Newsletter: Results of the Roundtables of the Conference

Dear reader, prezados leitores e prezadas leitoras,

We are glad to present our sixth newsletter on Impact Investing in Brazil. The aim of the newsletters is to further unite the Impact Investing community, to provide a channel to exchange ideas and simply to inspire.

After the last edition of the newsletter, which gave an overview of the entire second Impact Investing conference on “Enhancing Impact Investing in Brazil”, we would now like to focus on the outcomes of the key part of the conference – the roundtables on “Alternatives and Access to Funding”,”Social Housing” and “Education”.

The roundtables enabled the audience to interact directly with the panelists representing the perspectives of investors, entrepreneurs, accelerators and the academics from the University of St.Gallen, the Impact Investing Platform of the HSG Hub Sao Paulo and Insper. This unique setting proved to generate a very stimulating and fruitful discussion.

The goal of the roundtables was to give all participants the chance to interact directly and equally with the panelists as well as bringing all the key players of the community together. Additionally, new research questions were generated by feeling the pulse of the Impact Investing industry through the discussion of key challenges and potential solutions in order to enhance the industry.

To enable the participants to focus on their field of expertise and interest on the conference day, the roundtables were organized by sectors. The moderation of the discussion through an academic ensured a neutral conversation as well as the documentation and further use of the generated results.

The roundtable about “Alternatives and Access to Funding” focused on potential new frameworks that would allow classifying investments of social impact differently to traditional investments maximizing financial return. This also relates to the basic but challenging question of balancing business and social impact that should be defined first for the industry.

“Education” addressed the unclear division of responsibility of multiple governmental organizations (federal, state and municipal) and the difficult scalability of social impact projects in schools.

“Social Housing” identified the challenge of high investments and lack of innovation as key problems and argues for the leverage of best-practice projects and social urbanization.

The outlook will provide the readers with an idea of what to expect from the next newsletter, which will present the latest developments of the three-month period after the conference. We are looking forward to receiving any suggestions, insights and comments from you by the mid of November in order to be able to incorporate them. Additionally, we would like to invite you to stay updated through our Facebook page “Impact Investing in Brazil”.

We hope you enjoy reading our newsletter! You can find the full version here.

Thesis: Differences in Investment Behavior of traditional Investors and Impact Investors into Brazilian Biomass Projects

A five month internship in a consultancy for environmental services in Sao Paulo set the foundation of Estelle Tanner's Master thesis. In collaboration with the Impact Investing Platform of the HSG Hub Sao Paulo she conducted her thesis at the Chair for the Management of Renewable Energies at the University of St.Gallen.

Although Brazil has a high renewable energy share compared to the world average, there is potential for improvement. The growing Brazilian agroindustry, as well as a study from the International Energy Agency (IEA) promoting the production of bio-energy from residual biomass and energy crops, indicate potential for biomass projects in Brazil. However, so far this type of biomass projects has not gained momentum in Brazil. Assumed reasons for this phenomenon are (amongst others) the dominance of hydro-power plants, extensive oil resources and difficulties in financing biomass projects. This thesis suggests that Brazilian biomass projects could be a viable investment opportunity for impact investors seeking long-term sustainable investment opportunities, which have not only financial return but also measurable social and environmental impact.

Therefore, this thesis investigates the assumed differences in the investment decision making processes of traditional investors (PE, VC) and impact investors in emerging markets, via the example of Brazilian biomass projects. Through empirical research (based on 13 in-depth-interviews with six traditional and seven impact investors, all of whom are assessing a Brazilian biomass business plan) new insights are gained. The scope of this thesis does not allow for the deduction of general applicable theories, thus new insights for further research are created. In general, the investment decision-processes of traditional investors and impact investors do not differ significantly.

However, there are differences within the return and impact expectations. Although impact investing may propose one mean to foster biomass projects in Brazil, it is not the magic bullet accelerating the industry in general. Impact investing makes sense under certain circumstances. Dedication to create an intended and measurable social and or environmental impact in a less developed region, the inclusion of locals (e.g. better education, access to energy, creation of economic value), are just a few examples to point out what defines an impact investment.

For more information please also consider her presentation held at the 2nd Conference for Impact Investing, you can access it here.

Thesis: Portfolio Company Selection in Latin America

Our former Impact Investing Coordinator Fabian Oppenheimer just completed his master thesis on Portfolio Selection of Impact Investors. Here is a short summary of his work:

The paper analyses how Impact Investors select their portfolio companies in Latin America and what criteria are assessed in the process. The selection process model applied in Venture Capital has been adopted, since virtually no research on Impact Investing has been conducted to date. 

