5th December 2024
Conducting thorough due diligence is a cornerstone that Amazonia Impact Ventures (AIV) realises on the ground when expanding its reach to the Global South. Before deciding which cooperative or medium enterprise to invest in, our team meticulously analyses an intertwined amount of data to understand each organisation’s financial health, identify their impact potential, learn their possible challenges, and facilitate their readiness to become investible under our Amazonia Impact Fund I.
Multiple factors contribute to AIV’s comprehensive diligence process. This method is encapsulated in a bespoke document, collaboratively created by the team, leveraging their extensive track record in the sector. What sets AIV apart in the market is the undeniable deep-rooted experience accumulated within the Amazon region and the engagement with rural businesses and local communities.
The diligence prioritises AIV’s investment strategy: capitalising on organisations with environmental and social impact as their first line of action. Other critical factors will also be considered, such as clear governance, gender equality and social inclusion.
Essential data compilation
A single investment memo can span more than 20 pages, featuring thorough analysis, graphics, questionnaires, tables and rich data used to steer decision-making on investment. They all result in grades from low to high and they cover all sectors of the business.
According to AIV Investment Officer, Nelson Torres, who leads the Peruvian team responsible for this detailed work, these documents are prepared over weeks of groundwork, conversations, and sharing of sensitive information.
The team travels to the field and holds meetings with the cooperatives and enterprises in their quarters, gathering regularly with board members and farmers. In parallel, our business partners connect with the off-takers and buyers, who are mainly based in the Global North.
“We establish strong relationships with the cooperatives from the start because we understand their realities. Many are small or just beginning operations, but they are vital stewards of forest conservation, so we aim to support them efficiently,” Torres explains.
Track record of excellence
Nelson Torres brings over 20 years of experience in the financial and rural business sectors, particularly with smallholder farmers' organisations. He has designed rural credit products, structured credit operations for various supply chains, developed credit evaluation procedures, and created climate-smart investment cases for cooperatives. Additionally, he is a researcher in microfinance and rural development.
In the last six months, Torres has confirmed that the AIV’s Investment Committee has reviewed at least 10 new loan proposals (or reinvestment reports). During these meetings, the team of experts evaluate detailed forecasts and decide on future investments.
Around 96% of the cooperatives, who have already been provided with an AIV loan, seek further investment. “This reflects the effectiveness of our screening and how maintaining relevant information about our partners protects our fund,” Nelson celebrates.
For reinvestments, the screening is updated based on the latest achievements since the initial loan. “We are confident in our work to help our partners cooperatives or medium enterprises grow while prioritising the Amazon’s conservation,” Torres added.
Understanding local realities
According to AIV’s Managing Director and co-founder, Aldo Soto, success is significantly influenced by partnering with organisations that value strong member participation. The cooperatives who listen, meet the needs of the community and create transparency in their processes are more likely to qualify for a loan.
“We understand how Indigenous Peoples have unique decision-making processes, and face distinct challenges that are often misunderstood by generalist investors. We dedicate time to building relationships, engaging in meaningful discussions about their challenges, and collaboratively developing solutions. This tailored approach fosters trust, which is vital for establishing strong, long-term partnerships,” highlights Soto.
The AIV investments help small and medium enterprises to be stronger together and negotiate better prices for their produce, avoiding intermediaries and achieving better markets. “We have seen many injustices with communities being misled by middlemen into accepting unfair prices or signing long-term exploitative agreements. Our approach helps them achieve scale and self-sufficiency. We believe our support fosters their independence and resilience,” concludes Aldo.
Confidence in the team
AIV’s Investment Director and co-founder, Pajani Singah, highlights the unique strength of the team in the impact investing market. “Our founders and board members are seasoned entrepreneurs and advisors, collectively boasting over years of experience in managing investment funds,” Singah summarises.
Amazonia Impact Ventures combines 45 years of experience in forest conservation, sustainable land use and the development of rural enterprises, 18 years of experience working with Indigenous peoples and local communities in the Amazon, and over twenty years of mentoring relationships with cooperatives, creating strong bonds and trust.
In addition to this extensive background, AIV has more than 20 years of experience in soft commodities trade in Latin America, the US, Europe and the UK.
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