The Brief: Indigenous communities, the creative economy, and the future of finance in Latin America

Greetings Agents of Impact!

In today’s Brief:

• Capital providers in Latin America build a ‘community of impact’ in Oaxaca
• Lessons for neurodiversity investing
• Alt-cheese in Germany
• Impact management in underinvested markets

Featured: ImpactAlpha Latin America

Meeting of ‘impact minds’ in Oaxaca aims to catalyze capital for Latin America. Orgánico. Justo. Bueno. Indigenous communities and the inclusive creative economy are the inspiration this week for Latin American capital providers gathering in Oaxaca to rethink the role of finance in the region. In the Indigenous Zapotec town of San Martín Tilcajete, Palo que Habla Fund is replanting copal trees for the next generation of carvers of alebrijes, the finely colored wood sculptures that line the shops of downtown Oaxaca. In nearby Teotitlán del Valle, another Zapotec town, women- and family-led cooperatives are forging economic independence as suppliers of hand-woven, wool rugs dyed with natural pigments for high-end retailers around the world. CEPCO, a state-level coordinator for organic and just coffee producers in Oaxaca, has spun off La Organización, a private, branded roaster that is moving up the commercialization value chain to keep more wealth in the regional economy. The tagline: Orgánico. Justo. Bueno – organic, fair and good. 

• Community of impact. “Everything that we do has to be done with awareness, with consciousness,” said Rafael Bucios of Los Amantes, an artisanal Mezcal distillery 30 kilometers southwest of Oaxaca. Members of Latimpacto, the upstart venture philanthropy network, gathered at the distillery’s Rancho Cebú to kick off Impact Minds, this week’s confab of more than 600 capital providers in Latin America. “When we drink Mezcal, we are drinking something that is a tradition, something that allows people to bring sustenance to their homes,” said Bucios. “We have to be really aware that there is an impact to everything that we do.” Latimpacto’s Carolina Suarez signaled impact investors’ commitment to a more inclusive and sustainable Latin American economy. “We believe in a world beyond frontiers, beyond differences of our needs, cultures and businesses,” she said. “We share the same purpose, building a community of impact.”

• Catalytic green solutions. Working with Latimpacto, IDB Lab, the venture capital arm of the Inter-American Development Bank, is launching the Green Catalytic Fund to reduce carbon emissions by supporting hundreds of businesses and community initiatives in the sustainable use of natural capital. Latimpacto on Wednesday will launch a call for proposals for projects. Coca-Cola and Bayer Foundation have each invested $500,000 in the fund, which will provide a mix of debt and grants. IDB Lab invested $1 million. The Inter-American Development Bank’s Amazon Unit added another $2 million.
  
• Fund-o-rama. Following a similar model, Latimpacto and partners this week will stand up Fund STEM for education and skill-building, Latimpacto’s Juan David Ferreira confirmed to ImpactAlpha. Bogotá-based Fundación Arturo Sesana, in partnership with IDB Lab and other partners, will announce Region Plateada, or Silver Region, a multilateral fund to support elderly care services and workers in Latin America. In June, Medellín-based Fundación SURA, with Latimpacto, awarded $1.5 million to 15 cultural projects in Panama, Peru, Colombia and other countries in the region. 

• Keep reading, “Meeting of ‘impact minds’ in Oaxaca aims to catalyze capital for Latin America,” by Dennis Price on ImpactAlpha. 

Sponsored by Heading for Change

Reimagining disability investing: Lessons from an actual Autistic advocate. “One, or two? One, or two?” asks the optometrist of the patient sitting behind the phoropter – that big device with multiple lenses that helps determine a prescription for eyeglasses. Applying a new lens in impact investing is a bit more complex. For those looking to support neurodiversity, the first step is seeing through the eyes of the community itself. “You have the basic tools that you need to more appropriately engage in these spaces,” writes Heading for Change’s Daniel Maskit in a guest post on ImpactAlpha. For example, he suggests asking companies in the due diligence process “how they are ensuring that what they are doing is what that community wants.”

• Community voice. Maskit and his late wife, Suzanne Biegel, founded Heading for Change last year to bring a gender lens to climate investing. The fund’s other mission is to advocate for the interests of Autistic and other neurodivergent people, like Maskit himself. Maskit, the organization’s “chief ursine officer,” urges investors to seek direct engagement with neurodivergent and disabled people, not just their parents or doctors. Maskit applauds the Barrier-Free Finance Initiative, which was co-founded by a disabled person to address “the needs of those communities as expressed by the communities themselves.” Disability Impact Partners “seeks out entrepreneurs who understand the importance of engaging with disabled communities to ensure that they are solving problems that communities of the disabled see as a priority.”
  
• Keep reading, “Reimagining disability investing: Lessons from an actual Autistic advocate,” by Daniel Maskit of Heading for Change. Heading for Change sponsors ImpactAlpha’s coverage of Climate + Gender. 

Dealflow: Food Tech

German alt-protein startup Formo lands $61 million for animal-free cheese. Berlin-based Formo uses proteins from koji, a umami-flavored fungus found in fermented foods including soy sauce and miso. Previous backers, including FoodLabs, EQT Ventures and Lowercarbon Capital, were joined in the Series B round by new investors including The Nature Conservancy and European retailer REWE Group. “Few European companies are raising such large rounds within climate tech,” said EQT Ventures’ Sandra Malmber. “A key success factor was proving commercial traction, which is a rarity for this type of company at this point in its lifetime.” Formo will use its funding to increase 10-fold its current production of 100 tons per month of fermented Koji protein and plant protein-based cheese. Formo is also developing precision-fermented egg alternatives.

