This month’s Liist of impact funds actively raising capital is a tale of two markets.
Fund managers in emerging markets are going all-in to raise traditional, if impactful, VC funds, despite the still-sluggish venture capital market. With valuations down and many hopeful entrepreneurs looking for capital, opportunities abound for investors willing to get their hands a little dirty.
In the US and Canada, on the other hand, fund managers are iterating on traditional approaches to financing for community resilience, ownership and wealth. For example, New Majority Capital is repurposing the structure of a buy-out fund to transfer small-business ownership to underrepresented entrepreneurs. Homium is reshaping home refinancing by giving homeowners and home buyers the option of sharing their future equity with investors rather than taking out a traditional loan.
Eschewing such innovative structures, fund managers in Latin America and elsewhere are putting an impact spin on standard venture capital models. Dalus Capital and Savia Ventures in Mexico have their eye on emerging climate opportunities in Latin America and are working to build the region’s climate tech ecosystem through early equity checks.
Dalus is keying in especially on early and growth-stage climate opportunities in countries like Costa Rica and Colombia with progressive climate policies. It’s simultaneously helping to build Latin America’s climate investing ecosystem with an online network connecting startups, investors and intermediaries.
Savia, a first time fund manager, is focused on new ventures entering the market by cutting checks at the pre-seed stage. “Latin America is the largest untapped climate market opportunity right now,” Savia’s Andres Beahr told ImpactAlpha (watch ImpactAlpha’s video interview with Beahr).
Orbit Startups, part of US-based venture fund SOSV, runs an accelerator-investment program for startups in Africa, the Middle East, Asia and Latin America. It’s in the market with its third fund to invest in technologies improving livelihood resilience, education and healthcare access, and supply chain efficiency.
On this month’s Liist:
- Dalus Capital
- Homium
- New Majority Capital
- Orbit Startups fund III
- Savia Ventures
Disclaimer: The Liist and this post are based on available information, sourced by ImpactAlpha. Information has not been further reviewed by the managers nor verified by third parties, is not guaranteed for accuracy or completeness, and should not be relied upon as investment advice or recommendations. Nothing in The Liist, this post or on ImpactAlpha.com shall constitute an offer to sell or the solicitation of an offer to buy securities.
Dalus Capital
Mexico-based Dalus Capital provides early- and growth-stage capital to startups in Latin America addressing livelihoods and financial inclusion, access to education and healthcare, and climate change. Concern for climate change’s social impacts, such as human displacement and disruptions in food production and water supplies is driving the manager’s urgency to cultivate and invest in the region’s climate solutions.
“We are very positively surprised with actions that have been taken in Costa Rica, in Colombia, to some extent in Chile, and Paraguay,” Dalus’ Rogelio de los Santos told ImpactAlpha. “In these countries we see firm commitment to supporting the private sector, innovation, early-stage investment, and very, very firm commitments and institutional efforts to mitigate or reduce carbon and adapt to climate change.”
Dalus is raising its third fund with a target of $100 million to cut checks of $500,000 to $6 million in both climate-focused and social impact-focused ventures. It often leads or co-leads investments. The firm has raised $40 million so far, including $15 million from the US International Development Finance Corp. It has made nine investments.
- Type of investments: Preferred stock and quasi-equity SAFEs, with the possibility to offer convertible notes
- Fund structure: Traditional LP/GP
- Where fund is domiciled: Ontario, Canada
- Geographic focus: Latin America
- Commitments/investors: $40 million
- Who is eligible to invest: HNWI, Family Offices, institutional investors, foundations, development financial institutions
- Sample investments: Dalus co-led a $10 million seed round for Clivi, a digital clinic for diabetes and other chronic diseases which connects patients and specialists through Whatsapp. It has also invested in Algo, a motorcycle finance company focused on underbanked consumers and Reuse, a marketplace for refurbished electronics.
- Contact information: Juanita Gonzalez
Homium
Homeowners who need to tap into their home equity to finance upgrades or other life expenses often have to take out a second mortgage or home-equity line of credit. Those financial instruments function like any other form of debt, with regular payments and interest.
New York-based Homium is giving homeowners another option: to sell a portion of their equity to other investors through “shared appreciation.” Homeowners get cash up front, and pay nothing until they refinance or sell. Investors get repaid, plus a cut of the equity upside if the home appreciates in value. If the home loses value, investors get their principal returned.
Homium is also helping first-time homebuyers by providing “shared appreciation” notes, where they secure down-payment assistance in exchange for a 35% of their home equity appreciation (see, “Homium aims to help home buyers overcome the down-payment hurdle”)
“For homeowners who don’t qualify for a second mortgage or have a rich uncle, which disproportionately would include lower-income and BIPOC populations, Homium offers a way to bridge the gap when life happens,” Matt Eldridge of Realize Impact, an investor in Homium, told ImpactAlpha.
Homium has been testing the model in Colorado. The firm is looking to raise $350 million for Homium Asset LLC, a single-purpose vehicle that holds the shared appreciation loans and notes. The firm will focus the capital on first-time homebuyers, The and will have household income caps to ensure Homium’s lending reaches low- and middle-income borrowers.
