So where is one of the greatest hot spots in Impact Investing? Latin America.
What I love about Impact Investing is its emphasis on supporting entrepreneurial people and teams. If you can put a small amount of money aside and invest in one of these enterprises, you can often see great results. However, be prepared that it is a risk and a worthy risk! Investing is never a 100% guarantee.
Let’s take a look at how this industry continues to scale. In Mexico, we see the greatest leader; nearly $400 million in investments; Brazil nearly $190 million; Colombia: over $50 million.
Considering Impact Investing was coined in the 1990s, that’s a lot of money – showing a lot of awareness! Let’s be grateful for that. Aspen Network of Development Entrepreneurs showed the rise of Impact Investing in Latin America in their article The Impact Investing Landscape in Latin America.
What People Invest In
Let’s break this down a little bit. Within a two-year period, the number of Impact Investors increased by 25% in Brazil. The major areas they invest in are health, education, agriculture and financial exclusion, according to Aspen Network of Development Entrepreneurs.
It’s great to see Financial Inclusion, as we usually see more urgent needs such as food or shelter. It’s nice to see people caring about providing financial training, access to financial services and helping people of the lower class move to the middle class. As we know, this strengthens the entire community.
Now let’s look at Colombia. Colombia’s average deal size is much larger, but the issues focus on mostly Financial Inclusion and Agriculture. These investments in financial and agriculture have the most opportunity to make a difference because they benefit the most vulnerable populations. Therefore, the most popular sectors of Impact Investing rest in Financial Inclusion and Agriculture.
Next up is Mexico, the “Mother of Investing.” Mexico now has 50 investors with 20% of them who invest only in Mexico. That’s impressive! It shows we’re not just exporting people from the US or other more developed countries to plant the idea of impact investing. People are investing on their own soil. It is exactly what we want to see, so they truly own their investments and participate in building their local community.
One of my favorite groups is the National Institute for Entrepreneurship LINK which focuses on increasing Entrepreneurship in Mexico. Here is the astounding number: both from national and international investments, there is more that $7 billion dollars being invested. And true to the importance of local people playing a strong role, the local investors are the primary investors. That’s because the know their turf, they know their land, and they know what will work. A great example.
A success story from Impact Investing in Mexico is through a company called ClickOnero. Click Onero uses SMS messages and social networking to spread promotions of companies, such as Coca-Cola, to a wide list of users. The users clicked the “Like” button to companies’ promotions, and in exchange, received points that could be used for SMS or cellular prepaid airtime. Why is this important? Well, it helps companies advertise, but also helps the “liker.” They have their cell phone costs reduced, which is often important to their livelihood in selling crops in the market. You’re reducing their cost of doing business, making their businesses more profitable and reducing their living costs. This makes for a more successful life.This company has done a great job and has been growing consistently since 2009.
So that’s your crash course in Impact Investing in Latin America. We are also seeing it grow and also increase in Peru, Ecuador, Bolivia and Nicaragua. If you’re global and reading this, maybe you can set aside a small amount to invest in your local community. You might be the next investor!
Think Big and With A Big Heart,
“The Impact Investing Landscape in Latin America.” Aspen Network of Development Entrepreneurs. Aspen Network of Development Entrepreneurs (ANDE), Latin American Private Equity & Venture Capital Association (LAVCA), and LGT Impact Ventures, Aug. 2016. Web.