#4 Trend in Impact Investing 2012: Brazil!

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After a brief hiatus, we’re back.  The following is the sixth in a series of ten posts about top trends we predict in impact investing 2012.  For previous posts, see:

# 10: The U.S. Heats Up

#9: A Gap in India Gets Closed

#8: Mobile Goes Mainstream

#7: #socent vs. #impinv

#6: Fears of Silicon Valley IPO Bubble Shifts Investor Focus Elsewhere

#5: The Evolution of Rockstars

# 4 Trend: Brazil!

Brazil is steadily rising in the global public eye, with the Rio2012 summit this year, the World Cup in 2014, and the Olympics in 2016.  We at Village Capital predict that 2012 is the year that Brazil opens on the global stage as a major player in impact investing.    This isn’t new news to Brazilians.  Brazil has been producing high-quality, high-impact enterprises for a decade. It’s just an ecosystem that the world doesn’t know about.

What does the rest of the world need to know about Brazil, and why do we predict a take-off in 2012?

1. Strong collaboration and clustering in the local ecosystem, especially in São Paulo. Kelly Michel, one of the impact investing industry’s unsung heroes, founded or co-founded four organizations that work incredibly closely together: Potencia Ventures, which provides seed capital and support, Artemisia, one of the world’s top incubators, Vox Capital, an impact investment venture fund, and the Aspen Network of Development Entrepreneurs (ANDE) Chapter in Brazil, which coordinates activities between entrepreneurs, stakeholders, investors, and corporations.  There is a strong vertical aggregation in Brazil where promising companies can get support from Potencia and Artemisia, later-stage investment from Vox, and strategic partnerships through ANDE; simply put, in a confusing world, there’s a clear path to success in Brazil.

2. Excellent outreach beyond the social enterprise echo-chamber. One of the most promising subsets of social enterprises are what I like to call “social entrepreneurs who don’t know what social enterprise is”; that is to say, quality businesspeople running mission-driven enterprises that have never heard of the social capital markets.  Typically, these entrepreneurs have integrated mission into their companies for personal motivations, and the impact is inseparable from the success of the company; these companies tend to thrive.  But most of these companies don’t come to this site or major conferences, and one of the thing that actors in Brazil are particularly good at is active outreach and recruiting in the mainstream entrepreneurial sector for mission-driven businesses.  My favorite story: Saútil, a health information company for low-income Brazilians, is one of the most impressive social enterprises I’ve seen. They applied to our Village Capital program because Renato Kiyama, the director of the Artemisia accelerator, found Fernando Fernandes, the founder, on a health/information Facebook page and directly recruited him.  Though Fernando was running a mission-driven company, he had never heard of impact investing, and was surprised there was a whole “industry” for people like him!

3.  The rest of the world is starting to notice. Typically, Brazil has been quietly producing great companies, not noticed by most impact investors specifically because of the language barrier.  But a few organizations–Omidyar Network and Halloran Philanthropies most actively–have stepped up involvement in Brazil in the past couple of years.  Our prediction is that once a few players get over the psychological/language barrier, a waterfall will follow.  We’re excited.

By Ross Baird. Photo credit Cavezinho.

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