Since 2011 when the Commitment was made, there have been two major areas of progress: first, IGNIA continued to deploy its assets as anticipated, and second, IGNIA was able to leverage a major philanthropic institution to commit to deploy $100 million in the impact investing space in Mexico.
From 2011 to today, IGNIA deployed $35 million to support the founding and expansion of high growth social enterprises that serve the base of the socio-economic pyramid in Mexico.
In tandem, two years ago, after being exposed to the concept in social impact conferences, Nacional Monte de Piedad (NMP), a non-profit institution established in Mexico in the late 1700s to assist the poor, became interested in impact investing as a novel way to accomplish its mission. Having listened to IGNIA presentations at various fora, NMP board directors and its CEO approached us to gain a deeper understanding of the field. In addition to discussing these experiences, IGNIA encouraged NMP to attend international conferences like SOCAP and facilitated access to smaller, invitation-only group discussions hosted by the Omidyar Network. NMP subsequently commissioned a study to evaluate whether to engage actively in impact investing. In the course of the study, IGNIA often served as a source of reference to the external consulting team.
While IGNIA has always been open in sharing its experience, the organization viewed supporting NMP with more than usual interest. NMP is not only a well-established and respected philanthropic institution, but it is also a model social enterprise. With more than 300 branches across Mexico, it provides access to finance to low-income clients by accepting as collateral the types of asset that exist at the base of the pyramid. It then applies the resulting profits as grants and donations in support of a variety of initiatives aimed at Mexico's pressing social problems. It has financed activities in the areas of education, healthcare, job security, and transparency, to the tune of $40 million a year, making NMP one of the most important sources of philanthropic funding in Mexico. Accordingly, the entry of NMP into impact investing could be a major breakthrough.
The biggest challenge IGNIA has faced is the lack of co-investors in early-stage portfolio companies, which mirrors what is happening in the industry in general: a lack of risk tolerance and funding for innovative start-ups whose business models have not yet been proven. IGNIA considers the lack of funding for high impact early stage companies the biggest risk to the success of the impact investing industry as a whole. In order to overcome this challenge, IGNIA believes examples of success are necessary so that organizations become more comfortable and confident with investing in innovation. IGNIA is working hard to have this demonstration effect for the broader sector.