The Brief: New Ventures is going big by going niche in Latin America

Greetings, Agents of Impact! The June edition of our specialty newsletter, ImpactAlpha Latin America, is out later today. As an ImpactAlpha subscriber, you get the top stories first. For the full LatAm experience, opt-in to the new feature at no additional cost. ¡Disfruta! – David Bank

In today’s Brief:

• Specializing for impact in Latin America
• Amplifica’s gender-lens portfolio
• Modeling physical climate risks and pre-emptive adaptation 
• Building the Amazon’s bioeconomy

Featured: LP / GP

Going big by going niche: How New Ventures’ Rodrigo Villar is specializing for deeper impact (Q&A). Many impact fund managers seek scale by raising ever-bigger funds. To deepen its impact, Mexico City-based New Ventures is instead going niche, with specialized financing vehicles for companies tackling specific challenges. New Venture’s new Empodera Fund is raising capital to provide flexible funding for women’s healthcare solutions across Latin America. Among the mandates of Viwala, New Ventures’ lending facility, are financing solutions for transgender-led companies in Mexico, and innovative ventures conserving and restoring oceans and coral reefs. And the first thematic fund of New Ventures Capital, which will manage a family of venture funds, has backed more than 10 early stage startups focused on youth well-being. “One of the things I like about getting into a specific problem is that you aren’t talking about the impact investing industry. You are talking about the ocean industry, or the health industry,” New Ventures’ Rodrigo Villar tells ImpactAlpha as the fund manager celebrated two decades of Latin American impact investing ecosystem building. “The impact industry is a perception, an ideology. I don’t know if it’s ever going to penetrate the traditional markets,” he says. “If you go niche, then you can do that. You can break those barriers in a better way.”

• Building an ecosystem. New Ventures began in Mexico City as one of the region’s first accelerators of social and environmental enterprises. It raised over $60 million across two funds with Adobe Capital before selling the revenue-based finance fund manager to Deetken Impact in 2021. At one point, the entrepreneurial team was circulating over 150,000 print copies of a publication called Las Páginas Verdes, introducing thousands of companies with sustainable products to customers in Mexico and Colombia. Each year at New Ventures’ Foro Latinoamericano de Inversión de Impacto, or FLII, more than 1,000 investors and other practitioners cut deals and share best practices. 

• Intentionality and innovation. Villar says too much impact capital in Latin America is flowing to managers that lack intentionality around impact and meeting the needs of social and environmental entrepreneurs. The industry, he says, must grow beyond private equity funds. “You need financial institutions, you need debt facilitators, you need warranties. We need to build a much more complex ecosystem.” Villar and his team found that “the larger the fund, the further we got from the real problem and from the dealflow.” Specialized funds targeting specific problem sets instead “can be designed with the right size, the right people, the right financial mechanism and the right LPs,” he says, adding that the problem-focus strategy “opens up a lot of doors.”

• Keep reading, “Going big by going niche: How New Ventures’ Rodrigo Villar is specializing for deeper impact,” by Dennis Price on ImpactAlpha. 

Dealflow: Climate + Gender

First-time manager Amplifica Capital proves its gender thesis with 25 deals and counting. When Amplifica Capital launched in 2020, investors questioned whether the new manager would find enough deals for a gender-lens venture fund in Latin America. The team has since screened 1,500 companies, diligenced hundreds and invested in 25. “A lot of people were doubtful of whether we would see enough deal flow, and also about what it means to ‘invest in women’,” Amplifica founder Anna Raptis told ImpactAlpha. “The data speaks for itself.” The early stage VC firm invests at the intersection of gender and climate and/or digital inclusion, backing companies that are led by women or have designed products and services that center women. Mexico-based Verqor provides access to credit to farmers and helps them adopt sustainable farming practices. Tani Salud provides surgical patients with better information and cost estimates for their procedures. MicroTerra is partnering with aquaculture farms in Mexico to grow duckweed, which purifies and nourishes the farms; it’s using the mature plants to make a sugar alternative for food manufacturers. 

• Stick to the basics. Amplifica focuses on Latin America’s “fundamental” economic sectors that are less susceptible to tech hype-cycle volatility. “So many basic needs aren’t being adequately served, and that isn’t just happening at the base of the pyramid,” said Raptis. “It’s the middle class as well.” Long-haul bus service Kolors is making intercity travel in Mexico more efficient and affordable; it’s also partnering with large companies to provide shuttle services for their employees to reduce traffic congestion and help people get to work on time. Clupp is addressing low rates of car insurance in Mexico with affordable policies.
  
• Keep reading.