• Cheese alchemy. The company mixes non-GMO Koji protein, similar to the proteins in cow’s milk, with plant-based fats and water to create a dairy replacement. The process, which mimics traditional cheese making, creates a product that resembles the texture and flavor of dairy cheese. Formo, launched in 2019, says koji is “a true game-changer in the world of animal-free cheese [that] outshines typical plant proteins.” The fundraising coincides with Formo launching its cheese varieties in more than 2,000 retail stores in Austria and Germany. 

• Food innovation. Finland’s animal-free egg protein producer Onego Bio landed $15.2 million in July. Swiss company Cultivated Biosciences raised $5 million for its yeast fermentation tech. Earlier this year, US-based Perfect Day raised $90 million, and Meati landed $100 million. Innovative foods, mainly alternative proteins, were the third-most funded agrifood tech category last year, according to AgFunder. Alternative proteins are projected to reach full parity in taste, texture and price with conventional animal proteins by 2035, says BCG. 

• Read more.

Energy Impact Partners scoops up $1 billion its latest decarbonization fund. New York-based EIP raised $1 billion for its third fund for ready-to-scale climate solutions, according to an SEC filing. The firm’s strategic investors and collaborators include more than 60 utilities and corporations, such as Xcel Energy and Microsoft, looking for commercial solutions to help them decarbonize. The new fund follows a billion-dollar raise for EIP’s second fund in November 2021. “Our goal as a firm is to really accelerate the pace of change of the energy transition,” EIP’s Sameer Reddy said at the firm’s annual meeting in June. 

• Decarbonize everything. The fundraise bumps EIP’s assets under management to some $5 billion. Since it was founded in 2015, EIP has added a Frontier Deep Decarbonization Fund for seed and early-stage venture investments, two credit funds, and the Elevate Future Fund for seed, early stage and debt investments in diverse-led companies and funds. The firm’s portfolio companies include industrial heat battery maker Rondo; Electric Hydrogen, which makes next-generation electrolyzers; EV charger maintenance company Charger Help; and Spire, which makes specialty power transformers to boost grid capacity.
  
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Dealflow overflow. Investment news crossing our desks:

• Social Finance, through its education and workforce-focused UP Fund, invested $2.6 million in Durham, NC-based Upwing to provide support services to college students with underserved backgrounds. (Social Finance)
  
• Catalera BioSolutions, a Vancouver-based developer of natural pest repellents, snagged $8 million from S2G Ventures and Farm Credit Canada. (Catalera)
  
• Paris-based Elum Energy secured a $13 million in Series B round led by Energize Capital to grow its renewable energy management systems and expand into the US. (Elum)

Signals: Impact Management

Corralling the ‘Wild West’ of impact management to wrangle capital for underinvested markets. The lack of standardized approaches for impact management and measurement represents an obstacle to the mobilization of capital, according to a new report from the University of Oxford. “Those who are most in need have the least capacity to undertake additional impact measurement when accessing capital,” the researchers conclude in the report, “No data, no deal?” To ensure that impact capital doesn’t exacerbate existing funding disparities, local fund managers and entrepreneurs need replicable models, capacity support and funding for impact management and measurement. “How much time do you spend talking to other investors about impact management challenges? George Carew-Jones, the report’s lead author, said he asked investors. “The answer was not much at all,” he tells ImpactAlpha. “Impact measurement should not be proprietary information.”

• Power imbalance. Interviews with 20 impact investors and intermediaries illuminated a rift between what funders, often in the Global North, expect from their investees in the Global South in terms of the impact of their investments. Investees often feel reporting requirements are too stringent or rigid; that standards are imposed on them without their input; and that metrics aren’t appropriate or realistic for the intervention. There’s “a risk that impact measurement and management is seen as a neocolonial barrier to capital access for the Global South,” the report authors write. 
  
• Practical impact. The London-based nonprofit Global Innovation Fund provides investees with its “Practical Impact” measurement framework that requires tracking of just three metrics: number of beneficiaries over a decade, impact on individual incomes, and likelihood of an intervention’s success in 10 years. “This tailored approach avoids overwhelming small organizations that have lower capacity to understand and undertake impact measurement,” the report finds. First Circle Capital, a women-led fintech investor in Africa that is raising its first venture fund, is getting training and capacity building support on impact reporting from its investors. “For catalytic-style investors with a mandate of facilitating blended finance transactions,” says Carew-Jones, “they could create a huge amount of leverage by putting money into technical assistance on impact management.”
  
• Keep reading.

Agents of Impact: Follow the Talent

Sustainable Capital Advisors welcomes university student fellows: Duke University’s Cindy Cai, Samir Chowdhury of Stanford, Charisma Daniel of Stony Brook, and Georgetown’s Jacob Roy… MCJ adds Casey Goldstein, previously with Brightmerge, as an investment analyst… Abbe Billings, previously with BlackRock, joins Third Economy as head of institutional consulting.

The DFC’s Office of Catalytic Investments is recruiting a vice president… iGravity seeks a senior transaction associate… British International Investment has several openings, including reconciliations executive, treasury liquidity risk associate and head of business applications… Tikehau Capital is looking for a regenerative agriculture investment associate and a fund operations analyst… Blue Forest is hiring a partnerships coordinator to support its work with Indigenous communities.

ImpactAssets is accepting applications for its ImpactAssets 50 2025 Impact Fund Manager Showcase. The deadline to apply is Friday, Oct. 25… Amir Kirkwood of Justice Climate Fund, Appalachian Community Capital’s Donna Gambrell, and Wilson Lester and Talib Graves-Manns of Partners in Equity wil join a half-day summit in Durham, NC on building the green economy, Friday, Sept. 20… Impact Finance Center’s CO Impact Days annual conference will take place in Denver, Nov. 12-13.

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

Thank you for your impact!

– Sept. 11, 2024