IMPACT METRICS REPORT

Transcription

1 IMPACT METRICS REPORT

2 Pomona Impact makes financing available to businesses with a commitment to creating measurable social impact in Central America, Mexico, Ecuador, and Colombia. We support our entrepreneurs both through financing, business consulting services, as well as support the overall ecosystem through the development of co-working spaces throughout Central America. sarah@pomonaimpact.com Website: 1

3 LETTER FROM FOUNDER, RICH AMBROSE It was early 2011 and Mark Jacobson, my co-founder of Pomona Impact, and I had been exchanging books about impact investing. Titles like Out of Poverty (Polak), Building Social Business (Yunus), How to Change the World (Drayton) and Half the Sky (Kristoff) were both inspiring and powerful means to affect positive change, but the idea excited us and we were keen to learn more. nference in Managua, Nicaragua to begin to engage with them, we were thoroughly impressed. These were high caliber entrepreneurs, several of whom were managing investment-ready social enterprises. Our positive early experiences with impact investing and our desire to become more involved in the space culminated with the founding of Pomona Impact in late We developed and launched a $1 million Pilot Fund that we invested in 15 companies across the region during the last four years. The purpose of the Pilot Fund was to gain experience and deepen our understanding of the market for impact investing in the region. We invested using debt, equity, and mezzanine instruments across a broad range of sectors. We initially focused on "Catalytic Investments", which were very early stage, return of capital investments. More recently we turns as well as compelling measurable impact. Catalytic Investments and 19% on Core Investments. During this time our portfolio companies have created an We have greatly improved our understanding of a variety of sectors, refined our due diligence efforts, identified a long list of red flags to bear in mind when weighing early stage investments, streamlined internal operating systems, explored numerous ways to work with partners, and more. The Pilot fund also provided us with a terrific opportunity to hone our thinking around IMPACT. 2

4 At the outset our philosophy was simple: support entrepreneurs that are capable, passionate leaders and have shown a demonstrated commitment to generating positive change primarily for people at the bottom the entrepreneurs to understand how they prioritized impact and whether their approach was having the desired impact. It was fairly informal and admittedly very much an instinctual decision. For the most part, we actually did a good job at identifying h we can do to improve our processes, and in doing so greatly increase our impact. The three takeaways Metrics: much importance on measuring the impact of our was a naive persp understand sectors and the business models that are really generating compelling impact outcomes. Additionally, it positions us well to add value to our future investee companies by providing them with benchmarks and exploring ways to maximize their impact. Profits = Scalability: If you are excited about impact then you should be excited about profits because leveraging the power of commerce is the single best way to scale impact in a sustainable manner. At the outset, we gravitated toward entrepreneurs that prized their social mission above the profitability of the company. However, over time we realized that in order to generate a significant return on investment we needed to place more emphasis on the strength of the business models. Phillip Wilson, the founder of Ecofiltro (a wildly successful water filtration system focused on se should be capitalized. If the company is not able to operate profitably, it will likely not survive in the long-term and certainly not be able to scale any sustainable solutions. As a result, we redirected our search for new investment opportunities that have the potential to be very profitable and as such can scale to reach much greater populations. Quality of Impact: fact we saw several business plans that demonstrated that the business would generate X number of jobs and as a result Y number of kids would be better fed and able to go to school. In Central America, the lack of economic opportunity is a real issue. However, does that mean every business promising to create jobs - - 3

5 addressing a key pain-point in Central America, we wanted to see more from our investee companies. We wanted to see fair wages, skills training, and the possibility for upward mobility. lighted the clear difference between outputs (direct quantified results generated by the business) and outcomes. Outcomes capture the changes and effects on individuals or the environment from the activities undertaken by the business. So our impact ass stop at gathering and recording metrics, we take it a step further to understand and help drive impact outcomes. Focusing on outcomes has provided us with direction on what Pomona Impact wants to accomplish and energized us by providing further clarity of our ability to contribute as investors to help effect real change. learned and beginning to fundraise for our $20 million closed-end fund, Pomona Impact Fund I, focused on earlyentrepreneurs working on solving some of the most challenging issues in the region. And their progress is exciting. This not only represents the promise of a brighter future for Central America but a to have a follow-up conversation with you about the P Thank you to all the partners, advocates, and collaborators that have worked with us along the way. The collaborative nature of the impact investing ecosystem is a powerful asset and instills further confidence that together we can do great things. Best Regards, Rich 4