The findings reveal that Impact Investors originate and assess deals in a similar way to Venture Capitalists, but that some criteria are adjusted and others added in order to reflect the dual objective of Impact Investing;

Impact Investors can originate deals passively, but they prefer searching for social ventures proactively: personal contacts, access to networks and industry events are crucial in this context. 

Impact Investors considering an investment in Latin America search for integer, honest and reliable social entrepreneurs committed to social impact; eligible social ventures must be profitable with potential for further scalability; the product must have a social impact, i.e. create value for the individual consumer and for the wider community; market size and market growth are crucial external factors; and the deal features depend on the investor’s risk attitude and the prospects of a successful exit in both financial and social terms. 

Impact Investors are also willing to provide non-financial support prior to an investment, if a social venture shows high potential for achieving their dual objective.

If you are interested in the complete executive summary, please click here.

Newsletter: special edition about the conference - Enhancing Impact Investing in Brazil

We are glad to present our fifth newsletter on Impact Investing in Brazil. The aim of the newsletters is to further unite the Impact Investing community, to provide a channel to exchange ideas and simply to inspire.

In this edition, we will provide you an overview of the “Enhancing Impact Investing” conference which took place on August 28th in São Paulo. There are another two editions planned for this year, in which we will bring a more in-depth analysis of the conference outcomes, as well as an overview of the latest deals and research developed along 2013.

The conference goal was to discuss challenges and hurdles that need to be overcome in order to accelerate the development of the Impact Investing industry in Brazil. It also aimed at providing participants with a platform to network and learn about the different perspectives of investors, entrepreneurs, accelerators and academics.

This newsletter is divided into three parts reflecting the conference agenda.

The first one encompasses two very inspirational opening speeches about Impact Investing – one from Banco Palmas, a community bank located in the State of Ceará, and one about The Why, The What and The How on the need for Impact Investing.

Also the Evaluation Center for Impact Investing incubated by Insper and a set of outcomes of the University of St.Gallen Impact Investing Research Platform were presented. To close the first part, there was a panel discussion between family offices funds and accelerators with real cases from IT3Capital, Artemísia and Pipa.

The second part was dedicated to sector-related Impact Investing presentations, with the results of a HSG master thesis on Biomass for Brazil, and the outcomes of an impact measurement methodology in the area of education.

In the last part there were three thematic roundtables about the challenges and potential solutions in the sectors of “Education”, “Social Housing” and “Alternatives and Access to Funding” in which participants were empowered to share their ideas and ask questions directly to the top-class speakers.

The momentum surrounding Impact Investing in Brazil shall not be missed. Only to compare, the last conference in December 2012 brought together around 70 participants, while this last conference in August 2013 counted on around 200 like-minded participants.

We would like to thank our conference partners – Insper and the Sustainability Committee of the Swiss-Brazilian Chamber of Commerce– and the supporters: ICE, Endeavor Visao de Sucesso, and Artemisia. The conference success is the result of a very harmonic and integrated joint work.

We hope you enjoy reading our newsletter!

You can access the full newsletter here.

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Links to Conference Presentations

Dear reader, you can now access the presentations held on the 28th of August on the subject of our conference on Enhancing Impact Investing in Brazil. Please click on the links below to access the presentations.

Asier Ansorena - Opening Speech, Banco Palmas

Ernst von Kimakowitz - The why, how and what of Impact Investing

Angélica Rotondaro - Presentation of the HSG Hub Impact Investing Research Center

Sergio Lazzarini - Centro de investimento de impacto Insper

Dhaval Chadha - Presentation Pipa Accelerator

Renato Kijama - Presentation Artemisia Accelerator 

Luiza Camargo de Nascimento - Family fund IT3Capital

Naercio Menezes Filho - Avaliacao economica do ensino medio profissional no Brasil

Estelle Tanner - Impact Investing, a mean to foster biomass in Brazil?

The Second Impact Investing Conference is over!

We would like to thank you for your participation and contribution to the second Impact Investing conference. With over 200 participants the conference was a big step forward. This time, the topic was Enhancing Impact Investing in Brazil.

Also, we are working to provide you with reports and outcomes of the conference during the next few weeks. Please also visit our facebook page for newest updates and pictures.

To shorten the time until the full conference report is published, you can already have a look at the presentation of the opening speech by Asier Ansorena from Banco Palmas, a popular community bank in Brazil. Asier is the Microcredit Director of Banco Palmas and actively involved in projects related to research, technology and innovation focused on increasing the impact of Community Banks in Brazil.

You can access the presentation here.

How about a Ureport brasileiro?

A successful story of social impact in Uganda, brewing political change in Brazil, and how private capital might be able to help.

