Investing with purpose: How EcoEnterprises Fund III became FinDev Canada’s First #2XChallenge Investment

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In May 2019, FinDev Canada announced an investment in EcoEnterprises Partners III, LP, a women-led fund that will invest in small and medium-sized enterprises (SMEs) in Latin America.

EcoEnterprises III will focus on mainly locally-owned and led SMEs operating in the agriculture, agroforestry, and ecotourism sectors of Colombia, Peru, Costa Rica, Mexico, Nicaragua and Bolivia that show high potential to protect fragile environments, create jobs and empower women in rural areas.

Portfolio for the [Inclusive] Planet

Empowering and investing in women has proved a powerful accelerator for achieving the Sustainable Development Goals (SDGs). The SDGs are central to EcoEnterprises’ goal to build a “Portfolio for the Planet”, i.e. promoting environmental and social impacts by investing in sustainable business models.

This approach was a natural fit for FinDev Canada, who has made women’s economic empowerment and climate action two strategic pillars of its mandate. “We are proud to support a women-led Fund with a solid track record of helping environmentally sustainable businesses in Latin America scale their operations” said Paul Lamontagne, Managing Director of FinDev Canada. “We believe the private sector is key to address climate change and to empower women in rural areas, where they are often more vulnerable to inequalities.”

Sustainable and inclusive private sector financing models such as EcoEnterprises are key to unlock rural women’s potential and generate additional benefits for their communities and also the environment. Whether as early adopters of new agricultural techniques, users of ecosystem services, workers, entrepreneurs, or decision-makers at home, FinDev Canada and EcoEnterprises recognize that women are agents of change who must be equally part of the solution towards a sustainable future.

Meeting 2X eligibility

EcoEnterprises III qualifies for the 2X Challenge based on two criteria, namely women in senior leadership at fund manager level and the proportion of portfolio companies expected to meet the 2X criteria.

According to the IFC, only 15% of senior investment teams in the private equity sector are gender balanced. Funds such as EcoEnterprises – where 83% of senior investment professionals are women (well above the 2X criteria threshold of 25% in the financial sector), and where the two owner-principals are women – are inspiring examples of diversity in the investment community.

In addition to its qualification based on fund leadership, EcoEnterprises estimates that 30% or more of its Fund III companies will be 2X-eligible businesses. Previous funds managed by EcoEnterprises have shown strong outcomes for women in Latin America: for example, many businesses supported by EcoEnterprises Fund II offered quality employment to a significant proportion of women and had good gender balance in senior management teams. EcoEnterprises III will bring similar benefits for women as employees, as suppliers and as business owners and leaders.

“We are proud and humbled by the work that we do with women entrepreneurs and with our investors in trying to achieve our mission and mandate.” said Tammy E. Newmark, CEO and Managing Partner, EcoEnterprises Fund. “We know we serve as an example for others, not only women, but also traditional financiers and investors that are looking at our strategy and niche.”

Additionally, EcoEnterprises has indicated their desire to increase the share of women-owned businesses in its Fund III portfolio, as explained by Ms. Newark: “We’ve come a long way and made a lot of progress, but there’s a lot more to be done, both as a women-run and owned investment group as well as focusing on women-owned businesses and sectors.”

FinDev Canada is delighted to welcome EcoEnterprises Fund III to its portfolio and the 2X Challenge and looks forward to supporting them in their efforts to build an inclusive Portfolio for the Planet.

 
Frank Tobé