USAID bolsters impact investment in the Amazon

Crowdlending, once a niche, is growing to support startup business to positively impact communities and the environment. USAID/Brazil has led the charge with the Private Engagement Strategy, encouraging private investment, specifically targeting sustainable companies in the Amazon. As of December 2019 USAID partners have earmarked $15 million. ABF, a private investment fund aimed exclusively at Amazonian startups and co-designed by USAID and CIAT was launched a few months ago and has already issued letters of intent to individual companies totaling $1.7 million. These investments will support positive social and environmental change in regions that need it most. 

Impact investing seeks to generate positive social and environmental impacts in addition to to financial gains. Although it accounts for a small share of global investments, it has been growing at an impressive rate, doubling in size each year. It has engaged governments, development and investment banks, private companies, foundations and institutes in discussions and actions on the topic. According to the Global Impact Investing Network (GIIN), there are currently more than US$ 500 billion in assets under impact investment management.

In Brazil, impact investing is restricted to institutions and investors with significant assets, concentrated in the most industrialized regions of the country, and in sectors such as information technology and health. 

According to SITAWI's Impact Investing Manager, Andréa Resende, “when we look at businesses that were created to solve a social or environmental problem, 80% are capturing investments, and half of them are seeking to attract resources between US$ 25,000 and US$ 250,000. It is the so-called 'death valley’”. Entrepreneurs are either too small to access investment funds or structured debts or investments available are too big to fit into their pockets, she explains. 

As part of USAID's Private Sector Engagement Strategy, USAID/Brazil has encouraged the development and growth of the Partnership Platform for the Amazon (PPA), led by companies. It has also helped to inspire a private impact investment fund specifically aimed at Amazon companies in this death valley.

Announced in October in the city of Belém, during the launch of PPA Pará, the Althelia Biodiversity Fund (ABF), is a Brazilian private fund managed by Althelia Funds and run by Vox Capital. It was created after consultations with different sectors, including members of the PPA, which brings together large companies such as Beraca and Ambev; large Amazon-based companies such as Bemol and Rede Amazônia, medium and small enterprises, plus philanthropic, and civil society institutions. 

ABF's first major investor (US$ 15 million) was the International Center for Tropical Agriculture (CIAT), a multilateral research institution that has been USAID`s long term partner and was also involved in the very design of the fund. USAID itself, through a mechanism called Development Credit Authority, provides investors with guarantees for losses of up to 50% of the invested amount in the ABF, which in turn has incorporated biodiversity indicators developed by USAID and CIAT and will monitor these positive impacts. 

During the 2019 PPA Business Round in December, Althelia Funds delivered the first three letters of intent to startups, with long-term financing of up to US$ 1,7 million. One of the companies receiving the offer was Manioca, which produces high-quality regional food products and is seeking funding to build a factory to produce black tucupi – an indigenous recipe using cassava as a seasoning with a texture that resembles Worcestershire sauce. Manioca already supplies its products to a large supermarket chain and has helped producers to improve standards. 

According to Nick Oaks, CEO of Althelia Funds in Brazil, the goal is to invest US$ 100 million over the next 11 years, mainly through private capital. 


Já a SITAWI, parceira implementadora da USAID/Brasil no Projeto Médio Juruá, que trabalha com desenvolvimento de cadeias de valor, e também integrante da PPA, lança no primeiro trimestre de 2020 uma rodada de empréstimos coletivos focada em negócios sustentáveis na Amazônia. A plataforma vai captar com investidores pessoas físicas e tem como apoiadores a USAID, CIAT e o Instituto Humanize. “O chamado investidor de varejo não encontra abundância de produtos disponíveis para investir de forma alinhada com seus valores, explica Andrea. 

SITAWI is USAID/Brazil's implementing partner for the Médio Juruá Project and also a member of the PPA. In the first quarter of  2020 it will launch a round of collective lending focused on sustainable businesses in the Amazon. The platform, which is supported by USAID, CIAT and the Humanize Institute, aims to attract private investors. “The small private investor does not find many available investment options aligned with his/her values”, explains Andrea. 

Both the ABF and the crowdlending platform will bring startups in the Amazon out of the “death valley” and support the build up of a new development model for the region. The idea is that the model may contribute to the conservation of the megabiodiversity of the region and improve the socio-economic conditions of the people living in the largest rainforest on Earth.