ClimateX raises $18 million to help companies and investors manage growing climate risks. Climate-driven weather extremes cost the world more than $16 million per hour, according to the World Economic Forum. The realities are hitting home as many regions of the world endure a withering heat wave and regulators begin mandating climate risk reporting. ClimateX’s AI-based data analytics platform helps companies model physical climate risks for assets almost anywhere in the world and take preemptive action. The London-based company says it has amassed trillions of data points including information on individual assets and infrastructure to create a “digital twin” of the Earth. “Assessing the impact of physical climate risk on asset valuations and business operations is now a necessity, not a nice-to-have,” said Lukky Ahmed of ClimateX. The $18 million Series A round was led by Google Ventures with participation by Pale blue dot, CommerzVentures, A/O, Blue Wire Capital and others.

• Scenario planning. ClimateX models the likelihood of events such as flooding, extreme heat and cyclones under scenarios including worst-case policy environments. It then calculates the costs of those events and identifies preemptive adaptation solutions, enabling companies and portfolio managers to make informed decisions. Ahmed and his cofounder Kamil Kluza spent years modeling risk and stress testing for major banks. Separately, Berlin-based LiveEO raised €25 million ($32 million) in a Series B equity round to expand its AI-based satellite data to help infrastructure providers respond to extreme weather events, detect deforestation and manage climate risks. NordicNinja, a Japan Bank of International Cooperation-backed venture firm, led the round.
  
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Dealflow overflow. Investment news crossing our desks:

• Brookfield Asset Management is taking a majority stake in French renewable energy and battery-storage developer Neoen, as an initial step toward a full buyout. (WSJ)
  
• Decarbonization Partners led a $69 million “founding” round for Neustark, a Swiss carbon removal startup that captures CO2 from biogas plants and stores it in mineral waste. (Nuestark)
  
• ING extended a revolving line of credit to Lafayette Square of up to $250 million (see, “Lafayette Square’s Damien Dwin: Investing in working-class people and places”). The sustainability-linked loan is tied to performance including supporting 100,000 working-class jobs and offering benefits to half of portfolio companies’ employees. (Lafayette Square)
  
• Volkswagen will invest $5 billion in Rivian to create a joint venture with the struggling EV maker. (CNN)

Signals: Bioeconomy Investing

Building the Amazon’s bioeconomy by investing locally, at scale. Indigenous communities steward 80% of the world’s biodiversity – a precious resource in the face of escalating climate change. But both Indigenous communities and nature conservation receive woefully little funding. A new report from social enterprise accelerator NESsT offers solutions to building sustainable bio-economies that satisfy local communities’ economic needs, create new opportunities and protect ecosystems. In threatened biodiverse regions like the Amazon, “there have to be viable, sustainable, responsible ways to insure the livelihoods of people who live within,” says NESsT’s Kirsten Dueck. “It can’t just be about straight preservation and conservation.” 

• More than money. Since 2015, NESsT has invested in and worked with 50 small, mostly Indigenous-led businesses and cooperatives in the Amazon basin. Recurring themes across projects include a need for more patient and flexible financing, local network building, and strengthening value chains through procurement and infrastructure. “The question cannot be just, ‘how do we move more money?’ but ‘what are the mechanisms for connecting that money to the ground in usable, sustainable ways?’” Dueck tells ImpactAlpha. Coordinated, blended finance, for example, helps mobilize funders and enterprises around a shared mission and goals. NESsT’s Lirio Fund, backed by IDB Lab, supports small agri-businesses in the Amazon Andes with a combination of flexible debt, recoverable grants and standard grants. It reinvests fund fees and interest into a technical assistance facility.
  
• Go deeper.

Agents of Impact: Follow the Talent

The University of Michigan welcomes Shalanda Baker, previously the US Department of Energy’s Office of Energy Justice and Equity director, as its first vice provost for sustainability and climate action… The Rockefeller Foundation is hiring a senior associate of resource mobilization… Moody’s is on the hunt for an ESG associate in New York. 

Common Future is looking for a fund development manager in Oakland, Calif… The Solar and Energy Loan Fund is recruiting a community loan program manager… Honeycomb Credit is looking for a strategic finance director in Pittsburgh… The American Heart Association seeks a Baltimore-based managing director for its social impact fund.

The Good Economy has an opening for a senior consultant for place-based impact investing… The Advancing Black Leadership and Entrepreneurship accelerator is accepting applications from Black founders and small business owners… Bethnal Green Ventures is accepting applications for its Tech for Good venture program.

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

Thank you for your impact!

– June 26, 2024