Looking to protect threatened ecosystems while bringing much?needed income to local communities, EcoEnterprises Fund began investing risk capital in small biodiversity businesses in the Americas more than a decade ago. The company's first fund pioneered the approach in 10 countries in Latin America; investing in 23 unique first-mover companies in organic shrimp and spices, Forest Stewardship Council-certified furniture, biodynamic flowers, and a?ai berries. Collectively, these investments generated impressive results - 3,513 jobs created, 293 community groups benefited, 13,000 small producers involved, million in sales generated, and 860,773 hectares of land conserved. It demonstrated that businesses can both perform financially and deliver positive impacts through active local engagement.
Launched in late 2011, EcoEnterprises Fund II took impact results to scale building upon this legacy. EcoEnterprises Fund provides mezzanine financing to growth stage companies. Thus far, EcoEnterprises Fund's portfolio sustainably manages or directly protects 1.7 million hectares, supports 4,245 suppliers and benefits 23,135 local persons. Capital for this fund will be fully deployed by mid-2015. Given the deepness of the pipeline and opportunities created in the market in the sustainable agriculture, aquaculture, forestry, ecotourism and non-timber forest product sectors, EcoEnterprises Fund III plans to finance the next level of growth in sustainable companies through regional replication, mergers, and strategic sales. Over 15 years, EcoEnterprises Fund has lead the way -- from pioneering the 'proof of concept' to replicating success to mainstreaming the investment niche as the impact investing field evolves. From the get-go, EcoEnterprises Fund's aim has been to demonstrate that financial returns accompany impact results.
EcoEnterprises Fund has built a track record generating, structuring, and managing portfolios and attracting a diverse and deep investor base. With a team of seasoned investment professionals based in the region, hands-on relationship with companies, a strong monitoring system, and an active partner network, a framework for ongoing success is in place. The Fund's comprehensive social and environmental evaluation process ensures the portfolio works to protect vital ecosystems, provide alternative livelihoods, and bring benefits to rural communities. EcoEnterprises Fund is GIIRS rated achieving a superior score of 178 out of 200 (average score for fund category 132).
The Action Plan for EcoEnterprises Fund III is undertaken in two phases: I. Start-up and Launch; II. Capital Management and Deployment
By June 2015, business plan is written, including substantive pipeline opportunities based on the pipeline from EcoEnterprises
By December 2015, investment capital will be soft-circled, including identification of lead investors.
By June 2016, EcoEnterprises Fund will have legal work in place.
By December 2016, EcoEnterprises Fund will launch the third fund at a minimum of million.
Beginning January 2017:
Follow-up on opportunities for investment
Investment in those businesses
Undertake social and environment baselines and then monitor progress on impact metrics
Partnership with portfolio companies to grow the businesses in a way that builds employment, supporting and creating jobs and livelihoods in Latin America
EcoEnteprises Fund intends to deploy million in capital over five years averaging .5 to million deal. In addition, EcoEnterprises Fund expects that this investment capital will mobilize additional investment capital to portfolio companies from other sources at a rate of at least 2:1. EcoEnterprises Fund will use internal sources to fund technical assistance, business advisory support and metrics measurement to portfolio companies. The investment team in Costa Rica and Colombia will expand with 3 new members bringing the total staff to 9.
EcoEnterprises Fund projects that it will be able to support nature-based businesses that provide sustainable economic opportunities to 30,000 local peoples living at the base of the economic pyramid over a 5 year period.
As the global economy grows, the deterioration of the Earth's most important asset, the environment, has accelerated. Sixty percent of primary tropical forests have been cleared, ten percent of birds and plants face extinction, twenty five percent of mammals are endangered, most of the planet's fish species are overexploited, and degraded coral reefs are unable to offset system collapse. (United Nations) With the highest global deforestation rate, South America lost 40 million hectares of forest between 2000 and 2010. Though conservation efforts continue to gain traction to address challenges, many communities living in or near critical habitats and watersheds, faced with a daily struggle to survive, not only lack the financial means to dedicate to preserving local ecosystems but also have no economic incentive to adopt alternate methods of development that would remedy environmental degradation or encourage the more sustainable use of the natural resources.
Investing in small and growing businesses located near regions of important flora and fauna, could help maintain the integrity of the environment while generating income and sustainable livelihoods for local communities. One region where this approach could be especially effective is in Latin America. Estimates place employment figures for small companies in the Americas at 40 to 60%and their contribution to the region's GDP at as much as 30 to 50 percent. More than 50 million people in Latin America have been lifted out of poverty over the past decade (2012 World Bank Report) which is the engine for growth in the region.
According to the Inter-American Development Bank, Latin American is home to 40% of the planet's biodiversity and unique ecosystems. Because of this valuable natural resource base, Latin America has the ability to harness this 'natural capital' With the void in local financial markets to fuel and scale rural small businesses, capital is needed to create jobs, boost local economies, and effect lasting positive social and environmental change.
EcoE is planning to raise $80 million with a first close at $50 million by December 2016, by first reaching out to investors from EcoEII. With the growing interest in the impact investing space, increasing opportunities for nature-based businesses given climate change and environmental degradation and EcoEnterprises Fund extensive and solid track record in the sector, we believe there will be investor interest in EcoEnterprises Fund III.
EcoEnterprises Fund will continue to share best practices through participation in industry conferences, workshops and one-on-one consultations. For over 15 years, they have co-financed transactions, worked in partnership with conservation and civic NGOs and worked in conjunction with other players in the impact investing field to further penetration and education in our work.