6 INTRODUCTION Since its founding in 2011, Pomona Impact has in invested $920,000 through 16 investments* in a variety of sectors and countries in Central America as well as Mexico, Colombia, and Ecuador. We provide the necessary financing needed to businesses that have a specific social and or environmental focus to their operations as well as business consulting services as part of every investment. We believe that long term relationships between investor and investee are key to the success of every company in our portfolio since they are too big for microfinance loans and too small and risky to be considered by large banks. Key 2011, our companies have created an average of 841 jobs and benefitted over 5,259 people**.!key to every investment is our focus on finding entrepreneurs who are not only creating jobs through their enterprises, but are also building their businesses to address a social and or environmental problem. This that our companies have made since we have invested in them. *16 investments have been made into our 15 portfolio companies. We re-invested in Kiej de los Bosques in **Statistics relating to # jobs created and # beneficiaries is based off of companies that reported their data before the publication of this report - of the companies from which we asked information, only 10 out of the 15 were asked to report impact data for this report. Also it should be noted REPORT METHODOLOGY Above all, Pomona Impact is dedicated to reporting on impact in a way that does not place an additional burden on our portfolio companies and adds a value for them. In creating our impact metrics system, we consulted every step of the way without portfolio companies to ensure that the impact we were reporting on to our investors included data that they were already capturing and data about which they themselves 5

7 were passionate. We asked each of our companies to give us 8 to 10 metrics that they felt showcased their impact and out of those metrics we pulled 4 to 5 sector specific metrics. We have our companies report on both a quarterly basis and an annual basis using two different mechanisms: 1. Cross-portfolio metrics: these metrics are collected on a quarterly basis to assess the impact of our portfolio as a whole and include the following three metrics: a. Number of Jobs Created - This includes a blend of both the IRIS definition of Full Time Jobs as well as Part Time jobs created. Most of the companies that we invest in created meaningful part time jobs that we feel should be counted towards their overall impact. b. Revenue Generated - While under our financial metrics that we also collect, revenue generation is an important part of the impact that a company is able to create as they grow and expand over time. c. Number of Lives Benefitted - This uses a blend of both the IRIS definition of Direct Beneficiaries and Indirect Beneficiaries as reported to us by our companies. 2. Sector-specific Metrics: these metrics are collected annual to measure the impact of each sector that our companies fall into. We have coordinated the construction of these metrics with advice from our portfolio companies in order to reflect metrics they are already reporting on and ones that showcase the impact they are generating. We use anywhere from 3 to 5 metrics per sector. section. The sectors we are currently using to group our portfolio companies are: a. Agriculture b. Artisan Goods c. Energy d. Financial Services e. Education f. Co-working Space Development 3. Highlight Metrics: these metrics are collected annually along with the sector specific metrics to highlight the unique impact that each of our companies is generating beyond the sector specific metrics. We use anywhere from 1 to 4 metrics per company as they want to report on them. 6

8 POMONA IMPACT 2015 SUMMARY! 7

9 POMONA IMPACT PORTFOLIO COMPANIES: 53% WOMEN-FOUNDED/WOMEN-LED (8 out of 15)* 8

10 Emily Stone, Maya Mountain Cacao Maria Pacheco, Kiej de los Bosques Jessica Figueroa, Espinosa, GenteGas!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Maria Rodriguez, Byoearth & *C Entrepreneur Fund Social 9

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12 PORTFOL IO SPOTLIG HTS Kiej de los Bosques/ Wakami/Comunidades de la Tierra ARTISAN GOODS GUATEMALA POMONA INVESTMENT SINCE 2011 (Photo credit to miguatevaleoro.blogspot.com) Introduction to the Company Kiej de los Bosques was founded by Maria Pacheco in 2004 as a social enterprise with the objective of providing income opportunities for rural communities in Guatemala while also creating accessories to be sold abroad. Kiej de los Bosques is structured with a for profit entity, Wakami, which handles the marketing, advertising and overall business side and a non profit side, Comunidades de la Tierra (CDLT) (Communities of the Earth), which is in charge of training and providing services to the communities with refugee camp during the Guatemalan Civil War and seeing the destruction of her home country and its people. Maria was forever changed after that and was determined to find some way to contribute to the rebuilding of Guatemala. Through her studies at Cornell University, Maria received her degree in Biological Agriculture and set out to return back to Guatemala to combat famine in rural communities. It was only after more than a decade of working to create sustainable food security through family gardens 11

