ImpactAlpha Latin America | June 26, 2024

ImpactAlpha Latin America: How New Ventures is specializing for deeper impact

Dennis Price

Follow the money and people powering Latin America's impact economy.

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ImpactAlpha Editor

Dennis Price

Saludos, Agents of Impact! Welcome to the June edition of ImpactAlpha Latin America. Argentina is the favorite in fútbol’s Copa America. Who are the winners in the Copa America of impact investing? Send your picks and why to [email protected]

Our ImpactAlpha Latin America partners – FLIINew VenturesAlternaLatimpactoAliança pelo ImpactoPro MujerImpaqto and GSG NAB Chile – help keep us in the loop and connected to Agents of Impact across the hemisphere.

¡Empecemos! – Dennis Price

In this month’s newsletter:

  • How New Ventures is specializing for deeper impact
  • Using data to mitigate risk perceptions
  • Building the Amazon’s bioeconomy
  • Amplifica’s gender-lens portfolio

Going big by going niche: How New Ventures’ Rodrigo Villar is specializing for deeper impact (Q&A). Many impact fund managers seek scale by raising ever-bigger funds. To deepen its impact, Mexico City-based New Ventures is instead going niche, with specialized financing vehicles for companies tackling specific challenges. New Venture’s new Empodera Fund is raising capital to provide flexible funding for healthcare solutions for women across Latin America. Among the mandates of Viwala, New Ventures’ lending facility, are financing solutions for transgender-led companies in Mexico, and innovative ventures conserving and restoring oceans and coral reefs. And the first thematic fund of New Ventures Capital, which will manage a family of venture funds, has backed more than 10 early startups with tech solutions for youth wellbeing. “One of the things I like about getting into a specific problem is that you aren’t talking about the impact investing industry. You are talking about the ocean industry, or the health industry,” New Ventures’ Rodrigo Villar told ImpactAlpha as the fund manager celebrated its two decades of building out the Latin America impact investing ecosystem. “The impact industry is a perception, an ideology. I don’t know if it’s ever going to penetrate the traditional markets. If you go niche, then you can do that. You can break those barriers in a better way.”

  • Building an ecosystem. New Ventures began in Mexico City as one of the region’s first accelerators of social and environmental entrepreneurs. It raised over $60 million across two funds with Adobe Capital before selling the revenue-based finance fund manager to Deetken Impact in 2021. At one point, the entrepreneurial team was circulating over 150,000 print copies of a publication called Las Páginas Verdes, introducing thousands of companies with sustainable products to customers in Mexico and Colombia. Each year at New Ventures’ Foro Latinoamericano de Inversión de Impacto, or FLII, more than 1,000 investors and other practitioners cut deals and swap best practices. 
  • Intentionality and innovation. Villar says too much impact capital in Latin America is flowing to managers that lack intentionality around impact and financial products that meet the need of the growing market for social and environmental entrepreneurs. The industry, he says, needs to grow beyond private equity funds. “You need financial institutions, you need debt facilitators, you need warranties. We need to build a much more complex ecosystem.” Villar and his team found that “the larger the fund, the further we got from the real problem and from the dealflow.” Specialized funds targeting specific problem sets instead “can be designed with the right size, the right people, the right financial mechanism and the right LPs,” continued Villar. The problem-focus strategy “opens up a lot of doors.”
  • Keep reading, “Going big by going niche: How New Ventures’ Rodrigo Villar is specializing for deeper impact,” by Dennis Price on ImpactAlpha.

Elsewhere on ImpactAlpha:

  • In Latin America, investors see economic opportunities through a gender lens. In the pursuit of women’s economic empowerment, “Pro Mujer will not yield,” declared Pro Mujer’s Carmen Correa atthis month’s Gender Lens Investing Forum Latam. “I will personally not yield, either.” From Buenos Aires, Dennis reported on the action agenda: More women in leadership roles, more gender-smart fund strategies and more financial innovation to bring more women into the formal economy. Lee más.

Signals: Bioeconomy Investing

Building the Amazon’s bioeconomy by investing locally, at scale. Indigenous communities steward 80% of the world’s biodiversity – a precious resource in the face of escalating climate change. But both Indigenous communities and nature conservation receive woefully little funding. A new report from social enterprise accelerator NESsT offers solutions to building sustainable bio-economies that satisfy local communities’ economic needs, create new opportunities and protect critical natural resources. In threatened biodiverse regions like the Amazon, “there have to be viable, sustainable, responsible ways to insure the livelihoods of people who live within,” says NESsT’s Kirsten Dueck. “It can’t just be about straight preservation and conservation.” 

  • More than money. Since 2015, NESsT has invested in and worked with 50 small businesses and cooperatives in the Amazon basin, most of which are Indigenous-led. Recurring themes across projects include a need for more patient and flexible financing, local network building, and support strengthening value chains. “The question cannot be just, ‘how do we move more money?’ but ‘what are the mechanisms for connecting that money to the ground in usable, sustainable ways?’” Dueck tells ImpactAlpha. Coordinated, blended finance, for example, helps mobilize funders and enterprises around a shared mission and goals. NESsT’s Lirio Fund, backed by IDB Lab, supports small agri-businesses in the Amazon Andes with a combination of flexible debt, recoverable grants and standard grants.
  • Go deeper.

