Central America and the Caribbean are not often touted as a growth story. But another look reveals a region with a young and growing population, GDP-growth outpacing that of the U.S. and relative stability.
That entrepreneurs in the region’s 20 countries still struggle to access funding presents an opportunity for investors. Delivery of essential services for the poor and emerging-middle classes in Central America and the Caribbean would appear to be a growth industry.
Antigua, Guatemala, will be the meeting ground next week for investors and new and growing ventures taking on the region’s health, energy, education, food and housing challenges. The occasion is the Latin America Impact Investing Forum, or FLII, hosted by social venture-incubator Alterna Impact on November 8–9. The FLII will bring together more than 300 local leaders, investors and entrepreneurs looking to mobilize even more capital than the approximately $400 million impact investors placed in Central America in 2014 and 2015, combined.
There’s still time to register. Use code IMPACTALPHA_NETWORK_50 to receive a 50% discount.
Deal pipeline
Initiatives underway in the region are beginning to bear fruit. Guatemala-based Pomona Impact is building an agriculture-startup ecosystem. Banco de America Central Nicaragua is at the center of an experiment to get capital in the hands of women entrepreneurs who lack collateral to secure loans. Kingo, based in Guatemala City, is raising significant sums of cash to expand off-grid solar energy products.
The $54 million Central America fund from CoreCo Private Equity was recognized this year by B-Lab for its sustainability practices. The firm makes growth equity investments across a wide range of sectors in Guatemala, Belize, Honduras, El Salvador, Nicaragua, Costa Rica, Panama, and Dominican Republic. To create long-term value, the firm then works with portfolio companies to improve sustainability and ethical impact. Watch Volcano Capital Group, a Managua, Nicaragua-based venture investor with $200 million in growth capital to back startups in the region.
Here are five ventures, putting robust business models behind solutions to big challenges in the region.
Veerhouse Voda, a Haitian firm launched by Brendon Brewster in the aftermath of the 2010 earthquake, builds disaster-resilient homes, medical facilitates schools and warehouses. Veerhouse, whose structures reportedly withstood the powerful winds of 2016’s Hurricane Matthew, has raised $1.75 million in debt financing from frontier-market private equity investor Leopard Capital.
Leon, Nicaragua-based Vega Coffee has crafted a more direct route between coffee farmers and your morning brew. The firm, which raised $250,000 in a seed round from 1to4 and ADAP Capital in 2015, trains small-scale farmers to roast and package coffee then delivers it via online subscriptions to the end consumers, allowing farmers to earn up to four-times more per pound.
Colibrí, in Matagalpa, Nicaragua, wants to make investment in solar feasible for low-income Latin American households. The firm, which has raised seed funds from the Dorm Room Fund, distributes and finances solar products on a similar pay-as-you-go model that’s fueling the roll-out of small-scale, off-grid solar worldwide.
WorkRide is building a tech-based carpooling services in increasingly crowded San Jose, Costa Rica. To address security concerns the firm, a graduate of Telefónica Open Future incubator, is gearing the product towards targeted groups of people, like employees of the same firm, so riders already maintain a degree of trust.
Guatemalan firm Adelante Shoe Company is gaining traction with its online-distributed leather-footwear products. In an industry known for pushing down the cost of labor, the firm pays local craftsmen a Living Well Line, defined by the workers and their families, which amounts to 30% over market rate and more than twice the fair trade wage.
Impact Investing Deals Start to Flow in Central America and the Caribbean
Serious business
For the opportunity potential in Central America, look to Mexico. The Central America edition of FLII is a spinout of the pan-Latin America version founded by New Ventures seven year ago. Last week, New Ventures Mexico launched its second social venture capital fund (managed by Adobe Capital). The new fund was mostly backed by repeat institutional investors, including Auria Capital, a Monterrey, Mexico-based family office.
Adobe’s “impact” signature was an attraction, Auria partner Marcelo de la Garza told ImpactAlpha, but what he and Auria really wanted was access to a new crop of companies that were serious about serving Mexico’s emerging middle market. Such companies serving the Central America market will be on hand at next week’s forum in Antigua. Conference-host Alterna is gathering 30 ventures (including the five named above) alongside investors in the region including Gray Matters Capital, Mercy Corps and Sonen Capital.
Maria Cavalcanti, CEO of Pro Mujer, one of Latin America’s largest women’s organizations, will deliver a keynote speech. Cavalcanti took leadership of Pro Mujer, which alone made $660 million in loans to 250,000 clients in 2014 and 2015, after founding the $100 million FIRST Impact Investing in Brazil. Earlier this year she told NextBillion that she’s seeing more women in Latin America becoming entrepreneurs out of opportunity than necessity.
Morgan Simon, who co-leads the Candide Group and was founding CEO of the Toniic investor network, will also speak. Simon is out with a new book, “Real Impact,” that challenges impact investors to engage on-the-ground communities. In a podcast interview with ImpactAlpha’s David Bank, Simon challenged social-justice activists who may have a reflexive antipathy to Wall Street. “The opportunity is so massive if we’re able to change the way the global economy functions,” she said.
ImpactAlpha is proud to be a media sponsor of FLII Central America and the Caribbean. Register now with code IMPACTALPHA_NETWORK_50 to receive a 50% discount.
