The Brief | March 27, 2024

The Brief: Building an inclusive impact economy in Brazil

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Greetings Agents of Impact! 

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In today’s Brief:

  • Inclusive growth in Brazil
  • Innovative climate finance
  • Investing in life vs. tech

Featured: Inclusive Economy

Path to growth in Brazil runs through the impact economy (videos). In May, thousands of visitors will descend on São Paulo for the Feira Preta festival, the largest Black culture and entrepreneurship event in Latin America. Founder Adriana Barbosa has, over two decades, grown Feira Preta, or “Black Fair,” into a platform that has helped plug more than 10,000 Black and Indigenous creative entrepreneurs into the Brazilian economy. Barbosa’s Pretahub helps entrepreneurs produce and distribute their work through accelerators, physical spaces and financing. In turn, Barbosa, an Ashoka fellow, has helped companies recognize the purchasing power of Black consumers. Brazil’s Black community “is an economically active population,” Barbosa told ImpactAlpha at the Latin America Impact Investing Forum in Mexico last month (video). Investments in Brazil’s African descendants “would produce much more wealth,” she says.

  • Investment incentives. Growth in Latin America’s largest country has largely stagnated in recent years, partly due to persistent inequality. The half of the population that identifies as Black has long faced barriers to credit, education and the formal economy. Investment in Brazil’s Black entrepreneurs, and thousands of impact businesses throughout the country, stands to get a boost from Brazil’s new National Impact Economy Strategy, or Enimpacto. The coordinated policy aims to address inequalities and environmental challenges, and boost impact investing in the country from $11 billion to $120 billion over 10 years. “We are committed to building a better world, a more inclusive world,” Lucas Ramalho Maciel, who heads “New Economies” in the ministry behind Enimpacto, told ImpactAlpha (video). “Investing in Brazil is investing to combat inequalities.”
  • Impact economy. Pipe.Social and Quintessa have mapped over 1,000 impact businesses in Brazil. That almost certainly undercounts businesses in Brazil’s majority-Black northeast. Almost 60 organizations, including Artemisia, NesST, and Din4mo, now support Brazil’s impact businesses, according to Guia 2.5, a survey conducted by Quintessa. In São Paulo, Estímulo has used blended finance to turn a COVID relief fund into a small business lender delivering over $40 million to more than 3,400 businesses. “The impact economy in Brazil is rising,” says Estímulo’s Lucas Conrado (video). “The financial sector is increasingly interested in innovative financing structures with the social sector.”
  • Keep reading, “Path to growth in Brazil runs through the impact economy (videos),” by Dennis Price on ImpactAlpha. 

Dealflow: Catalytic Capital

New Global Innovation Lab cohort dives into regional climate finance solutions. Climate Policy Institute’s decade-old Global Innovation Lab for Climate Finance has mobilized $4 billion to urgent climate efforts in the Global South. To ensure local capital managers and other stakeholders have decision-making power over how money is deployed in their communities, CPI’s 10th and largest cohort is doubling-down on regional solutions. From the Lab’s East and Southern Africa program, ICLEI Africa’s Resilient Municipal Market Fund is designed to bolster agri-food livelihoods and curb food waste in Africa. Grameen Foundation’s climate resilient agriculture bond is directed at women in Uganda. Forest Carbon’s Model Forests and Biodiversity Bond aims to tap corporate green bonds to support forest conservation in the Philippines. “We are expanding the Lab’s reach to address historically underfinanced and particularly vulnerable regions and thematic areas,” said CPI’s Barbara Buchner

