Impact Investing in Brazil

Business for social development.. take 1

Impact Investing in Brazil

Social Enterprise World Forum 2012

October 25th, 2012 · No Comments · Uncategorized

As far as I’m concerned, Rio couldn’t have been a more opportune location for the SEWF2012 given that I got to reconnect with various folks I had the pleasure of working with during my Frontier Market Scouts placement in Brazil and its successor in Colombia and now Central American beauty of Belize. A big Thank You to SEWF2012 event hosts NESsT for the student scholarship, FMS and my new employer Maya Mountain Cacao for supporting my bid to take part in the event! Any takers for the SEWF2013 in Calgary, Canada?

The event’s highlight for me were the parallel sessions that saw the almost 700 participants in the NESsT hosted event scramble through the 9 different options simultaneously available for each track in the massive venue. My topics of choice were (see for info on speakers and topics):

Social Enterprise Strategies: National & Municipal Policies & Strategies for Fostering Social Enterprise

Equity Investments in Social Enterprise: Generating Financial and Social Returns

Models for Measurement: Models for Capturing and Communicating Social Enterprise Impact

Recycling & Reusing Capital: Debt Financing for Social Enterprise

Building the Pipeline: Challenges in Identifying and Preparing Investment-Ready Social Enterprises

Below are some of my big takeaways from the parallel tracks.

From: Social Enterprise Strategies:

The value proposition of social enterprises via – Lisa Nitze, Mission Measurement (USA)

Social enterprises:

  • address social needs without having to increase taxes
  • fulfill meaningful opportunities for those with barriers to employment
  • create partnerships among stakeholders
  • provide a sustainable approach to systemic change

And, most importantly social entrepreneurship as a movement provides a paradigm shift when it comes to the government’s role of build, do and educate to partner and leverage resources.

To develop, the social enterprise sector needs:

  • clustered offerings for holistic solutions
  • consortia to create leverage for purchase and sales (already happening through b corporation)
  • template solutions to increase rapid sharing

Current innovation in social enterprises

  • pay-for-success bonds (e.g. Instiglio’s SIB approach)
  • public/private infrastructure innovation funds
  • B-corps, L3Cs, Flexible Purpose corps

Continuing challenges:

  • storytelling and making the case for Impact Investing
  • government tracking field data
  • awareness of major buyers
  • lack of a single certification program
  • lack of access to growth capital
  • tax structures (incentives) lag behind field development
  • lack of social enterprise case studies to learn from
  • lack of training youth / human capital for the field
  • lack of a single measurement and reporting standard that fits social enterprises in different sectors and regions

From: Equity Investments in Social Enterprise: Generating Financial and Social Returns

  • Financial capital is most widely available for growth-stage businesses, least for early stage
  • Pipeline building is typically outsourced to accelerators
  • GIIRS was the common measurement standard among the funds
  • Scale and impact – law of diminishing returns?
  • Innovation
    • Vox Capital’s GP remuneration model – rewarding fund managers for social impact achievements by portfolio companies vs just financial performance
    • Foundations – Impact Investment Fund partnerships where the former invest in the latter to manage funds.. e.g. Instituto Alana – Vox Capital R$10M investment
    • Examples of portfolio companies and tendency to focus on scale largely favors digital enterprises

From: Building the Pipeline:

  • Money is no longer a constraint for Impact Investing
  • Capital Curve– forms of capital available is not enough of risk-taking from financing institutions.. Why?
    • Expectations are too high for social enterprises
    • Need for much more talent than is currently concentrated in the field
  • Value proposition of impact measurement standards, e.g. GIIRS:
    • Outsourced due-diligence for investors be it philanthropy, impact-first or financial-first
    • Speaks to commercial firms/corporations (think CSR) in a quantifiable manner
  • While investor readiness is difficult for social enterprises to achieve, so is accelerator readiness!
    • Missing link in the supply chain of social enterprises  – what kind of resources can bring ideas to life by the actual BoP/ enterprising poor

Some big ideas to close with:

Social Entrepreneurship / Impact Investing is undergoing a terminology and identity crisis.