The firm says its loans match Fannie Mae’s Community Seconds guidelines for down payment assistance programs.
- Type of investments: Reg 144A-exempt securities backed by on-title home equity loans
- Fund structure: The loans are held by a single-purpose LLC vehicle. The LLC pays Homium a 0.50% fee for assets under management. All proceeds from loans go to investors; there are no profit sharing or preferred terms.
- Where fund is domiciled: Delaware, US
- Geographic focus: US
- Commitments/investors: $11 million from Realize Impact, Sorenson Impact Institute, Blizzard Fund and other investors
- Who is eligible to invest: Qualified institutional buyers, foundations, endowments, family offices, and donor advised funds with greater than $100 million in assets
- Sample investments: Homium has closed 18 deals in a pilot in Colorado with average shared-appreciation loan amounts of $64,000 on homes valued at just below $500,000 on average. The average income of its customers is $60,000 annually.
- Contact information: David Jette
New Majority Capital
New Majority Capital is strengthening small businesses–the backbone of local communities–while enabling a wealth transfer to diverse and female entrepreneurs. Its model is a twist on a traditional buy-out fund model. The Rhode Island-based organization runs an accelerator program for diverse entrepreneurs and then helps them acquire existing, profitable small businesses from owners who are looking to retire or transition the business. Retiring business owners represent an estimated $14 trillion in enterprise value, says New Majority’s Havell Rodrigues.
“This is a one time opportunity to help take an existing good cash flow generating business, treat it as an asset, and help transition ownership of that asset to an underrepresented entrepreneur,” Havell says (see, “Through small business acquisitions, New Majority aims to create ownership access for underrepresented entrepreneurs”).
New Majority Capital has two deals under its belt and has advised or sponsored 13 acquisitions. It is looking to raise $50 million for its first fund.
It is partnering with JPMorgan Chase’s Advancing Black Pathways initiative to scale its bETA accelerator program across the US and build its pipeline of entrepreneurs.
- Type of investments: Equity investments in businesses with $500,000 to $2 million EBITDA [TK]
- Fund structure: traditional private equity with revenue-based returns to the fund
- Where fund is domiciled: US
- Geographic focus: US
- Leadership: Diverse-led
- Commitments/investors: $5 million from the Skoll Foundation
- Sample investments: Support for David Owoyemi from Nigeria to acquire a small landscape installation and maintenance services business in Connecticut.
- Contact information: Havell Rodrigues
Orbit Startups
An arm of the US VC firm SOSV, Orbit Startups launched in 2022 to accelerate and invest in tech startups in Asia, the Middle East, Africa and Latin America. It selects cohorts of five to 10 companies ranging from the pre-seed to Series A stage and invests up to $180,000 in each.
Orbit’s focus is companies bolstering economic independence through better livelihoods and access to and affordability of basic goods and services; improving the climate resilience of core industries and agriculture through adoption of climate-smart technologies and better waste management; and delivering better access to quality health services. It’s also zeroing in on startups “that are future-proofing the local economy through digitalization,” according to SOSV’s William Bao Bean.
“We are eager to help disruptive startups in emerging and frontier markets where there are more inefficiencies, fewer legacy industries, and the most opportunities for aggressive growth,” he explained.
Orbit is raising its third fund with a target of $60 million.
- Type of investments: Equity
- Where fund is domiciled: Delaware, US
- Geographic focus: Emerging markets
- Leadership: Diverse-led
- Unique fund features: the fund’s carried interest is distributed across the entire Orbit Startups team
- Sample investments: Colombia-based MUTA is digitizing waste collection and management processes; Morocco-based Chari is an e-commerce platform for small businesses and micro merchants
- Sample impact metrics: Number of small business and low-income female beneficiaries, number of jobs created, number of female founders/employees, carbon emission reductions, as well as company-specific metrics including students trained, amount of waste collected, or accidents avoided
- Contact information: Oscar Ramos
Savia Ventures
Mexico-based Savia Ventures is a first time fund manager that is zeroing in on Latin America’s promising but under-resourced climate tech ecosystem.
“Latin America is the largest untapped climate market opportunity right now,” Savia’s Andres Beahr told ImpactAlpha (watch ImpactAlpha’s interview with Beahr).
The firm’s investment scope covers startups in the blue economy, climate fintech, carbon markets, and climate-smart agriculture.
Savia is looking to raise just $10 million for its first fund to prove its thesis. It has made five investments, including Santiago-based food tech venture Done Properly.
To support female entrepreneurs in the ecosystem, the firm launched the Savia Lotus Award, which will grant one winner $10,000 during this year’s Climate Week NYC.
- Type of investments: Equity; pre-seed to seed with tickets of up to $400,000
- Fund structure: Traditional LP/GP
- Where fund is domiciled: Delaware, US
- Geographic focus: Latin America
- Commitments/investors: $3 million from a mix of individuals, family offices and one corporate backer
- Sample investments: Five investments, including Done Properly, a Chilean fermentation-based food tech venture, and Splight, which makes software to optimize clean energy coming into the electricity grid
- Contact information: Bryony Parker, Andres Baehr
