Pomona Impact is putting $250,000 into Organic Gum, which produces and sells a biodegradable and sugar-free gum sourced from the Petén region in Guatemala.
The small investment is part of a big strategy: to build a startup ecosystem in one of Central America’s most important sectors: agriculture.
“Building an entrepreneurial ecosystem is akin to the ‘big push theory’ in developmental economics,” Rich Ambrose, managing partner and co-founder of Pomona, told ImpactAlpha. A comprehensive investment package, or a “big push,” believes Ambrose, can enable the sector to leap forward.
With 29 percent of employment in the region linked to agriculture, it’s a sector where boosting productivity and profitability can lead to significant economic growth. Pomona wants to give it a nudge.
“Central America has many competitive advantages and the region is well-positioned to innovate in the agtech (agriculture technology) space,” says Rich. “What is missing is a force propelling innovation — someone who would lead acceleration in agricultural sector.”
Pomona is bringing together experts, corporations, philanthropic actors, research institutions and entrepreneurs to accelerate marketable and scalable solutions. Here’s how:
Last September, Pomona launched the first AgTech accelerator in Central America — PomonaImpact AgTech. Designed in partnership with Village Capital, this comprehensive program is meant to identify and provide technical assistance to innovative enterprises in the region.
The accelerator focuses on innovations that prevent agricultural diseases and enable the efficient use of resources. Pomona selects and works with 12 companies that are past the pilot stage and are ready to scale rapidly. The program leverages regional universities and connects participating entrepreneurs with experts and investors to help them develop and scale.
As a final step in the accelerator program, entrepreneurs have an opportunity to present to investors and compete for seed capital of $50,000 from Pomona and a co-investment partner. The winners of AgTech Accelerator 2016 were Panama-based Advanced Biocontrollers, a producer of environmentally-friendly biopesticides, and Nicaragua startup Evolo, developer of remote sensing and geographic information systems for agricultural and environmental applications.
Organic Gum, which sells the gum under the brand “WILD” to grocery stores, including Whole Foods, plans to build out a manufacturing and fulfillment line, expand distribution and launch a private label.
Pomona is launching a $20 million Pomona Impact Fund I, the first impact investing fund focused on Central America. The firm recently graduated from the leading global impact fund accelerator, Capria, which ensured best practices for impact fund operations and provided Pomona with a stamp of approval.
The fund targets a 10 percent return net to investors and will provide mezzanine debt structured as revenue-based financing. Pomona believes this flexible form of financing is most appropriate for early-stage entrepreneurs in the region.
Pomona intends to provide growth financing to 15 companies in agriculture as well as basic services in energy, education, healthcare and water. The financing will be used for aggressive scaling to help companies get started with finance, operations, back-office infrastructure and staffing.