The U.S. uses social business strictly as defined by Yunnus – with all profits (though very desirable) are reinvested into the business and no dividends can be collected.. In Latin America, social business is any entrepreneurial activity designed to address a social cause, however they choose to utilize the profit. Moreover, south of the border, social enterprise and social business are used interchangeably. To complicate matters further, a social enterprise in Latin America can be either a business or non-profit, a view shared by investing institutions as well. In the duration of the event I also heard impact business used interchangeably with social enterprise, and have to say there’s a need for etymological analysis and clarification. Implications – new links between the field and academia!

This is no news, but there is more willing capital than social enterprises, and the capital favors scalable models and thus certain sectors, esp. digital.

I personally see the latter part of the insight as a major flaw of this financing model, as it excludes very important sectors such as agriculture, where scale is harder to achieve to and even more difficult to sustain. Implications – same as above and tracking of trends in fund portfolios, addressing gaps with partnerships with philanthropic capital.

The Impact Investing field is very small. Everybody knows everybody, and while this creates risks of a closed-loop system when it comes to the question of including new players in the field, it also facilitates transparency and cooperation. With just under a year in this field in Latin America under my belt, I have no more than 1 degree of separation from everybody working in this space. Implications? There is a lot of room and need for new human and financial capital as well as new initiatives to fill existing and emerging gaps in the enabling environment.


Done, am I?

September 5th, 2012 · 1 Comment · Uncategorized

MIA for some time now, I write to report that a month ago, I wrapped up my 6 month assignment with QMágico – recently named São Paulo winners of Startup World Brasil!

I want to (semi-)close with an update with what’s been happening in my much-praised impact investing ecosystem in Brazil..

VilCap peer-selection process winners QMágico and Saútil continue getting good press and raising funds to further develop their already amazing businesses.

Artemisia in July graduated 9* out the 10 businesses that started its accelerator in 2011, and launched its 2012 class, consisting of:

  • Backpacker – a web platform that offers a fast, accessible and easy way for Brazilians to learn languages to increase their employability;
  • TreinaLink (formerly BoPyra) – a multimedia platform for professional training and connecting qualified workforce with work opportunities;
  • Geekie – web-based teaching tools that complement classroom learning for students who are preparing for Brazil’s National High School Examination (ENEM) – the only ticket for free college entry for Brazilians;
  • Instituto Movere – referral center for prevention and treatment of obesity – one of the main non-transmittable chronic illnesses in Brazil – among children, youths and adults;
  • Sementes de Paz – online marketplace that sources organic food for transparent and fair prices and thus promotes investments in improving efficiency and qualification of the production chain.
  • Que Fala! – Alternative communication app for tablets, smartphones and PCs that offers an integral solution to communication for people with speaking disabilities.

And I’ve made it over to @HUB_Bogotá half wrapping up my deliverable for the Frontier Market Scout assignment in Brazil, half helping facilitate the launch and impact investing events. The assignment thus far has given me innumerable networking opportunities in the socent world and beyond, helped me win a volunteer position and raise funds to participate in the NESsT Social Economic World Forum (SEWF) in Rio and a social business intern position with Maya Mountain Cacao in Belize starting mid October.

Keep an eye out for blogs during the SEWF Oct. 16-18, and follow my twitter stream @VilCap_Brasil for updates on development initiatives in Latin America! And feel free to reach out to me with any questions/ideas @

* – Banco Perola; Clinica SIM; Dossier Digital; F123; Kiduca; QMágico; Saútil; Solidarium and Works







More on Artemisia’s Aceleradora

June 6th, 2012 · No Comments · Uncategorized

Last week, we at QMágico participated in the last-to-final work session with the 2011 Artemisia Accelerator class. The topic in question was Human Capital and Governance, something that is of both of vital importance to startups at an early stage of development and often overlooked.

Facilitated by HR guru with impressive qualifications Sandra Betti and by her incredibly engaging colleague at MBA Empressarial consulting company Marcia Sznifer, the two-day session centered on the importance and characteristics of good leadership, communication, and, specifically, do’s and don’ts of constructive feedback.

