Greetings, Agents of Impact!
🤝 Agents of Impact are convening this week at the Latin America Impact Investing Forum and the Sorenson Impact Summit. ImpactAlpha’sJessica Pothering and Amy Cortese are in Mérida, Mexico and David Bank is in Snowbird, Utah. Say hello (or hola)!
Featured: Impact in Latin America
Latin America’s impact entrepreneurs find opportunities in nature-based solutions and smarter services for low-income consumers. Street demonstrations, populist leaders and economic strife dominate news headlines about Latin America. Less appreciated are the entrepreneurs who are finding viable ways to address the social, economic and climate-related issues roiling the region. “The entrepreneurship ecosystem is booming,” says Rodrigo Villar of Mexico City-based New Ventures, which is hosting this week’s Latin American Impact Investing Forum in Mérida, Mexico. “We’re living in hard times, in one sense, with more oppressive governments that aren’t promoting innovation,” Villar says. “But we’re living in probably the most exciting time in terms of entrepreneurship.”
- Beyond venture capital. New Ventures is rolling out a $20 million revenue-based finance fund for women’s health companies, part of an expanding mix of fund managers with specially-designed vehicles for underserved founders and underinvested sectors. Elevar Equity is in the market with its first dedicated impact fund for Latin America. “There is a lot of resilience within lower-income and underserved communities. People will continue to spend on basic services,” says Elevar’s Johanna Posada. U.K.-based Amazonia Impact Ventures is among the new crop of funds investing in land restoration and regeneration. “Mainstream impact investing is getting its head around nature-based solutions and its potential,” says Laura Ortiz Montemayor of SVX Mexico. “We’re finally getting there.”
- Keep reading, “Latin America’s impact entrepreneurs find opportunities in nature-based solutions and smarter services for low-income consumers,” by Jessica Pothering.
Building livelihoods and climate resilience in Central America. Impact investors like Root Capital have emerged as key partners in the Biden administration’s effort to address the root causes of migration from the region. “Locally rooted economic development is the best solution to the migration pressure in the region,” Root Capital’s Willy Foote tells ImpactAlpha. Root’s $80 million commitment in loans to agricultural enterprises in Honduras is among $950 million in new pledges to the Partnership for Central America.
- Financing pledges. CrossBoundary has closed two transactions in mid-sized businesses in El Salvador, as part of a pledge to mobilize up to $30 million in the country. Deetken Impact also has closed two transactions in El Salvador and mobilized more than $17 million, including $2.2 million for renewable energy. The administration has so far secured more than $4 billion in pledges from investors and corporations to create good jobs, upskill people for the digital economy and expand access to small business financing.
- Keep reading, “Root Capital and other impact investors emerge as key players in Biden’s Partnership for Central America,” by Dennis Price.
Dealflow: More LatAm
Bigger impact funds and investments defy venture capital slowdown. Impact investment in Latin America has remained strong even as overall venture capital activity is slowing down after a record-setting $15.9 billion in venture funding deployed in the region in 2021. London-based impact private equity firm Lightrock is looking to increase its investments to more than $1 billion in Latin America over two years. Lightrock raised $300 million in May last year to invest in Latin American tech solutions. São Paulo-based Monashees is looking to raise a total $700 million for a pair of funds to invest in early- and growth-stage fintech, edtech, healthtech and logistics startups as well as startups building tech solutions for small and medium-sized businesses in Latin America. The firm secured an undisclosed commitment from IDB Lab earlier this month.
- LatAm’s impact unicorns. Startups in Latin America raised 19 rounds above $100 million last year. Among them is Chile’s Betterfly, a company that promotes wellbeing by rewarding people’s healthy habits. Betterfly, which early last year became Latin America’s first B-certified unicorn, contributes a portion of its revenues to social impact projects. Creditas, a Brazilian consumer lending startup that has raised $1.1 billion from investors, was valued at $4.8 billion early last year. Last May, Xepelin raised $111 million to streamline financial tasks for small businesses in Chile and Mexico. In January last year, Colombia’s Tul raised $181 million to digitalize independent hardware stores in Latin America.
