Social entrepreneurship & finance

Tag ‘ amérique du sud ’

Fair Street highlights the role of finance in the development of social enterprises.

If there has been social entrepreneurs for a long time, their development and their influence has strongly increased in the last three decades. Among other things, this happened thanks to the work of several organisations which, convinced of the potential of these extraordinary individuals, support them to increase their impact and spread their innovations.

Ashoka was the first and is today the largest organisation supporting social entrepreneurs.

Ashoka is a non-profit organisation that aims at structuring and developing social entrepreneurship at the global level. It was founded in 1980 in India by Bill Drayton who was persuaded that the economy needs the dynamism and the innovations of social entrepreneurs in its long term development.

Bill Drayton famously commented that “our job is not to give people fish, it’s not to teach them how to fish, it’s to build new and better fishing industries.”

Guillerma Lazzaro, Ashoka’s director for the Cono Sur region (Argentina, Chile and Uruguay) received Fair Street in Buenos Aires to explain us in details the vision of Ashoka and the main challenges that social entrepreneurs will have to face in the coming years.

Fair Street - Ashoka Cono Sur from Angalio Productions on Vimeo.

Following the interview of Michael Chu, here is a more detailed description of IGNIA Fund, the social venture fund that he co-founded and manages.

Founded in June 2007 and headquartered in Monterrey, Mexico, IGNIA Fund is a social venture capital fund that supports social enterprises with high growth potential. IGNIA builds bridges between financial markets and the « Base of the Pyramid » by providing capital to enterprises of this sector. Traditional investors are usually reluctant to invest in this sector as the incubation period is longer than for regular companies. As a consequence, social enterprises face major underserved financing needs. IGNIA’s founders believe that the market constituting the « Base of the Pyramid », has a huge potential. In Latin America, it is composed of more than 360m people whose purchasing power is valued to $520 billion.

In May, IGNIA completed his third closing bringing its equity commitment to $40,7m. The round was led with $5m from Soros Economic Development Fund, created by philantropists investor George Soros. According to Michael Chu, IGNIA’s fund raising have not been affected by the current economic slowdown. Moreover, it made it possible for IGNIA to come closer to its objective of $50m - $75m in equity. If we also consider the credit line of $25m provided by the InterAmerican Development Bank, IGNIA will have a total of $75m - $100m that can be invested in initiatives dealing with the most urgent problems of our planet. The invested amounts will vary between $2m and $10m for a period that lasts 12 to 15 years. In IGNIA’s founders’ opinion, this is the necessary period for having a major social impact.

IGNIA does not only focus on a specific industry and is willing to have a highly diversified portfolio. On the geographical level, its ambition is to go beyond Mexico and to participate to the development of the « Base of the Pyramid » in South America as a whole.

In addition to a major social return, IGNIA also wants to offer above average return to its investors (e.g. IRR 30%). If the two founders, Michael Chu and Alvaro Rodriguez, are convinced that social enterprises represent the future of our society, they also believe that a sustainable change can only be obtained through the development of entire industries (requiring the emergence of numerous companies). As the development of industries implies superior financial return, maximizing financial value is, together with having a social impact, one of the two pillars of IGNIA’s investor proposition.

IGNIA’s first investment is an equity investment of $3m in Primedic‘s capital, a Mexican firm based in Monterrey. Primedic provides healthcare to the most destitute people through an innovative membership program. The capital provided by IGNIA will allow Primedic to extend its services to other cities of Mexico. Up to now, the performance of this investment exceeded IGNIA’s expectations.


From Salta to La Quiaca

May 20, 2009 | Comments Off | Travelogue

Friday May 8th, we head to Jujuy in order to meet with the 3rd entrepreneur. Trips are always a surprise; a new destination always means a new culture, new landscapes, new meetings…One big surprise of our Northern-Argentinan adventure that will surely remain in our memories is our meeting with the Gronda’s family.

Jorge Gronda is a doctor who has developed, in the Jujuy Province, an innovative healthcare system (personal profile and video coming soon). His organization’s model has taken him to the World Economic Forum of Davos in 2008 to share his view of the change.

After our visit at the CEGIN Center, Jorge invited us for lunch at his home with his family. In a very casual atmosphere, we quickly realized the essential role Jorge’s family plays in the development of his organization ; His wife, Irene, and his son, Simon, know the minor details of the organization, and their involvement is fundamental to Jorge’s way of thinking.

More than one entrepreneur, it is an entire family who is keen to solve social issues.

Very soon, we mentioned their visit to Davos and listened carefully to their story…

Their opinions are divided; on one side, they realize the strong determination of the West to contribute to the development of developing countries, therefore they feel honored to take part in that change. On the other hand, they are conscious of the numerous obstacles and high stakes involved with moving forward in a rigid global economic system.

Their vision is, however, very clear: political leaders are the only ones with the power to make significant changes. But in order to develop an adequate answer, it is paramount to hear the voice of those at the Bottom of the Pyramid and the aid organizations working with them; they are the impulse for change.

After this hopeful meeting, we headed to Tilcara by crossing the Quebrada of Humahuaca… As often happened during that trip, we spent hours discussing the importance of social entrepreneurship and the different ways to strengthen the North-South collaboration.

We are more than ever convinced that the contribution of capital is a key element to accelerate development.

In the middle of canyons, cactuses and disused railways, we have the impression of being in the middle of a western movie. This region, ranked in the world patrimony of the UNESCO, is nicknamed the « Paleta del Pintor » (the painter’s palette) ; among red rocks, green valleys and yellow sand, the color mix is enchanting !

On our way on this outstanding « Ruta 40 » we will next head to La Quiaca where we will cross the Bolivian border…

See you very soon,

Jo and Max


May 1, 2009 | Comments Off | Travelogue

From Patagonia to the Salar de Uyuni, from Lake Titicaca to the Machu Picchu, from Lima to Santiago, our encounters take us through magnificent landscapes and mythical places…

Discover these places, these cultures, these countries in the ‘Travelogue’ articles!