The content was well-presented and work sessions engaging, but what stood out most was the unmatched group dynamic of the accelerator class. Kicked off in the month of October, this group of 10 social enterprises from, I believe, 5 states of Brazil, has become perhaps the most tightly-knit support community I’ve seen since I quit volunteering at a children’s helpline.  At the time of extending thank you’s to Artemisia and the group at the closing of the event, everybody exchanged sincere reflections on the state of personal as well as social development in the country and tears of joy that only a sense of belonging as deep as shared at that moment could evoke.

As mentioned earlier, this accelerator class will wrap-up with a grand event on July 5th in São Paulo, which will consist of final pitches by the 2011 class, teasers on the six enterprises taking part in the new class launched this May and updates on Artemisia’s revamped accelerator methodology and, most likely, scope of social impact.

Some facts on the new class:

  • Despite considerable effort on the selection team’s part to expand the geography of accelerator participants, all 6 are from the state São Paulo (this trend is much in line with the social enterprise sector mapping results discussed in my previous post);
  • The enterprises are from the areas of education (Geekie and Backpacker), health (Instituto Movere), access to market (BoPyra and Sementes de Paz) and technology for social inclusion (Quem Fala!);
  • 5 are social enterprises and 1 is an NGO on its way to adopting a for-profit model;
  • Instead of following the 9-month acceleration of the 2011 class, this one will be compacted into a more intense 5 month program;
  • Topics to be covered in two-day work sessions will include:
  1. Intro and entrepreneur biographies;
  2. Deconstruction of the business model;
  3. Commercial strategy and positioning;
  4. Thinking like an investor;
  5. Final pitches and graduation.

More coming soon!



Brazil socent map

June 3rd, 2012 · No Comments · Uncategorized

Typing socent in this title made me realize that just as grad school in the U.S. acronymized my language, twitter is teaching me to communicate in a different type of incoherent syllabus combinations for words.. Sorry guys!

I’d like to dedicate this post to a study and recently released iconographic mapping the social enterprise sector in Brazil by the Brazilian chapter of the Aspen Network of Development Entrepreneurs – ANDE Polo Brasil; Potencia Ventures; the Brazilian branch of Latin America’s sustainable development foundation Avina and Brazilian consulting company for BoP business solutions Plano CDE. The study analyzes in quite some detail 50 social enterprises in the country, out of a total of 140 identified by the group.

Some interesting findings:

  • 50% of the interviewed businesses are concentrated in the especially economically active states of São Paulo and Rio de Janeiro, with 13% in the Nordeste, leaving the rest of the pie for the more economically depressed northern and interior regions. This could be in part explained by the fact that enablers in the impact investing space are centralized in São Paulo, complicating their reach to the more geographically remote parts.
  • 78% of the interviewed entrepreneurs have attained either undergraduate (40%) or graduate levels (38%) of education, meaning that the sector is dominated by well-to-d0 and well-meaning mostly generation Y’ers, who want to improve the situation of but do not necessarily represent the Bottom of the Pyramid (BoP).
  • Although all of the interviewed qualify as social businesses, just 50% apply methodologies, either internal (38%) or external (12%), for measuring their social impact. Having dedicated some effort to impact measurement both in theory and practice, I’d like to venture that this might be a trend that evidences a need for greater consolidation in the field of impact measurement..
  • As this was part of the selection criteria, all of the analyzed businesses directly serve the BoP in either providing services or products (18%), or including low-income Brazilians in the value chain (14%) or both (68%). The latter statement includes businesses that outsource distribution and other services to BoP partners, which makes for a happy marriage between lower cost for the social enterprises themselves and stable clients for existing small service providers. An important distinction made in the study was that they did not consider hiring low income staff as a sufficient condition to qualify as a social enterprise.
  • 86% of the interviewed entrepreneurs used their own resources to finance their startup! The difficulty of mobilizing capital for early stage high risk social enterprises is another reason why the BoP themselves are not enterprising in Brazil.
  • 72% sell exclusively in the Brazilian market, 22% of which act only within their regions, while 28% act as international companies.
  • While 64% of the businesses are financially sustainable, 36% are hybrids and for the time-being rely partly on donations, with some relying on the latter for as much as 90% of their costs.
  • Education, financial services, culture, environment, agriculture and technology were the most represented sectors.

