The Brief | February 20, 2020

The Brief: Latin American leadership, sustainable agriculture and aquaculture, investing in refugee solutions, Zebra cooperative

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Greetings, Agent of Impact!

Featured: ImpactAlpha Original

Latin America’s impact investors lead the way at the Foro Latinoamericano de Inversión de Impacto. More than 600 impact investing doers and shapers are convening in Mérida, Mexico this week for the tenth Foro Latinoamericano de Inversión de Impacto, the biggest impact investing gathering in Latin America. Conference host New Ventures has built “the FLII” into a global gateway to impact investing in Mexico, Central and South America. Among this year’s hot topics: solutions for refugees and migrants, making blended finance work and gender-lens investing. “Now is the time for Latin America to lead,” Refugee Investment Network’s John Kluge said from the stage at Hacienda San Pedro Ochil, the backdrop for the forum’s opening evening (see Investing to integrate the growing wave of displaced people in Latin America in Signals, below).

ImpactAlpha’s eyes and ears at FLII “X” belong to a dozen business students from the Kellogg School of Management at Northwestern UniversityGabriel Meizner, Isabella Artiles, Dylan Sun and other correspondents fanned out to panels and plenaries and gathered intelligence from the FLII faithful. The social and financial innovations that have flowed through the FLII to other regions include revenue-based financing, which is now a hot topic in VC circles in the U.S. but has long been deployed by impact fund managers in Brazil, Guatemala and Mexico (see, “Flexible financing gives venture capital a run for the money in Latin America). Impact-linked financial incentives have been piloted and tested with social enterprises in Mexico, Honduras and Peru (see, Impact-linked financial rewards help high-impact companies attract growth capital). In his keynote, Acumen’s Alberto Gómez-Obregón reminded delegates to be disruptive, center users in designing solutions, develop partnerships and redefine investment success. Tweeted Innovare’s Adrian DeLeón, “I wish these types of speakers were the norm in the U.S.!”

Keep reading, “Latin America’s impact investors lead the way at the Foro Latinoamericano de Inversión de Impacto,” on ImpactAlpha.

Dealflow: Follow the Money

Germany’s KfW adds $16.6 million to LatAm-focused Fund. The German development bank partnered with Conservation International and Finance in Motion to corral public and private capital for conservation projects in Latin America and the Caribbean. Fund has invested more than $380 million in 17 projects in seven countries, mostly to support sustainable agriculture and aquaculture. KfW committed an additional $16.6 million to the fund after injecting $18 million in January for the fund’s expansion to Africa.

  • Eco-portfolio. Fund’s most recent investment was a $10 million loan to Banco Promerica to finance sustainability-certified farms in Costa Rica. It has provided loans to banking group Ficohsa in Honduras and Nicaragua for lending to agribusinesses adopting sustainable practices, and to GNB Sudameris Bank in Colombia to provide credit to local businesses that comply with environmental sustainability standards.
  • Conservation finance opportunity. Blended finance is slowly coaxing capital into climate and conservation initiatives in Latin America. “Impact investing has mostly focused on social investments,” Laura Ortiz of impact advisory firm SVX Mexico tells ImpactAlpha. “The intersection between impact investing and climate finance is under-explored and radically underinvested.”
  • Read on.

Renewal Funds backs plant-based food company Hodo. Hodo, the Oakland-based maker of bean- and plant-based Moroccan Cubes, Curry Nuggets, and Cajun Burgers, doubled its retail distribution last year to 6,000 stores. The size of the Series B round was undisclosed.

Signals: Ahead of the Curve

Investing to integrate the growing wave of displaced people in Latin America. Migration and displacement are unfortunate growth sectors in Latin America. Migrants continue to flee the troubled “northern triangle” of Honduras, Guatemala and El Salvador. With U.S. border policies stopping many Central American migrants at the border, Mexico is grappling with its own influx of refugees and immigrants. Farther south, more than five million Venezuelans, 15% of the population, have fled the collapsing economy in “the world’s largest forced migration you’ve never heard of,” as Migration Policy Institute’s Andrew Selee told the Financial Times. Migration is escalating as conflict and climate change disrupts agricultural traditions and livelihoods: More than 1.4 million Central Americans could seek refuge by 2050, estimates the World Bank.

  • Public funding. Baja California is creating a regional fund to invest in economic development ventures that speed the integration of refugees and displaced people, as well as housing, financial inclusion, education and childcare. The Baja California Fund for Inclusion, anchored by $2.5 million from the state government and additional capital from private U.S. and Mexican investors, is designed in partnership with the Refugee Investment Network.
  • Easing the strain. Colombia is bearing the brunt of Venezuela’s exodus. The World Refugee Council is backing a Social Infrastructure Investment Fund to finance social infrastructure projects to address the influx of Venezuelan migrants. The blended capital fund aims to raise $100 million to “create alternate financial vehicles that can help these countries manage these enormous strain on their housing, medical and education systems,” says consultant David Goldfield.
  • Capital on the move. “We think impact investors are possibly the best-placed actors to solve the refugee problem,” Refugee Investment Network’s Christine Mahoney said at the FLII (see, Mobilizing private capital to back solutions to the migration crisis in Latin America). The network has identified at least 120 social businesses in Mexico with potential to become “refugee lens investments” with technical assistance and outcomes-based investment. Two-thirds could measurably improve lives for displaced people. The RIN plans to launch new investment partnerships across Mexico at a catalyst meeting Feb. 20.
  • Más.

Smaller universities are greening their portfolios, too. A report from the Intentional Endowments Network highlights a dozen higher education institutions that have aligned their investments with environmental, social and governance goals. One exampleBecker College in 2017 adopted ESG strategies to shift 100% of its $5 million endowment, and has realized stronger total returns with lower risk.

Agents of Impact: Follow the Talent

Zebras Unite is partnering with Second Muse Capital to create a blended capital fund, Zebras Unite Capital… The Curt Bergfors Foundation, created by the founder of Sweden’s Max Burgers, has launched the Food Planet Prize awards for scaling sustainable food and transforming the food sector. Nominations are open for the two $1 million awards.

Citi is recruiting a VP-level sustainability and ESG program lead in New York… The Climate Leadership Initiative is hiring a director of operations in San Francisco… Nonprofit Finance Fund is looking for a New Markets Tax Credits analyst in New York… Bamboo Capital seeks a senior investment manager, an investment manager and a debt investment associate in various locations… Tipping Point Fund is recruiting a lead program officer in New York or Washington D.C.

Thank you for reading.

–Feb. 20, 2020