Unlocking Impact Capital: Bridging the Divide in Latin America

In today's dynamic impact investing landscape, a gathering of Latin American capital providers in Oaxaca, Mexico, aims to catalyze a new era of inclusive and sustainable finance. This meeting of "impact minds" explores innovative solutions to empower indigenous communities, support the creative economy, and drive meaningful change across the region.

Harnessing the Power of Community-Driven Impact

Cultivating a "Community of Impact" in Oaxaca

The Indigenous Zapotec communities of San Martín Tilcajete and Teotitlán del Valle are showcasing the transformative potential of community-driven impact. In San Martín Tilcajete, the Palo que Habla Fund is replanting copal trees to ensure the next generation of artisans can continue the tradition of crafting alebrijes, the vibrant wood sculptures that adorn Oaxaca's shops. Meanwhile, in Teotitlán del Valle, women- and family-led cooperatives are forging economic independence by supplying hand-woven, naturally dyed wool rugs to high-end retailers worldwide. These initiatives exemplify the power of grassroots innovation and the inclusive creative economy.Furthering this community-centric approach, CEPCO, a state-level coordinator for organic and fair-trade coffee producers, has launched La Organización, a private, branded roaster that keeps more wealth within the regional economy. The tagline "Orgánico. Justo. Bueno" (Organic, Fair, and Good) encapsulates the ethos of this movement.

Catalyzing Capital for Sustainable Development

Latimpacto, the upstart venture philanthropy network, is playing a pivotal role in convening this "community of impact." At the Rancho Cebú distillery of the artisanal Mezcal producer Los Amantes, Latimpacto members gathered to kick off the Impact Minds conference, which will bring together over 600 capital providers from across Latin America.Recognizing the need for catalytic solutions, Latimpacto is collaborating with IDB Lab, the venture capital arm of the Inter-American Development Bank, to launch the Green Catalytic Fund. This fund aims to reduce carbon emissions by supporting sustainable businesses and community initiatives that harness natural capital. With investments from Coca-Cola, Bayer Foundation, and the Inter-American Development Bank's Amazon Unit, the fund will provide a mix of debt and grants to drive transformative change.

Expanding the Impact Investing Ecosystem

Latimpacto's efforts extend beyond the Green Catalytic Fund. The organization is also launching the Fund STEM, focused on education and skill-building, and Region Plateada, a multilateral fund to support elderly care services and workers in Latin America. These initiatives demonstrate the growing momentum and diversification of the impact investing ecosystem in the region.Furthermore, Latimpacto and Fundación SURA, a Medellín-based foundation, recently awarded $1.5 million to 15 cultural projects across Panama, Peru, Colombia, and other countries, underscoring the commitment to nurturing the inclusive creative economy.

Lessons in Neurodiversity Investing

Alongside the focus on community-driven impact in Latin America, the article also explores the evolving landscape of neurodiversity investing. Daniel Maskit, co-founder of Heading for Change, emphasizes the importance of seeing through the eyes of the neurodivergent community itself.Maskit encourages investors to engage directly with neurodivergent and disabled individuals, rather than relying solely on input from parents or medical professionals. He highlights initiatives like the Barrier-Free Finance Initiative and Disability Impact Partners, which prioritize the needs and perspectives of the communities they serve.By adopting a more inclusive and community-centric approach, impact investors can better support solutions that truly address the priorities of neurodivergent and disabled individuals. This lesson extends beyond the realm of neurodiversity, underscoring the importance of centering the voices of underserved communities in the impact investing ecosystem.

Forging a New Frontier in Alternative Proteins

The article also delves into the burgeoning alternative protein sector, showcasing the innovative work of German startup Formo. Formo has developed a novel approach to creating animal-free cheese, using proteins derived from koji, a umami-flavored fungus found in fermented foods.Formo's $61 million Series B funding round, led by a diverse group of investors, including FoodLabs, EQT Ventures, Lowercarbon Capital, The Nature Conservancy, and European retailer REWE Group, underscores the growing interest and investment in this space.By harnessing the power of fermentation and plant-based ingredients, Formo aims to create dairy-free cheese products that rival the taste, texture, and functionality of traditional dairy. This technology has the potential to disrupt the conventional cheese industry and contribute to a more sustainable food system.The article also highlights other notable developments in the alternative protein landscape, such as the funding rounds of Finland's Onego Bio, Switzerland's Cultivated Biosciences, and US-based companies Perfect Day and Meati. These advancements demonstrate the rapid innovation and investment in the alternative protein sector, which is poised to achieve parity with conventional animal proteins by 2035.

Accelerating the Energy Transition

Shifting gears, the article spotlights the latest fundraising efforts of Energy Impact Partners (EIP), a New York-based firm focused on decarbonization solutions. EIP has raised $1 billion for its third fund, which will support ready-to-scale climate technologies and help its strategic investors, including utilities and corporations, achieve their decarbonization goals.EIP's growing portfolio of investments, spanning industrial heat batteries, next-generation electrolyzers, EV charger maintenance, and specialty power transformers, underscores the firm's commitment to driving the energy transition. With its diverse network of corporate partners and a growing pool of assets under management, EIP is well-positioned to accelerate the deployment of innovative climate solutions.The article also highlights EIP's expansion into complementary investment strategies, including a Frontier Deep Decarbonization Fund, credit funds, and the Elevate Future Fund, which targets diverse-led companies and funds. This diversification reflects the firm's holistic approach to addressing the multifaceted challenges of decarbonization.

Unlocking Impact Capital in Underinvested Markets

The final section of the article delves into the challenges of impact management and measurement, particularly in underinvested markets. A report from the University of Oxford highlights the power imbalance between funders in the Global North and investees in the Global South, where rigid impact reporting requirements can be seen as a "neocolonial barrier to capital access."To address this issue, the report advocates for more practical and tailored approaches to impact management. Initiatives like the Global Innovation Fund's "Practical Impact" framework, which focuses on just three key metrics, and the capacity-building support provided to First Circle Capital's investees, demonstrate how impact investors can better serve the needs of local communities.By prioritizing replicable models, capacity support, and funding for impact management and measurement, impact investors can help unlock capital for underinvested markets and ensure that their investments truly drive meaningful change. This shift towards a more collaborative and community-centric approach to impact management is crucial for fostering a more equitable and sustainable impact investing ecosystem.