders developed the B2B software after finding that solar installers had to use specialized monitors for each type of hardware. “A typical solar company is relatively hardware agnostic, so may have five to six different hardware products they install,” said Popular Power’s Morgan Babbs. “This results in segmented data, alerts and analytics, leading to limited insights and a heavy reliance on manual processes.” Amplifica’s Anna Raptis called Popular Power’s technology offers “a solution that contributes to mitigating the effects of climate change.”
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More deal activity:
- Agrifood investing. Brazilian agtech startup Genica raised 68 million reais ($12 million) to make biological crop treatments that improve soil health… Brazil’s Meu Pescadoraised $420,000 from Aimorés Investimentos, Japan’s Incubate Fund and angel investors to help fish farmers with limited internet connectivity monitor animal health, feed use and water quality… Argentina-based EDRA raised an undisclosed amount of early stage funding for its blockchain-based investment platform that supports regenerative and sustainable farmers.
- Climate adaptation. BlueOrchard’s second InsuResilience Investment Fund, which is targeting $100 million to increase access to affordable climate insurance in Africa, Asia and Latin America, clinched €5 million ($5.4 million).
- Ecosystem finance. Dutch Impact fund of funds manager Wire Group invested in EcoEnterprises Partners’ fourth fund to support nature-based livelihoods and ecosystem protection in Latin America…Future of Fish launched the Artisanal Fisher Development Fund, a pilot loan guarantee fund to facilitate access to credit to support Peru´s artisanal fishing sector
- Financial inclusion. Accion invested $10 million in Los Andes to digitalize micro-lending in Peru… Accion and Chile Ventures led a $2.1 million round for Moffin’s alt-credit ratings in Mexico… Mexico’s OCN landed $86 million in debt and equity to expand gig-worker car rentals… Chile’s Relifsecured $400,000 to help companies’ workers with financial literacy and to improve their financial security.
- Bond markets. BancoSol floated a $30 million gender bond in Bolivia… IFC invested in Natura’s sustainability-linked bond to improve sourcing of bio ingredients from the Amazon… The government of the Dominican Republic issued a $750 million sovereign green bond, the country’s first.
- Incentivizing impact. Roots of Impact, which piloted the first “social impact incentives” with social enterprises in Latin America, inked impact-linked investment for itself.
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