ImpactAlpha Latin America: Tilting Chile’s startup ecosystem toward impact

ImpactAlpha · November 27, 2024

Santiago, Chile

Saludos, Agents of Impact! Welcome to November’s ImpactAlpha Latin America. Tomorrow is Thanksgiving Day here in the US. This holiday, we’re grateful for you and your impact across Latin America, and indeed, the globe. Please drop us an email with any tips, suggestions or requests on how ImpactAlpha can serve you even better.

As always, special thanks to our ImpactAlpha Latin America partners – FLII, New Ventures, Alterna, Latimpacto, Aliança pelo Impacto, Pro Mujer, Impaqto and GSG NAB Chile. They help keep us, and you, connected to the people and places driving impact in Latin America.

¡Empecemos! – Dennis Price

Featured: Market Building

Families and fund managers tilt Chile’s startup ecosystem toward impact. The term “impact” doesn’t yet have wide recognition in Chile, but as a startup culture takes hold, investors are finding that many of the new investment opportunities include an impact lens. Companies like small business-focused fintech venture Xepelin and vehicle and workforce finance provider Galgo are building products and services for underserved communities. That, in turn, is underpinning a growing ecosystem of impact-minded investors, financial advisors and network builders, reports ImpactAlpha contributor Shefali Anand. “Many entrepreneurs, they do impact, but they are not aware,” observes Andrés Pesce of Kayyak Ventures, one of Chile’s early impact-minded investment firms. Last year, impact investments in Chile reached about $450 million – up 12% from 2022.

Community curation. Accelerating the growth is an impact matching program for founders and investors organized by Chile’s four-year-old national advisory board for impact investing, or NAB, which is part of the GSG Impact network. “No one invests in what they do not know, so it is crucial to reduce this barrier inherent to a new investment strategy,” says Ximena Vial, who runs impact investments for Quest Capital, a money-management firm in Santiago. Vial and Pesce have been working to advance impact investing in Chile by educating the LPs in their own funds, and through their work with the NAB, via partnerships with crowdfunding platforms, networking events, and efforts to bolster impact management and measurement practices. Proof points from investors’ own portfolios are helping too. “If we don’t have a return, we can’t scale impact and we can’t recycle capital,” says Pesce.
Family and institutional money. Chile’s early impact ecosystem blossomed around the government-led startup acceleration initiative, Start-up Chile, which has helped usher more than $1.2 billion to more than 3,000 ventures since 2010. About 16 impact funds have since emerged in the country. Now wealthy families are joining in. “The new generations of these families are leading the charge, restructuring their ancestors’ investment portfolios towards more sustainable approaches,” says Vial. The president of Chile’s NAB, Horacio Pavez, helms the family office Napali. The NAB is angling to engage Chilean pension funds and other institutional investors, says Pesce. “We need endemic managers and endemic capital because that capital stays here in the region.”
Keep reading, “Families and fund managers tilt Chile’s startup ecosystem toward impact,” by Shefali Anand on ImpactAlpha.

Agents of Impact: Central America and the Caribbean

Agents of Impact building solutions for underserved markets in Central America and the Caribbean. Remittances. Second-hand shopping sites. And small business loans that could make or break a family. Agents of Impact who are coming back to Central America and the Caribbean, or who never left, are building fintech, e-commerce and other solutions for the region’s underserved markets. With ImpactAlpha’s growing focus on Latin America, ImpactAlpha’s Zuleyma Bebell went to the FLII Central America and Caribbean in San Jose, Costa Rica earlier this month, excited for the opportunity to sit down with some of these emerging changemakers (read our conference preview). “So many of these stories hit close to home,” writes Bebell. “Many of these solutions would have made our lives so much easier when I was growing up in Colombia.

Solution builders. Kura’s Stephanie Joseph is easing remittances to Central America and the Caribbean. Gabriela Madrigal Morera of El Mercado del Pollo is creating good jobs through food. Stevon Darling of ONEST Financial is expanding access to banking. And Vitrinnea’s Julio Javier Pastore is building an online market for second hand goods. “At the FLII, our conversations focused around the company’s origin stories and their impact,” says Bebell. “They fill me with pride and hope for the region.”
Keep reading, “Agents of Impact building solutions for underserved markets in Central America and the Caribbean,” by ImpactAlpha’s Zuleyma Bebell.

Dealflow: Catalytic Capital

Catalytic investors mobilize $300 million in ‘debt for nature swap’ in the Bahamas. In the wake of an agreement at the COP29 climate summit that was derided as woefully inadequate, catalytic investors are demonstrating how to shuttle private capital to climate needs in emerging economies. Lukas Walton’s Builders Vision became the first family office to backstop a so-called “debt for nature swap” that will free up more than $125 million for marine ecosystem protection and restoration in the Caribbean nation of the Bahamas. Builders Vision provided a $70 million credit-risk guarantee, which, coupled with a $200 million guarantee from the Inter-American Development Bank, allowed the Bahamas to refinance $300 million of its sovereign debt. The new, lower-cost package from Standard Chartered will allow the Bahamas to redirect money it would have used for interest payments to managing and expanding its marine protected areas, or MPAs.