The list goes on, but the overview is sufficient to recognize some interesting trends.. It will be very interesting to see future studies, as right now seems to be a time of explosion for social enterprises in the country. As impact investing advocates including Artemisia, the group above, and the social enterprises themselves continue showcasing good examples, the sector in this 200 million-strong country is bound to have more than 150 examples to explore.













On social enterprise careers

April 6th, 2012 · No Comments · Uncategorized

As I rummaged my Easter-vacation bound-brain for inspiration on this week’s blog entry, I chanced upon a webinar by Edge – a globally oriented talent-building group for the impact investing space. Do keep them in mind if you share my quest for landing a job in this young and exciting field. The webinar was facilitated, incidentally, by CEO of Potencia Ventures Kelly Michel and Coordinator of ANDE Polo Brasil Rob Parkinson.

Rob categorized opportunities for employment in the field based on the stakeholders involved: 1. investors, 2. capacity development providers (e.g. accelerator and incubator programs) and 3. back-office service providers (any services needed by social enterprises that are typically outsourced). For either of the three, it seems that skill sets from the traditional business space would be simply transferred to serve the impact business space. As I look for places to take my development degree, a question that comes to mind is how important is knowledge in social development versus technical business skills for actors in the social enterprise arena…tbd

Back to the grouping, however, let’s start with investors. Investors look for business analysts, fund-raisers and fund managers, and here I’d like to try and unwrap the terminology a little, as I have no clue what either of them do. Business analysts, though it seems the definitions are fuzzy from both the theory and practice, define and solve business problems. Most definitions focus on the IT field, and paint the BA as a liaison between some technical function groups and the business itself. Fund-raisers seems more straightforward, and probably includes skills like designing a fundraising strategy, grant-writing, risk analysis and the like. Fund managers seems to be a more senior position describing somebody who makes investment decisions based on analysts’ work.

The next grouping provided in the webinar was capacity development providers for social enterprises, e.g. accelerators, incubators and the like. These types of institutions, most of which are set up as non-profits, need consultants, trainers and mentors. Consultants can work in any area from developing an accelerator’s methodology to mentoring entrepreneurs under acceleration, advocating for the social enterprise field in a given country or region, or selecting enterprises for acceleration. Trainers, I assume, are technical assistance providers for the enterprises receiving support. Mentors will be a more senior position, targeted at people with business experience they are willing to share with high-impact startups.

Back-office service providers was a new term for me.. Here webinar facilitator Rob was referring to any work that social enterprises themselves typically outsource to third parties, including financial, legal services, graphic design and so forth. I don’t see any social enterprise graphic designers appearing on the market any time soon, but if this movement manages to prove itself worthy, why not?

In conclusion… I both found this classification useful in terms of thinking about social enterprise careers, and thought it provides good points to consider when trying to brand yourself for the field. One category I would perhaps like to add is field builders. Though #2 in the classification – capacity development providers – i.e. accelerators do considerable road paving for social enterprise in given regions, there’s definitely room for connectors and integrators, if you will.. Due to an impinv/socent craze we’re seeing these days, there’s lots of doing, but reflecting is not catching up yet. Researchers analyzing and synthesizing the various data that’s becoming available on either the impact or the business side of things will probably become very sought after by either side as the boom wears off and validation of the concepts being tried out becomes a necessity rather than an marketing element.


VilCap goes QMagico

March 27th, 2012 · No Comments · Uncategorized

Wordle: dar vienas

For my benefit as much as your own, let’s briefly revisit my role in Brazil. More on this in my first post. As a Village Capital (VilCap) representative here in Sao Paulo, I am working directly with its portfolio company QMagico. This edtech startup is one of 10 social businesses accelerated by Artemisia Negocios Sociais in a Village Capital-like peer support process, and one of two VilCap investees in Brazil. This post as well as the remaining five months of my foray into the impact investing field in Brazil go out to them!