  • LatAm growth. Four new financing initiatives come from Latin America and the Caribbean. Among them: Regenera Ventures, which is making equity investments in farms in Mexico to support their transition to regenerative practices (see Impact Voices below). The Nature Conservancy and CIPAV are incentivizing cattle farms to transition to regenerative “silvopastoral” production with profit share-based financing, links to carbon markets and technical assistance. “The rationale for our broader focus in Latin America is that it’s a huge engine of economic growth, and it’s also very much at risk of food scarcity and other climate adaptation challenges,” CPI’s Ben Broché told ImpactAlpha.
  • Catalytic capital innovators. CPI seeks proposals through April 24 for grants of up to $500,000 from its Catalytic Climate Finance Facility to help bring early stage climate finance instruments to market. The facility, a partnership between CPI and blended finance network Convergence, launched last year with backing from the Gates Foundation, the International Development Research Centre, and the governments of Canada and Australia. It has raised $13.5 million in donor funding to date and is targeting $100 million to “catalyze the development of the next generation of climate finance vehicles,” Buchner said.
  • Read the full story

Dealflow overflow. Investment news crossing our desks:

  • The US Department of Energy provided $6 billion in catalytic grants to initiatives to decarbonize heavy industry. Grant awardees must secure matching investments. (Bloomberg)
  • Bank of America and Visa Foundation backed Impact X Capital’s second fund to invest in diverse-led healthcare, tech and media companies. (Reuters)
  • New York-based 4DX Ventures secured $10.5 million from the International Finance Corp. to provide early stage capital for African startups. (IFC)
  • Ireland-based MyGug raised €900,000 ($975,000) to convert food waste into renewable biogas as an alternative energy source to fossil fuels. (TFN)

Impact Voices: Climate Finance

Investing in life vs. tech: Lifting up nature-based solutions for ecosystems and communities. Three recent ag-tech deals in Latin America left Laura Ortiz Montemayor uncomfortable. Marketed as impact investments, she saw them as serving big banks or corporate interests, selling more toxic agrochemicals and degenerating both biodiversity and smallholder farmers. “While agtech may offer efficiency gains, it often neglects the cultural and ecological dimensions of farming favoring corporate interests over the well-being of smallholder farmers and the environment,” Ortiz writes. “True impact lies in regenerative practices that restore ecosystems, promote biodiversity, and empower local communities.”

  • Beyond techno-optimism. “Rainforests and their stewards remain substantially undervalued against the word of any chief technology officer,” she says. One blind spot: the need for ever-more gadgets and minerals for “climate tech” solutions. “Regions of the Global South have become the defacto ‘sacrifice zones,’” Ortiz says, citing the impact of tech’s cobalt addiction on the Democratic Republic of the Congo.
  • Ecological intelligence. “The synergy of natural systems, from photosynthesis to ecosystem dynamics, offers unparalleled and real solutions,” says Ortiz, founder of SVX Mexico, who has launched Regenera Ventures to make equity investments in regenerative land projects throughout Mexico (see, “Stewarding capital for Mexico’s regenerative economy”). The fund manager is anchored by a $4 million commitment from the US International Development Finance Corp. Other investors practicing nature-based approaches include EcoEnterprises Fund, Ceniarth, Reciprocity Fund, Mad Agriculture’s Perennial Fund, CI Ventures, URAPI, The Nest, Grounded Investment Co. and Althelia (now part of Mirova). 

Agents of Impact: Follow the Talent

Verdane adds four new employees to its decarbonization team: Erich Becker, a former managing partner of Exergy Capital Management, joins as partner; Christina Levin-Rylander, previously with Northvolt, joins as chief operating officer of Verdane’s Elevate platform; Nikolaj Ager Hamann, previously with Seaborg Technologies, joins as senior decarbonization project director; and Ali Ersoz, a former visiting researcher at Imperial College London’s Energy Futures Lab, joins as principal.

W.K. Kellogg Foundation promotes Yazeed Moore as its Michigan programs director… Franz Hochstrasser, co-founder and CEO of Raise Green, joins S2 Strategies as an inclusive climate finance senior advisor… Peter Healy, previously with Equilibrium Collaborative, joins Mad Agriculture, the affiliate of regenerative agriculture investor Mad Capital, as director… Sunwealth is recruiting a senior counsel in Cambridge, Mass… Skyline Foundation is hiring two program associates in California… The Investment Integration Project will host its third annual system-level investing symposium, Wednesday, April 10 in New York.

👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.

Thank you for your impact!

– March 27, 2024