13 that she realized that projects supporting the economic development of these communities would be more long lasting and beneficial to the people there. Starting small with basket weaving cooperatives, Maria created a new value chain for rural communities by weaving sleeves for Zacapa rum bottles. But Maria wanted to create a company that not only provided jobs, but one that would provide a holistic system for the workers and the entire community from where her company would source its labor. She wanted to create an integrated system to support economic, social, educational, cultural, and physical systems at the same time to break the cycle of poverty and famine. With this vision in place, Maria founded Kiej de los Bosques and Wakami to connect rural villages with global markets. Later on, Kiej would expand to form its nonprofit arm, CDLT, which would support community and capacity building projects. Impact Summary The majority of the social impact that Kiej has is created and headed by their nonprofit arm, Comunidades de la Tierra (CDLT), which is in charge of working on the ground with communities who are creating the products that Wakami exports and sells globally. The objective of Kiej as a whole is to not only provide training to rural stakeholders but to also ensure that the entire community benefits through their Wakami Villages program, run by CDLT. Beyond artisanal training for the quality control of the Wakami products, CDLT also provides the following programs to communities in which Kiej works: Education: with an emphasis on educating girls, CDLT helps to provide scholarships for students to attend either grade, junior high, or high school ensuring that the children of the Wakami workers gain access to higher levels of education than their parents had access to. Home: CDLT provides a significant discount to healthy household products such as solar panels, water filters, ecological stoves, and rainwater harvesting technology. Nutrition and Health: CDLT focuses on health and nutrition education for families that have children ages 0-5 years old through their 1,000 day monitoring program. Guatemala has one of the highest rates of malnutrition in children in all of Latin America making it a priority area to address. CDLT links health workers with its communities to provide monitoring and educational classes surrounding nutrition and health for 1,000 for each child. Impact Metrics Description 12

14 We have co-created metrics with Kiej de los Bosques to help showcase the social impact that they are creating through their business model in rural communities in Guatemala. The following metrics will help to showcase the development and expansion of their impact over time. It was essential for us at Pomona Impact to create metrics that Kiej was already collecting and ones that they could use to promote themselves as well as promote our ability to find and support amazing and innovative entrepreneurs like Maria Pacheco. Artisan Goods Sector Metrics # of Jobs Created: (IRIS OI8869) The net number of new full-time equivalent employees working for enterprises financed or supported by the organization (Pomona Impact) at the end of the reporting period. # of Women Employed: How many women are employed through the activities of the organization?* Note: this number does not represent the employees who work in the Wakami offices, just the women that are working to produce the Wakami products. # of Indirect Beneficiaries: This refers to the number of people who benefit indirectly from the for example, if the organization employs small shareholder farmers, the number of indirect beneficiaries would correspond to the number people in their household # of Trainings and Cost of Trainings: Measuring number and number of capacity building trainings given. Average Income and Number of Hours Worked: On average, how much are the direct beneficiaries making and how many hours are worked. Kiej de los Bosques Highlight Metrics Change in Nutrition Status of Children Aged 0-5: How has the nutrition status changed for children of the direct beneficiaries since their parents joined Wakami to work? 13