What? QMagico uses a platform with static content coupled interactive exercises and data analysis features to flip YOUR classroom into a blended learning paradise. But, really, all edtech jargon aside, think a Brazil-grown Khan Academy-inspired online learning platform covering the national curriculum and complete with a suite of features for a personalized learning experience. Some sources of inspiration for QMagico and like-minded edtech businesses include the U.S.-based Education Elements, Knewton and Grockit. Like most successful businesses, QMagico has been observing its market, picking the top ideas of best practices observed, and weaving it into an innovative product offering and business model of its own. QMagico’s CEO Thiago, previously a founder of two educational NGOs, deliberately opted for a for-profit business model to go after more scalable impact.

Why? Because improvements in education, especially aimed at primary and secondary schooling, drive economic and social development. On the macro level, they promote sustainability of investment and drive innovation. Social development effects materialize in better overall public health, lower population growth rates, greater human rights and liberties, a safer society with less poverty and more equitable opportunities for its citizenry. Oh, the enthusiasm of us development kids…

How? Any a critical-thinking skills-equipped person would question the potential social impact for the Bottom of the Pyramid (BoP) of anything that relies on technology reserved for those who can afford it. Fair enough, not all Brazilian schoolchildren have access to computers and the Internet, actually far from it. To address the issue, Qmagico spares no effort to scout complementors in the education sector, be it NGOs, foundations or government entities, to help it deliver its product with the technology needed for its utilization to suit.

For an interesting source on applying learning management systems in the classroom, check out the Blend My Learning blog.

To close, here’s the feel-good educational video of the day:












The things Artemisia does

March 6th, 2012 · No Comments · Uncategorized

Artemisia, a plant mostly known for its medicinal qualities, and its use as the original stock in vermouth, is also thought to uncover psychic powers. Pioneer in social enterprise field-building in Brazil, Artemisia Negocios Sociais couldn’t be better named. Launched in 2004 by the social business clairvoyant Kelly Michel, the non-profit has for almost a decade been paving the way for poverty reduction via business in one of the world’s most unequal countries.

To give a shot at untangling of the logo conglomeration above, Potencia – also founded by Kelly – is an investor group that employs a methodology of ecosystem building to promote emergence and success of social enterprises in Emerging Markets around the world. Its pilot cluster project saw the light of day in none other than Sao Paulo, Brazil. Vox was created as a venture capital fund focused on remove obstacles to financial empowerment of businesses that serve the Bottom of the Pyramid in the country. Meanwhile, Artemisia, a non-profit, was tasked with identifying potential social entrepreneurs and providing them with the technical assistance and know-how needed to cultivate and develop innovative market solutions to social needs.

Moreover, the three, in collaboration with the AVINA Foundation, Endeavor and New Ventures have been working hand-in-hand to develop the social enterprise sector in Brazil. Among other achievements, they also facilitated the creation of a regional chapter of the Aspen Network of Development Enterpreneurs (ANDE) – Polo ANDE Brazil – in 2010 and launched the Brazil edition of in early 2011.

Artemisia, though often cited in relation to its Aceleradora program, comprises of two more branches, namely Choice and Usina das Ideas. Its Accelerator program, after testing various approaches from its conception in 2004, graduating three classes of social entrepreneurs, and adopting features of the Village Capital peer-selection process, is now in the midst of a fine-tuned and refined 9-month program with 10 promising social enterprises – Clinica Sim, Works, Aurie, QMagico, Sautil, Solidarium, F123, Banco Perola, Cidade de Educacao and Dossier Digital. Most of the startups have already secured funding, and all without exception have been perfecting their business model after rounds of pitches and feedback. Their graduation, scheduled for around July 5th this year, will be marked with a major conference complete with social enterprise trendsetters in Brazil as well as international guest speakers and invitees.

Artemisia’s Choice program, a later creation, functions as a means of disseminating ideas and good practices in social entrepreneurship by involving university students as ambassadors of the ideals Artemisia is working to spread. Selected participants – with the new and what is now a second class comprising 90 students or recent graduates from 12 different states Brazil – go through a 5-month program complete with trainings, weekly challenges and required workshop facilitation to spread the word of positive social change through conscientious business practices.

Finally, the Usina de Ideas is an in-depth hands-on introduction to social entrepreneurship that guides an average of 20 participants per class through the idea-conception phase onward to social enterprise inception, equipping them with concepts and requisite tools along the way. The program consists of four different modules, delivered in 10 days spread out in a period of 6 weeks.

