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The Brief: Global access to vaccines, electric batteries, student-run impact funds, Adobe Capital acquisition, confronting income inequality, alt-capital

February 27, 2020
Adobe Capital made an undisclosed investment in Puntored, a Colombian digital payments platform. ( Contxto ) Colombian fintech, Puntored, will be investing just shy of US$6 million (COP$20 billion) into strengthening its network of 75,000 payment points. The idea is to make life easier for millions of people who want to electronically deposit, pay, or retrieve their money. Puntored attributed the investment to the impact investors at Adobe Capital. This Mexico City-based fund specializes in socially-conscious investments across Latin America. Where venture and impact capital meet
Interestingly, according to Adobe investment officer, Paula Giraldo, fintech—being such a capital intensive and straight-up profitable sector—often doesn’t attract the attention of impact funds. However, she noted that Adobe realized that, even if traditional venture capitalists (VC) were all over this industry, there was still an enormous amount to be done within the sector. The right funding could potentially revolutionize the social inclusion and economic development of entire communities in the region. This is where Puntored came in, since their network of payment points (indeed, this is their name in Spanish) facilitates one of the most basic transactions—economic exchange. And yet, in this region, even the most fundamental facts of life are made increasingly difficult the further down the social pyramid one goes. Pain-point to paying point
Poor infrastructure and relatively expensive and convoluted electronic transactions make this region particularly cash-dependent. But then you have to get ahold of your cash, and even if you do have a bank account, the lack of physical ATMs and banks makes this a challenge. And if you ever made the mistake of trying to withdraw your money from a bank that isn’t yours it will cost you a double-digit percentage of your minimum wage salary. Obviously, this problem is worse in poorer, more secluded areas. Therefore, an enormous amount of people opt to stash their cash under the mattress (all while traditional banks pretend to scratch their heads as to why people are unbanked…). This was where Puntored came in. By turning brick-and-mortar venues, like shops, into payment points, the fintech was solving a crucial problem in one fell swoop. The final result is increased efficiency, not only for individual customers, but the entire networked economy. This efficiency translates into less wasted capital, more investment, and ultimately more equitable growth. This is because the savings tend to stay in the hands of small business and shop owners. Clearly this is an all-around win-win-win-…, because, make no mistake, there’s a pretty penny in it for Puntored. This year, the fintech is projected to grow by 51 percent. The plan is to manage this by adding an additional 40,000 payment points to their network. A grand total of 115,000 points across the region. In the end, this will mean that they will be handling and transacting a huge amount of money; US$9 billion dollars according to Colombia’s La República. So, you’ll excuse me for sticking to US dollars. With these eye-watering sums, this article would be mostly zeroes if I went with Colombian pesos. -AG

Adobe Capital Invests in Colombian Fintech, Puntored

Colombia-based Fintech Puntored confirmed recently that it plans to invest around COP$20 billion (appr. $6 million) into further expanding and strengthening its existing network of 75,000 payment points. Puntored’s financial services have been developed to make it easier for millions of people to conduct transactions by making it simpler to perform electronic deposits, and send or receive payments online. Puntored has reportedly received funding from impact investor Adobe Capital , which is a Mexico City-headquartered fund that focuses on making socially-conscious investments across the Latin American (LatAm) region. Paula Giraldo , investment specialist at Adobe, acknowledged that the Fintech sector has not yet attracted substantial investments from impact funds. She pointed out that Adobe noticed that, although venture capital firms had heavily invested in Fintech initiatives, there was still a lot of work that needed to be done within the industry. The right funding model could significantly improve and enable greater social inclusion, while promoting economic development of entire communities, Giraldo said. Puntored aims to help out by offering a network of payment channels which are used to carry out financial transactions. Poorly designed or outdated financial infrastructure and costly electronic payment methods have forced many Latin American residents to depend on cash transactions. For people who’ve managed to open a bank account, there’s still a lack of physical ATM locations, so it can be difficult to perform typical day-to-day transactions. Puntored aims to transform brick-and-mortar shops and various other retail outlets into payment points, which can process transactions more efficiently for individuals and businesses. The Fintech firm says its business operations are on track to grow by 51% this year. The company plans to add 40,000 new payment points to its network. Colombia’s La República estimates that Puntored will be processing $9 billion in payments this year. Sponsored Links by DQ Promote
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Colombia-based Fintech Puntored to Invest $6 Million into Expanding Network of 75,000 Payment Channels

Español (Spanish)
Contxto – Colombian fintech, Puntored , will be investing just shy of US$6 million (COP$20 billion) into strengthening its network of 75,000 payment points. The idea is to make life easier for millions of people who want to electronically deposit, pay, or retrieve their money. Puntored attributed the investment to the impact investors at Adobe Capital . This Mexico City-based fund specializes in socially-conscious investments across Latin America. Where venture and impact capital meet
Interestingly, according to Adobe investment officer, Paula Giraldo, fintech—being such a capital intensive and straight-up profitable sector—often doesn’t attract the attention of impact funds. However, she noted that Adobe realized that, even if traditional venture capitalists (VC) were all over this industry, there was still an enormous amount to be done within the sector. The right funding could potentially revolutionize the social inclusion and economic development of entire communities in the region. This is where Puntored came in, since their network of payment points (indeed, this is their name in Spanish) facilitates one of the most basic transactions—economic exchange. And yet, in this region, even the most fundamental facts of life are made increasingly difficult the further down the social pyramid one goes. Pain-point to paying point
Poor infrastructure and relatively expensive and convoluted electronic transactions make this region particularly cash-dependent. But then you have to get ahold of your cash, and even if you do have a bank account, the lack of physical ATMs and banks makes this a challenge. And if you ever made the mistake of trying to withdraw your money from a bank that isn’t yours it will cost you a double-digit percentage of your minimum wage salary. Obviously, this problem is worse in poorer, more secluded areas. Therefore, an enormous amount of people opt to stash their cash under the mattress (all while traditional banks pretend to scratch their heads as to why people are unbanked…). This was where Puntored came in. By turning brick-and-mortar venues, like shops, into payment points, the fintech was solving a crucial problem in one fell swoop. The final result is increased efficiency, not only for individual customers, but the entire networked economy. This efficiency translates into less wasted capital, more investment, and ultimately more equitable growth. This is because the savings tend to stay in the hands of small business and shop owners. Clearly this is an all-around win-win-win-…, because, make no mistake, there’s a pretty penny in it for Puntored . This year, the fintech is projected to grow by 51 percent. The plan is to manage this by adding an additional 40,000 payment points to their network. A grand total of 115,000 points across the region. In the end, this will mean that they will be handling and transacting a huge amount of money; US$9 billion dollars according to Colombia’s La República . So, you’ll excuse me for sticking to US dollars. With these eye-watering sums, this article would be mostly zeroes if I went with Colombian pesos. -AG

Colombian fintech, Puntored, invests US$6 million into payment infrastructure

Cusco, Peru l Photo by Adrian Dascal on Unsplash
 
ImpactAlpha, January 28 – Big-ticket venture-capital and private-equity deals, many of them backed by the ubiquitous SoftBank Group, made many investors take notice of Latin America last year. But intentional impact investors who look beyond the headlines may find that fund managers able to structure creative and flexible term sheets are landing less flashy deals that may well be better values. Flexible capital is attractive to mission-driven entrepreneurs wary of traditional VC and its attendant pressure for fast growth and quick exits. And it is such entrepreneurs who may be best equipped to build durable businesses that can scale up to serve the growing markets for high-value, affordable products and services for a growing, and restless, middle class. Many Latin America fund managers are ahead of their U.S. counterparts in raising “alt-capital” funds that can offer entrepreneurs term sheets that include flexible revenue-sharing and other creative financing terms. “There are a lot of new funds coming to market that are more open to creative financial engineering,” observes Rodrigo Villar of Adobe Capital, an early-stage impact fund in Mexico that closed its second fund at $30 million last year. “Entrepreneurs and limited partners are, too.”
Adobe was an early investor in Provive, for example, which restores abandoned homes and helps families secure financing to buy them. The Tijuana-based company quintupled its revenues during the five years Adobe was an investor before exiting last year. Rather than traditional equity stakes, Adobe has focused on revenue-based repayments in which young impact ventures share business proceeds with investors as they grow. Adobe’s return expectations are modest: investors are likely to get 2X to 3X return on their investment, rather than the proverbial 10X that venture capitalists target. “Most of the really great deals are related to impact,” says Villar. Big tickets
Latin America’s banner year for venture capital investing was driven by eight- and nine-figure deals, particularly for fintech investments. SoftBank alone invested more than $1 billion from its $5 billion fund for the region, including in Rappi, a Colombia-based delivery startup, and Clip, a Mexican payments provider initially backed by Accion. Argentina-based digital lender Ualá has raised nearly $200 million, including from Tencent Holdings and SoftBank. Brazil’s neo-bank unicorn NuBank raised $400 million. “This is the kind of capital that has never been seen before in Latin America,” SoftBank’s Andre Maciel told Bloomberg . Even in bigger deals, impact-aligned investors are finding opportunities to deploy more flexible capital. Blue like an Orange Sustainable Capital, founded by former World Bank officials to catalyze capital to meet the Sustainable Development Goals, offers Latin American entrepreneurs the kind of “mezzanine” or structured debt financing that is well-known in Europe and the U.S. but less common in Latin America or most emerging and developing economies, “whereas these are typically the countries where it is really something that can make a difference,” BlueOrange’s Bertrand Badré told ImpactAlpha. Structured debt, he ways, can be anything that’s neither straightforward equity nor senior debt. The flexible terms could include a grace period, recapitalization of interest, repayments tied to revenue-sharing and other provisions. BlueOrange has made three investments , including in Cabify, a popular ride-hailing service; Ecuadoran small business lender Produbanco; and Grupo Cimcorp, one of Brazil’s largest information technology service providers. “For an entrepreneur, the capacity to provide flexible debt instruments which are really customized to satisfy the expectations of the entrepreneur has way more value,” he said in a podcast interview. “You have very few providers of flexible financing tools and that’s what we are bringing to the market.” 
Alt-capital
Local and regional investors are bringing flexible capital to smaller deals to tap opportunities in affordable housing, education, healthcare, alternative energy. Impact entrepreneurs, in particular, appreciate such terms because it helps them maintain their commitments to mission. Adobe and other funds that offer such “alt-capital” term sheets will be featured topic at this year’s Foro Latinoamericano de Inversión de Impacto under the theme “resilient investing.” The track “showcases new trends and flexible financial tools that help achieve a more profound and scalable impact. (ImpactAlpha is a media sponsor of FLII 2020; subscribers get 50% of with code ImpactAlpha_FLIIX. Learn more . ) 
Institutional investors like Mexico’s $15 billion baking giant Grupo Bimbo are tiptoeing into impact investing. Bimbo seeded the Latin America Impact Fund, a new impact fund of funds, through its employee pension scheme (see, “ In institutional shift, Grupo Bimbo anchors an impact fund of funds in Latin America ”). Impact startup accelerator NESsT has raised $3 million from investors  who recognize early ventures need a flexible loan fund to address their persistent lack of working capital or funding to cover short-term inventory expenses. Other deal terms can directly incentivize social impact. Root Capital makes small investments in agribusinesses across Latin America with a lending structure that offers bonus payouts for achieving impact targets. Such social impact incentives, says Root Capital’s Willy Foote, are a game-changer because they help Root and other institutions “lend to the enterprises that need it most.”
Conservation finance
Blended financing has been key to many of Latin America’s environmental impact investments. The Eco.business Fund, which invests in sustainable agriculture, fishery, forestry and tourism initiatives in Latin America and the Caribbean, raised $60 million in debt to lend to organizations like GNB Sudameris Bank in Colombia, which finances local businesses aligned to international environmental sustainability standards. Costa Rica-based EcoEnterprises Fund is raising a $100 million third fund to boost sustainable livelihoods in agriculture, ecotourism and forestry sectors. Althelia’s $115 million Climate Fund invested $6.5 million in an initiative to restore degraded areas of Peru’s Amazon. The Tambopata project’s unique deal structure was designed to demonstrate how forest carbon credits could be harnessed to finance large-scale conservation and boost local farmers’ livelihoods. Sales of the carbon credits were initially disappointing; project developers had to be nimble in developing other revenue streams, including sustainable cacao production (see, “ Can carbon credits and cacao outcompete gold mining and deforestation in Peru’s Amazon? ”). Mexico’s Ejido Verde project also leads with an environmental angle, using forest conservation as an opportunity to empower indigenous families. Last year, it secured a $2 million loan from IDB Invest to build and maintain 1,250 hectares of native pine trees on communally-owned indigenous lands, known as ejidos.

Flexible financing gives venture capital a run for the money in Latin America

Bradley Horowitz

Expa

FundersClub

Irene Au

Nick Caldwell

Tom Preston-Werner

Tribe Capital

Y Combinator

Unattributed

Adobe Capital is an impact investment fund focused on triple bottom line businesses that drive social and environmental impact with profitable, scalable models. Adobe provides financing and strategic support for the development of successful cases.

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