Ignia Fund I, billed as Latin America’s first social venture fund, has reached a total of USD34mm in equity commitments at its second closing from investors including the Multilateral Inve
Ignia Fund I, billed as Latin America’s first social venture fund, has reached a total of USD34mm in equity commitments at its second closing from investors including the Multilateral Investment Fund of the Inter-American Development Bank, a US family foundation, and European and Latin American individuals.
The latest round of USD13.6m builds on Ignia’s initial closing of USD20.6m announced in early June, and it expects to reach its target of USD50m to USD75m in equity through subsequent closings into the early next year.
Together with USD25m in debt financing concluded with the Inter-American Development Bank, Ignia will invest a total of up to USD100m in innovative businesses targeting the so-called ‘base of the pyramid’, the largest and poorest section of the population, in Latin America
‘This USD13.6m capital closing and the recently announced USD25m debt financing have both been closed after the start of the financial crisis,’ says Alvaro Rodriguez Arregui, Ignia’s co-founder and managing partner.
‘We deeply appreciate the trust of our investors at this sensitive time, and it is a clear indication of how strong they deem the Ignia business model, the team we have assembled, and our theory of change.’
‘Partnering with the Multilateral Investment Fund will bring tremendous value to Ignia,’ says Michael Chu, the firm’s co-founder and managing director. ‘We will benefit from the substantial experience its has built in pioneering equity investing in the region.’
Fund team leader Susana Garcia-Robles says: ‘By supporting Ignia, the Multilateral Investment Fund is not only supporting the creation of a new venture fund dedicated to the base of the pyramid segment, but is also helping to create a new segment within the venture capital industry that will focus on fighting poverty, combining the lessons learned from microfinance with the financial tools of venture capital. The demonstration effect of this fund could lead the way for many more similar initiatives in the region.’
The Multilateral Investment Fund has a mandate for innovation and aims to accelerate development of the private sector in Latin America. Over the past twelve years, it has approved 56 seed and venture capital funds representing more than USD200m in commitments in around a dozen countries.
‘Alvaro Rodriguez Arregui and Michael Chu were instrumental in making microfinance successful in Latin America and also have a unique combination of private equity, executive management and base of the pyramid experience in the region,’ Garcia-Robles says. ‘They can make the venture capital approach to tackling poverty a success by investing in and scaling up businesses that serve the base of the pyramid.’
Ignia has already completed two investments in health care and affordable housing. It has made a USD3m commitment to Primedic, which delivers health care to the urban poor, and through its real estate subsidiary a USD2m investment in Jardines de Grijalva, an affordable housing development in Chiapas, Mexico.