Earlier this summer, two seemingly unrelated events came to my attention. I heard Dr. Sapra, the UNICEF Representative in Uganda, tell the story of Ureport at the United Nations Summer Academy and, on the exact same day, headlines about the political protests in Brazil reached my RSS feeds.
 
The difference between the two scenarios is evident. Yet the literal coincidence in the explanation for each was striking: a crippled government struggling to tackle issues of corruption, inflation, poor education, collapsing health services and infrastructure, combined with a young population eager to take ownership over social and political change in their communities. In 2011, a vanguard team in Uganda came up with an innovative tool to untie a few of the many knots inherent to the picture I just described.
 
Ureport is an SMS-based system through which the local UNICEF office carries out countrywide polls to collect real-time data, and helps foster popular engagement and accountability. It started with a few simple but important research questions, such as how many youth were within a ten-minute walk from safe water, and has gone on to conduct over 470 polls and two million responses (and counting). The qualitative and quantitative information collected has been used to shape policy and actions, and to monitor results. Parliament members started to employ Ureport to obtain up-to-date input from the national youth before lawmaking sessions. In addition to polls, the program involves regular radio programs and newspaper articles to share stories from the Ureport community. Thousands of Ugandans continue to sign up every month.
 
Two features make Ureport unbeatable. First, its cost-effectiveness: the initial capital was around 200,000 dollars and participation is free. Second, the simplicity of the concept yields great versatility and scalability. It is no surprise that the World Bank decided to roll it out for the monitoring of its own financed projects. An analogous structure could certainly suit the needs of the millions of Brazilian twitters and Facebook members, who frenetically expressed their views on our country’s most critical matters in the past weeks. I also see that the Ureport concept can be adapted to generate profit, for instance, if telecom companies putting money into infrastructure were to charge a nominal amount for the SMS service. There are myriad other profit opportunities, and I invite consultants and bankers aboard. 

Indeed, a healthy dose of skepticism accompanies every talk on impact investing and how it might translate into financial return. It is a challenge for all of us. At this point, I would venture to suggest that we borrow another brilliant idea from Dr. Sapra - he has instituted "Fail Fridays", during which every member of his team tells their trials and failures of the previous week. In my view, discussions like this post must proliferate quickly if we want to find the answer. Let’s talk, act and even fail more often in trying to do what is right.

By Mariana Castro, Goethe University Frankfurt 

The Second Conference on Impact Investing

Enhancing Impact Investing in Brazil

We are realizing the second conference on Impact Investing on the topic Enhancing Impact Investing in Brazil. Below you find the conference details and further information about the program and speakers. If you're interested in participating, we kindly ask you to confirm your presence according to the indications in the program.

When: 28th of August 2013

Time: 14:00 - 19:30

Where: Insper, Rua Quatá 300, 04546-042 São Paulo at the auditorium.

The program is available here.

Foro Latino Americano de Inversion de Impacto, Merida, 20 - 22 February 2013

Meet us at the Foro Latino Americano de Inversion de Impacto! The representatives of the Impact Investing Research Platform in Brazil and the University of St.Gallen (HSG) will be at the Foro Latino Americano de Inversion de Impacto, which will take place in Merida, from 20 to 22 February 2013.
Angelica Rotondaro, the Managing Director of the Hub Office of the Universitiy of St.Gallen (HSG) in Sao Paulo, will be presenting what business schools are doing towards forming a new generation of impact professionals. The session will take place on 20 February, 12:00h. In the following days we will be posting some interesting discussions and insights that will come up along this conference.
Since 2011, the LAIIF has marked the exciting start and development of the impact investment movement in the region. It  also provided a local forum for the continued growth of the social and environmental investment ecosystem, by including the participation of many of the main players and stakeholders. LAIIF 2013 has pledged to continue supporting the expansion of impact investing in Latin America by bringing together the leading investors, entrepreneurs, foundations, technical assistance providers and other related stakeholders.
A key success factor for this year’s meeting lies in the participation of leaders which, like you, contribute to the continued progress of the sector by sharing their experiences, analysis, and vision in order to foster innovative sustainable development solutions.
This is why we want you to apply for a scholarship to go to the third edition of the Latin American Impact Investing Forum to be held from 20 to 22 February 2013 in Merida, Yucatán, Mexico.
For further information: http://www.inversiondeimpacto.org



 

Meet our Team at the "Foro de Inversion de Alto Impacto" in Mexico

Meet the Team of the Impact Investing Research Platform at the "Foro de Inversion de Alto Impacto" in Mexico! We will participate in the forum, in order to share our insights and to network with the Impact Investing community. We would be happy to share, discuss and develop our thoughts, perspectives and understandings. For further information, please contact our platform coordinator.