A new generation of fund managers in Latin America is resetting the norms of finance in Amazonian communities. Their investment models are being designed hand in hand with Indigenous communities to support local enterprises, share ownership and make possible long-term co-benefits.
New managers, like Aliados in Colombia and Ecuador, were front and center at the CLIIQ impact summit in Quito earlier this month, which focuses on impact investing in Latin America’s smaller Andean markets. Much of the impact opportunity, both socially and environmentally, in Ecuador, Peru, Colombia and Bolivia, runs through Indigenous communities and lands.
Aliados’ blended-finance fund was co-designed with and invests in Indigenous entrepreneurs, to ensure they’re matched with appropriate forms of working capital, results-based financing and technical assistance.
Amazonia Impact Ventures, based in Peru and the UK, finances early-stage ventures aligned with the ecological and livelihood priorities of Indigenous communities in the Amazon.
IMPAQTO Capital in Ecuador invests in companies rooted in the Andean Amazon and which partner with Indigenous producers and cooperatives.
“This region holds extraordinary potential: strong Indigenous governance, rich biodiversity and fast-emerging regenerative markets,” said Michelle Arévalo of IMPAQTO Capital, which hosts CLIIQ. “We’re building the missing financing infrastructure for this region.”
Rebuilding trust
The Andean region of Latin America remains overlooked by most investors and funders. Arévalo said she has noticed interest building, on display at CLIIQ, from investors looking to make an impact closer to local communities and issues they’re facing. Opportunities in the Andes fit the bill because they center around “small-ticket, high-impact enterprises,” Arévalo said. “It’s not the flashy stuff, but it’s where the work needs to be done.”
Funds like Impaqto’s, Aliados’, Amazonia Impact Ventures, as well as impact accelerator NESsT’s growing Lirio Fund “all point in the same direction,” she added. “Upstream investment isn’t just possible for this region. It’s overdue.”
Key to these funds’ investment approach and design is recognition of the historical and recent harm done to the region’s Indigenous communities and deep need to rebuild trust with those who steward the most biodiverse land in the region. Within the last few years, Indigenous protesters effectively shut down Quito over IMF-backed fuel cuts and blockaded copper mine in southern Ecuador.
On stage at CLIIQ were repeated acknowledgements that sustainable and lasting investment in the Andean Amazon requires that local communities be able to set the agenda — that relationships, not terms, must guide investment decisions.
Impaqto, which closed its first fund earlier this year, is trying to lead by example with its early portfolio. Portfolio company Waykana sources guayusa from Kichwa farmers. Ishpingo supports reforestation and agroforestry led by forest communities. Canopy Bridge connects smallholder producers to premium markets.
Amazonia Impact Ventures is working within local governance structures to develop community-owned processing hubs for macambo, sacha inchi and native timber.
“Our work grew out of years supporting Indigenous enterprises and biodiversity projects in the Amazon,” said Amazonia’s Aldo Soto. “We build long-term relationships and adapt our capital to fit community needs.”
Meliquina in Argentina is co-developing renewable energy and conservation finance projects with Indigenous communities in Argentina and in the broader Andean region. Its 18-megawatt solar project, ANTU, was designed in partnership with the Mapuche peoples of Argentina. The community owns an equity stake in the project and guides environmental permitting.
Community-aligned capital
Entrepreneurs too are building their businesses around trust-based partnerships with Indigenous and rural communities.
Pacari, an Ecuadorian chocolate company, sources its cacao directly from 4,000 Indigenous Kichwa and smallholder farmers. The company manages the full production chain, from fermentation to export, and pays farmers fair rates rather than market-rates.
Amapurí, in the Colombian Amazon, sources native fruits like açaí and camu camu through partnerships with Indigenous and river communities in Guaviare and Vaupé, which have suffered from extractive business.
Chum Chum in Mexico works with smallholder farmers and aggregators to recover surplus produce that would otherwise go to waste.
With more social enterprises and fund managers setting up in local markets, they’re shifting the tools of impact finance to better match local needs.
In Colombia, The Nature Conservancy is piloting a lending vehicle where loan repayment is based on productivity gains in silvopastoral systems. The vehicle offers five years of technical assistance and allows farmers to make repayments as their income increases. They can also pay with carbon credits.
“This is not a traditional loan,” said The Nature Conservancy’s Pedro Castro.
Peru-based NESsT’s Lirio Fund, which operates in Peru, Colombia and now Brazil, offers low-interest and flexible debt for Indigenous and rural enterprises that are supporting ecosystem restoration. Structures like revenue-based financing and outcome-linked payment terms are often better aligned to seasonal income patterns in rural agricultural communities than fixed-term loans, explains NESsT’s Chad Sachs.
“You still have to pay us back, but under terms that make growth possible,” he said. “We’re not asking for 30 percent of your company.”