- Smaller ticket sizes. IDB Lab also backed Guatemala’s Acceso Impact Fund, which is raising an evergreen fund to fill small businesses’ need for debt and revenue-based financing. The fund has raised $4.5 million to date. Ecuador-based IMPAQTO Capital, is raising $2 million, also for revenue-based financing for high-impact enterprises in the Andean region (see “The Liist”). In January this year, Mexico City-based venture fund Amplifica Capital raised $11 million to invest in early-stage women tech founders in Latin America.
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Dealflow overflow. Other investment news crossing our desks:
- Black-led affordable housing developer SoLa Impact received a $7.5 million equity injection into its Black Impact Fund by PNC Bank.
- Utah-based Oka, The Carbon Insurance Company raised $7 million in a seed round led by Aquiline Technology Growth to grow its insurance offerings for carbon credit buyers.
- A climate fund managed by responsAbility committed $10 million in debt financing to South Africa’s Jaguar New Energies for solar energy expansion.
- New York-based XL Batteries raised $10 million in seed funding from Catalus Capital with participation from Xerox Ventures.
Impact Voices: Rebuilding Ukraine
One year on, impact investors look to back reconstruction and resilience in Ukraine. When Russia invaded Ukraine a year ago, Scott Richards of CrossBoundary was among those fleeing to Poland. He walked the last six kilometers on foot as the wave of migrants made the road impassable. The impact investing firm sprang into action, connecting its network of global partners and clients with opportunities to address challenges they are uniquely positioned to help solve. One example: CrossBoundary client Bank Lviv channeled funds to small- and mid-sized Ukrainian businesses, sustaining jobs and economic activity in challenging conditions. The focus on immediate humanitarian relief has broadened “to a wider conversation on investing in Ukrainian economic resilience and, ultimately, reconstruction and recovery,” Richards writes in a guest post on ImpactAlpha (for context see, “Call No. 40: How impact investors embrace political risk to keep progress flowing (video).
- No small potatoes. Richards heads the CrossBoundary’s Eastern European advisory group. With Geneva-based Peace Dividend Initiative, the firm is helping to stand up a Ukraine Impact Fund to invest in small and medium-sized enterprises. Back in Ukraine last month, Richards visited Central Plains Group, a four year-old sustainable grower and exporter of potatoes. “In spite of the war, they are investing and generating new employment in rural areas of western Ukraine,” he writes. “The character of the Ukrainian people, revealed in these darkest of times, leaves me humbled, amazed, and more convinced than ever of the limitless potential of Ukraine and the bright future ahead of it.”
- Read Scott Richards’ guest post.
Agents of Impact: Follow the Talent
Robert Bernard, ex- of CommonWealth Equity Partners, is named chief sustainability officer and senior vice president of client sustainability solutions at CBRE Group… Hannon Armstrong Sustainable Infrastructure Capital is promotingJeffrey Lipson to president and CEO, replacing Jeffrey Eckel, who will step into a new role as executive chair. Marc Pangburn will replace Lipson as chief financial officer… American Expressis recruiting an ESG and sustainability manager in New York… PosiGenseeks a corporate finance and capital markets vice president in New Orleans.
Putnam Investmentsis hiring an executive assistant for a sustainability strategy in Boston… California’s IBankhas an opening for a venture specialist… Northwestern Universityis looking for a diversity and inclusion director in Evanston, Ill… The World Bankseeks a chief ethics officer in Washington, D.C… One Acre Fundis recruiting an investor relations manager in New York… This year’s Social Enterprise Conferencewill take place at the Harvard Kennedy and Harvard Business schools, March 4-5, 2023.
Thank you for your impact.
– Feb. 27, 2023