Also, the very latest development is an under way MBA program in social innovation! More on that to come.

To provide some scope to Artemisia’s impact and pace, check out what they’ve done in just the past week:

  • trained 60 new Choice ambassadors from six states in two weekend-long events in Sao Paulo and Curitiba
  • involved eight graduated Choice ambassadors as mentors in the training of new participants
  • delivered workshops to 40 students in the sciences, engineering and IT in the northern city of Recife
  • facilitated the creation of ten social enterprise ideas in the area of technology and awarded top three
  • conducted this year’s first weekend workshop with the latest Accelerator class on Commercial Intelligence with six guest lecturers from the private and public sector.

Exemplary, nao e?



Intro and some thoughts on development

February 27th, 2012 · 1 Comment · Uncategorized

To crown my MA studies in International Development at the Monterey Institute of International Studies (MIIS), I am taking part in the Frontier Market Scouts (FMS) program, developed in partnership with Village Capital. VilCap’s partner in Brazil – Artemisia Negocios Sociais – IS the field of impact investing in Brazil.. More about this fascinating organization and its complex network to come in future posts. For now, suffice it to say that VilCap Brazil is currently in stage 4 – portfolio management – of its signature process. FMS scout Hallie McCormick and myself are here to work and learn alongside of two very promising social enterprises and VilCap Brazil investees Sautil and QMagico, respectively.

Though an enthusiastic participant in the almost-or soon to become a-field of impact investing (which many use interchangeably with social entrepreneurship), I’m trying to keep my cool and still question its novelty.. Whether or not a unique phenomenon, however, social entrepreneurship seems to address at least some of the issues facing other avenues to development explored to date, all-the-while also appeasing those disgruntled with the profit-first nature of the private market.

To name just a couple of the aforementioned issues, development activities by governments and intergovernmental organizations, both of which tend to be laden with convoluted and inefficient bureaucracies, are often characterized by the wrong incentives and flat out inefficient implementation.. The NGO sector oftentimes fails to mobilize locals to address the issues they have reason to want to address and suffers from a lack of financial sustainability as well as coordination of efforts.

OECD country governments and multilateral agencies have for decades been allocating considerable chunks of their GDP to benefit the world’s poorest countries (albeit those whose values aren’t too divorced from those of donor governments)..And despite the impressive figures boasted as being spent on the noble cause, the long-awaited trickle down effect remains to be seen.

Grassroots may be the key approach, but NGOs as they exist today may not be the key agents of bottom-up change. At least not the most efficient ones.. The point in development, and the non-profit world is that which taught me so, is sustainability of impact (impact being the social change as opposed to mere tangible outputs facilitated by a development activity).. However, for any a development agent, sustaining impact is a matter of sustaining operations, and that’s where the NGO model, its reliance on grants and donations, and program-focused development falls short of hitting that very target.

Another issue in how both governments and NGOs handle development is the question of WHO gets to decide what needs changing.. While the worst example is shipping US corn (read: contracting US companies) to address hunger in Sub-Saharan Africa and moreover tying the aid to certain purchasing requirements to further benefit US exporters, better projects equipped with needs-analyses and respective custom-made solutions also fall prey to taking matters into the wrong hands.

Social impact-driven businesses by their very nature seem to have at least the above critiques covered. As the successful social enterprises are those that generate at least enough revenue to break even, money circulates and is therefore not “wasted” as in the case of foreign aid.. Moreover, breaking even is a straightforward measure of whether or not a social enterprise is succeeding in meeting a local need. And the last, and my favorite aspect of social entrepreneurship, is its local flavor. While the field building for impact investing may have started in the so-called Global North, the social entrepreneurs supported by the numerous accelerator and incubator programs springing up throughout Emerging Markets are mostly local.

Clearly, as any a new and exciting venture, this field is too young to already have research to back its purported impact.. While microfinance is arguably is failing at achieving its poverty reduction impact, impact investment’s focus on small-and growing-businesses, which can be taken to scale, is expected to be a more suitable medium for poverty reduction.. Oxalá!!!

More to come soon…