Quito-based Impaqto Capital spent the last five years proving out custom financing solutions for impact companies across the Andean region. Now the firm is taking that approach deeper into the Amazon.
Incubated by the Global Innovation Lab for Climate Finance, Impaqto’s Amazon Andes Fund will back processors, exporters and ingredient companies in sectors like cacao, specialty coffee and natural ingredients. While not limited to the farm level, the strategy zeroes in on businesses farther up the value chain.
“The closer to the end buyer, the more margin there is to share,” Impaqto Capital’s Michelle Arévalo-Carpenter told ImpactAlpha. “Smallholder farmers capture very small value from really hard work, we’re now solving for that.”
Informal economies and weak land tenure have left smallholder farmers in parts of the Andean Amazon with few alternatives to extractive capital. “Farmer associations are losing families to miners offering $20,000 checks for land access,” Arévalo-Carpenter said. Impaqto’s bet is that strengthening the middle of the value chain can shift those incentives.
Seeding an ecosystem
To lead the strategy, the firm brought on Rick Kellett, who previously founded Mountain Harvest Coffee and built Ground Up Investing, an impact investing vehicle for Corus International that backed early-stage agribusiness companies in Africa and Latin America.
“The focus is less on building a fragmented supply chain and more on anchoring a regional ecosystem,” Kellett told ImpactAlpha.
The Amazon Andes Fund marks Impaqto Capital’s third vehicle.
Its first fund, a $2.1 million revenue-based financing pilot, deployed flexible loans of up to $200,000 for working and growth capital to companies delivering basic services, agricultural development and climate resilience in Colombia, Ecuador, Peru and Bolivia. Investors in the fund included Sorenson Impact Foundation, Full Spectrum Capital Partners, CREAS Ecuador, DF Impact Capital, Boosting Opportunities, WCCN and UnTours Foundation.
A second fund, currently in the market, is targeting larger tickets with the same focus.
“Billions have been announced at COP for the Amazon, but we don’t see that trickling down to this Andean side,” said Arévalo-Carpenter “The existence of a fund on this side of the Amazon will take away most of that excuse.They say there’s nowhere to place capital. There will be now.”
Impaqto Capital is a spinout of Impaqto, the Quito-based ecosystem builder that has helped seed the region’s entrepreneurial pipeline through co-working spaces, accelerators and venture support programs.