Family funding. Builders Vision was brought into the deal by a familiar conservation partner in the region, The Nature Conservancy, which has structured four other debt-for-nature swaps. “What we’re hoping to prove is that family offices and other pools of capital can play a unique role to support and catalyze investments for projects like this,” Builders’ Vision’s Rebecca Carland told ImpactAlpha. Read on.
New tools. Latin America- focused Ponterra is among five new grantees from the Catalytic Climate Finance Facility, an initiative of Climate Policy Initiative and Convergence to support novel funding mechanisms for the least-invested climate challenges. Ponterra, based in London, works with farmers and landowners in Latin America to restore native species and protect biodiversity through reforestation projects. Its planned $100 million Biodiversity Bridge Vehicle will generate income and returns through biodiversity and carbon credits. Check it out.

Dealflow overflow. More investment news crossing our desks:

Carbon markets. Temasek and Trafigura backed carbon credits from ecosystem restoration in Colombia.
Financial inclusion. Accion invested in Banco Contactar to drive digital financial services to rural Colombia… Tumoni landed $2.3 million to bank Central American migrants and their families back home… ALIVE Ventures invested in Colombia’s AgriCapital to finance smallholder farmers… Mexico-based Solvento raised $12.5 million from Cometa, Quona Capital and others to help independent truckers with financial management, including invoicing and payments.
Green energy. Mexico City-based Sistema.bio acquired Inclusive Energy, which makes sensors for biogas and solar systems, to improve Sistema.bio’s digital monitoring, reporting and verification capabilities for its biodigester units… IDB Invest provided a $50 million loan to Banco Davivienda Salvadoreño to on-lend to small businesses and renewable energy projects in El Salvador… Colombia-based Bia Energy raised $8.5 million to provide companies with smart energy meters that enable them to monitor and manage their energy consumption, and track clean energy usage and carbon emissions.
Health and wellness. Mexico’s Minu raised $30 million from Next Billion Capital Partners, Flourish Ventures, Promotora Impact Ventures, Nazca and other investors for its employee benefits service for companies.
Inclusive economy. Rutopía, which links Indigenous communities in Latin America to the sustainable tourism market, raised seed funding from Elea Foundation, ATTA Impact Capital and Boosting Opportunities Fund.
Sustainable bonds. BBVA Colombia secured $100 million from a sustainable bond issuance to finance green and social projects in the country.

Impact Voices: Gender Smart

How fintechs are bridging the gender-based financing gap in Latin America. Better meeting the financial needs of women-led micro, small, and medium-sized enterprises isn’t just the right thing to do. For fintech startups in Latin America, it’s an untapped business opportunity, Alan Pierce of Bogotá-based Alive Ventures argues in a guest post. To better understand those financing needs, and develop actionable recommendations for fintech companies, Alive worked with Pro Mujer’s Gender Knowledge Lab to survey 90 small businesses and nearly 30 fintech companies across the region. “How fintechs can improve access to financing for MSMEs led by women in Latin America” delivers practical, gender-smart strategies based on that research.

Gender-smart strategies. Three out of four women-led small businesses in Latin America lack adequate financing, underscoring the urgent need for tailored financial solutions.Alive investee Finaktiva, for example, developed a line of credit with flexible terms specifically for women-led small businesses, enabling them to significantly increase the percentage of women-led company clients. Another strategy: Leverage gender-disaggregated data. Peruvian fintech Prestamype, another Alive investee, used a sex-disaggregated analysis of their customer acquisition process to redesign the funnel with a gender perspective, leading to an increase in the number of women-led clients in Prestamype’s portfolio.
Keep reading, “How fintechs are bridging the gender-based financing gap in Latin America,” by Alive Ventures’ Alan Pierce.

Get in the Game

🏃🏽‍♀️ On the Move

Global Development Advisors added Roger Santodomingo of the Aspen Network of Development Entrepreneurs to its board of directors.

💼 Step Up

Community Investment Management is hiring a director of investments in Mexico City… GAWA Capital is hiring a regional manager for Latin America… U.S. International Development Finance Corp. seeks a project finance specialist in Guatemala City… IDB Invest seeks a lead (or senior) investment officer for the Infrastructure and Energy Division of the Investment Operations Department in Costa Rica, Dominican Republic, Jamaica, Guatemala, Mexico, Panama or Trinidad and Tobago.

International Finance Corp. is recruiting a principal investment officer in Santo Domingo, Kingston, Bridgetown, or Panama City… The Financial Institution Group of International Finance Corp. is looking for an investment Officer based in México City or Panama City… Promotora Social México is hiring a researcher and analyst in Miguel Hidalgo, Mexico.