Impact Voices: Impact Management

Using data to mitigate risk perceptions of impact investing in Latin America and the Caribbean. Collecting and measuring the impact of investments. Building accountability in due diligence. Adding transparency and standardization to reporting. “Leveraging data is essential in mitigating the misperception of risk and unlocking the full potential of deploying impact capital in Latin America and the Caribbean,” writes Manuela Jiménez of Latimpacto, which conducts an annual investor survey to surface trends, obstacles and opportunities. With such data-driven insights, she argues, “investors can make informed decisions, optimize impact strategies, and drive positive social and environmental change in the region.” 

Measuring impact by listening to smallholder farmers at scale in Latin America. Colombia-based Fundación Alpina supports smallholder farmers and their families. In search of a more agile tool to measure the impact of their funding, the Foundation discovered 60 Decibels’ Farmer Thriving Index, a standardized tool based on a representative sample of farmer voices. A study of over 200 farmers across five regions in Colombia found that nearly four in five farmers saw an increase in their earnings due to Fundación Alpina’s support. “By creating standardized measures of well-being, we can track progress, identify areas for improvement, and ensure more equitable and sustainable outcomes,” writes 60 Decibels’ Carla Grados Villamar and Camila Aguilar of Fundación Alpina in a guest post.

Dealflow: Financial Inclusion

First-time manager Amplifica Capital demonstrates its gender thesis with 25 deals and counting. When Amplifica Capital launched in 2020, investors questioned whether the new manager would find enough deals for a gender-lens venture fund in Latin America. The team has since screened 1,500 companies, diligenced 350 and invested in 25. “A lot of people were doubtful of whether we would see enough deal flow, and also about what it means to ‘invest in women’,” Amplifica founder Anna Raptis told ImpactAlpha. “The data speaks for itself.” The early stage VC firm invests at the intersection of gender and climate and/or digital inclusion, backing companies that are led by women or have designed products and services that center women. Mexico-based Verqor provides access to credit to farmers and helps them adopt sustainable farming practices. Tani Salud provides surgical patients with better information and cost estimates for their procedures. MicroTerra is partnering with aquaculture farms in Mexico to grow duckweed, which purifies and nourishes the farms, and using the mature plants to make a sugar alternative for food manufacturers. 

  • Stick to the basics. Amplifica focuses on Latin America’s “fundamental” economic sectors that are less susceptible to tech hype-cycle volatility. “So many basic needs aren’t being adequately served, and that isn’t just happening at the base of the pyramid,” said Raptis. “It’s the middle class as well.” Long-haul bus service Kolors is making it more efficient and affordable for Mexicans to travel between cities and states; it’s also partnering with large companies to provide shuttle services for their employees to reduce traffic congestion and help people get to work on time. Clupp is addressing low rates of car insurance in Mexico with affordable policies.
  • Other recent gender-lens dealsBancoSol floated a $30 million gender bond in Bolivia; Wire Group invested in women-led EcoEnterprises Partners’ fourth fund to support nature-based livelihoods and ecosystem protection.
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More deal activity:

  • Agrifood investing. Brazil’s Mercado Diferente, a consumer marketplace for lower-cost organic produce, raised $1.6 million from Collaborative Fund and Caravela Capital.
  • 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.
  • Climate resilience. Helda Gerdau Institute and Din4mo Lab launched RegeneraRS, a 100 million real ($19 million) philanthropic fund backed by Gerdau, IHG and Vale for those impacted by extreme floods in Rio Grande do Sul, Brazil.
  • Financial inclusion. PayJoy raised $25 million to provide “fair and responsible” digital and cash loans to customers accessing formal financial services for the first time, mostly in Latin America.
  • Impact tech. Colombian HR tech startup Magneto raised $7 million from ALIVE Ventures, Pashin, Impact Ventures PSM and Latin Leap. “Accessing formal jobs is a ticket out of poverty,” said ALIVE’s Santiago Álvarez… Brazil’s Kanastra raised $20 million from Kaszek, Valor Capital, Quona Capital, QED Investors and other investors to provide financial back-office infrastructure.
  • Investing in health. Chile’s FarmaLoop raised $900,000 to curb pharmaceutical waste and help chronic disease patients reduce their drug spending costs.
  • Regeneration. Brazilian cosmetics company Natura launched Natura Ventures, a corporate VC fund that invests in circular, regenerative and diverse beauty brands in Brazil. Impact fund manager Vox Capital will manage the 50 million real ($9.2 million) fund… KPTL’s venture fund will expand its Amazon bioeconomy investments beyond Brazil… BTG Pactual’s Timberland Investment Group in Brazil inked an agreement to provide Microsoft with eight million carbon-removal credits through 2043. 

Get in the Game

💼 Step up

Alterna is accepting applications for its Impact Fellowship program. Alterna is also recruiting for other roles in the organization in Guatemala… 60 Decibels has an opening for a business development associate in Mexico… Quona Capital is hiring an investment analyst in Mexico City.

Brazilian social enterprise incubator PretaHub seeks a human resources analyst in São Paulo… Also in Brazil, Impact Earth is looking for an impact investment analyst…Fundación Ayuda en Acción is recruiting a private fundraising technician in Nicaragua.

🤝 Meet up

Don’t miss these upcoming ImpactAlpha partner events: