As with other impact investors, the rate of return is not the key issue for Root Capital. Poverty reduction and empowerment of small enterprises are highest on the wish list for this investor company based in Boston, USA. The company has for 13 years been focusing on smallholder farmers primarily in Latin America, and since 5 years, also in Africa. They have provided 1100 loans of an aggregate amount of $350 million to 350 different enterprises. The repayment rate of these loans is 98%, an impressive rate commercial banks have a hard time beating.
The SOCAP – conference works as a annual meeting for investors and social entrepreneurs from all over the world. Coming together and listening to examples from both worlds is a great start to understand and co-create solid business models with a positive social and environmental impact. I was excited to explore how it is to come to an event like this as a social entrepreneur prepared to get funding? I grabbed Veronica D’Souza after a panel session to get an answer to my question. D’Souza represents the start-up Ruby Cup, a venture selling menstrual cups to women in developing countries.
Impact investment is receiving increasing attention. It is seen as the financial sector’s answer to inclusive business to benefit the poor in developing countries. More and more capital is flowing into this sector due to popular demand. However, as for any incubator, the step from blueprint to scale is big and for social entrepreneurs, the step is even bigger as they are embarking on a journey that in most cases is truly innovative and hasn’t been done before. The solution, according to Acumen Fund and the Monitor Group lies with philanthropy, to use grants and donor aids as catalyst to get these social enterprises to the stage where they can start scaling up, the stage where impact investors come in.
The SOCAP conference in Malmö Sweden has gathered around 400 people interested and involved in investment with a social impact. One of the participants is Johan Sundholm from Mikrofinansinstitutet i Sverige (the Microfinance Institute Sweden) that is giving loans to the otherwise unbankable segment in society. The bank targets entrepreneurs and helps them to build their businesses in order to repay their loans. So far so good – we’ve heard it all before. But!