For nearly a decade, Mercy Corp Ventures has been ahead of the curve in backing emerging market impact technologies. With multiple vehicles and pots of capital, the venture investing arm of humanitarian NGO Mercy Corps can be more experimental and risk-taking than other early-stage impact investors.
It’s not too late for Mercy Corps Ventures to be early to the next trend: climate adaptation.
Too little capital is flowing for adaptation and resilience efforts, even though climate change is affecting life everywhere.
“Climate resilience isn’t the only shock and challenge facing underserved communities, but it’s a significant one,” Mercy Corp Ventures’ Dan Block tells ImpactAlpha. “We see a lot of intersectionality between climate challenges, gender inequality, financial shocks, socio-political tensions and other issues.”
Mercy Corp Ventures’ tackles climate resilience through three themes: adaptive technologies for the food and agriculture system, green and inclusive fintech, and climate data and insight systems. For the last theme, Mercy Corp Ventures is gearing up for its second Climate Venture Lab accelerator program, which focuses on AI for climate resilience.
Climate tech in Latin America
This thematic focus on climate resilience is dovetailing with increased engagement in Latin America’s tech scene. The organization recently invested in Mexico-based Popular Power, a developer of software that helps residential, commercial and industrial solar companies optimize the performance of their solar hardware. In Argentina, it backed Satellites on Fire, which leverages AI and satellite imagery to detect wildfires so early they may not even fill a full image pixel. And in El Salvador, it invested in Abaco, which tailors financial services to help small agri-export businesses adapt to climate change.
“We’re seeing a deeper realization of the potential for climate solutions in Latin America, for one, because of the biodiversity, and also because of the significance of the climate realities facing the region, from wildfires in Argentina and Chile to droughts in Panama and Mexico,” Block observes.
Another trend: “The level of tech innovation coming from the top universities across the region, such as in Brazil, Argentina, Mexico, Costa Rica, Chile,” Block says. “Latin America has an opportunity to be fertile ground for local climate tech applications and also a developer of leading climate technologies globally.”
Regional tech transfer
Mercy Corps Ventures notched its 50th investment this year. It’s nearing its first portfolio exits. It’s also seen a fair number of failures.
And it’s seen early portfolio companies that designed solutions for an African context expand to Latin American markets facing similar issues.
Kenya-based crop insurance provider Pula has expanded its coverage to protect farmers from drought and other extreme weather events in Latin America. Ghana-based Ignitia, which offers hyper-local weather forecasting in tropical environments, expanded to Brazil and is building a broad strategy for the region.
London-based Epoch supports agriculture and forestry supply chain monitoring and carbon reduction in Africa and Latin America.
“The solutions that will be the most enduring and have the greatest user stickiness and market potential are the ones that directly solve climate problems affecting users financially – solutions where users show the greatest willingness to pay for helping them adapt to a new reality,” explains Block. “[This] is one of the reasons our climate thesis prioritizes solutions driving climate resilience.”
As climate tech funds proliferate, Mercy Corp Ventures is developing a taxonomy to help investors navigate early-stage climate solutions for underserved communities.
“We have seen a lot of models focused on the Series B, C and D stages of growth, but less for the early-stage climate solutions,” Block observes. “That’s an area where we think we can be helpful.”