15 Impact Metrics ( ) 14

16 Maya Mountain Cacao AGRICULTURE 15

17 BELIZE POMONA INVESTMENT SINCE 2013 (Photo credit to uncommoncacao.com) Introduction to the Company Founder Emily Stone created Maya Mountain Cacao Ltd (MMC) in Belize in 2010 with the premise of increasing transparency and accountability for fine chocolate sourcing and production by directly connecting cacao farmers with fine chocolate producers. With MMC, Emily Stone set a new standard for the fine chocolate supply chain by working with individual cacao farmers and paying them a price premium for their wet cacao. Emily was also able to increase the quality of the cacao shipped out of Belize by controlling the fermentation and drying process of cacao production through buying wet cacao directly from farmers. By connecting cacao farmers directly with international markets, she was able to get farmers a higher return per pound of cacao then if they went through the traditional route of using multiple middle men. Through Maya Mountain Cacao, farmers also were given training on grafting their cacao plants to get the hardiest varieties as well as access to credit through their partnership with Kiva to expand production on their land. Maya Mountain Cacao then expanded beyond Belize to Guatemala with the creation of Cacao Verapaz in Guatemala which sources cacao through cooperatives who harvest and process the cacao. Emily Stone and her team were able to work with and train the cooperatives on best practices associated with the fermentation and drying process for the cacao to produce a finer quality cacao bean. As demand for their product grew, the team looked into ways in which they could source more fine cacao by investing more into working on the supply chain side of their operations and with that vision came the creation of newlyformed Uncommon Cacao, a high quality bean-to-bar cacao brokerage. The Uncommon Cacao team now has started to create an added value supply chain service to cacao farmers in Latin America and Africa by connecting them with fine chocolate buyers creating greater transparency and fair wage standards to transform the international chocolate industry. Impact Summary 16

18 Maya Mountain Cacao provides cacao farmers with a unique and transparent way to get the best price per pound for their product. They provide farmers with training and advisory services on best practices for producing fine quality cacao while also having a say in the buying and selling process. Through annual pricing meetings, farmers can participate and see how the price is set for their product with international buyers giving them a view of the entire buying process for the first time. Maya Mountain Cacao is also able to give farmers access to financing to expand their production, on the ground technical support, and opportunities to collaborate with local organizations. Between Maya Mountain Cacao and Pomona Impact, we have created a set of impact metrics to use in order these metrics to compare our companies in our agricultural sector (see Runa) but will also be using a select few metrics to highlight the unique impact that Maya Mountain Cacao has on its beneficiaries through its business model. Agriculture Sector Metrics # of Jobs Created: (IRIS OI8869) Number of people employed by the organization as of the end of the reporting period. This is the sum of all paid full-time and part-time employees. # of Indirect Beneficiaries: Number of people who indirectly benefit from the services or product provided by the organization. *Note: for MMC, this is calculated using a multiplier of 3 for Belize and 2 for Guatemala based on average family sizes. They have then shifted to calculating both numbers with a multiplier of 5 for # of Permanent Employees: Female: (IRIS OI2444) Number of females employed by the organization as of the end of the reporting period. This is the sum of all paid full-time and part-time female employees. Land Indirectly Controlled: Sustainably managed: (IRIS PI6796) Area of land, in hectares, indirectly controlled by the organization and under sustainable cultivation or sustainable stewardship. Report indirectly-controlled hectares sustainably managed at any point during the reporting period. Income Increase: Wage Premium: (IRIS PI1568) Price of product sold to organization from clients. *NOTE: the drop in income increase for 2015 is due to the expansion of operations into Guatemala which brings the current metrics to 14% increase in Belize and 45% in Guatemala. MMC, a holding of Uncommon Cacao has not yet reported origin-specific impact metrics for Uncommon Cacao Highlight Metrics 17

19 Organic Acreage: # of hectares certified organic under cultivation by MMC farmers. Increase in Farmer Yields: The increase in farmer agricultural yields during the reporting period. Impact Metrics ( ) 18

20 Runa AGRIC ULTUR E ECUAD OR POMON A INVESTMENT SINCE 2012 (Photo credits to observer.com) Introduction to the Company Runa, founded in 2009 by Dan MacCombie and Tyler Gage, is an ecologically minded beverage company with the mission to build a value chain for Amazonian indigenous people while also promoting ecological forestry practices. Runa uses a native plant, called guayusa, which not only has a host of beneficial properties like antioxidants but also has a natural caffeine component. Several years before 2009, Tyler Gage was living and working in the Ecuadorian Amazon and was introduced to this incredible plant that is integral to the daily cultural traditions of native people there. He also witnessed the destruction of the forest by unsustainable logging and farming practices and wanted to find a way to provide a more sustainable income generation source for local people. Tyler left the Amazon for graduate school where he met Dan and there the idea for Runa was formed. Runa now has two components to its operations: Runa LLC is the for profit arm of the company which handles the marketing and selling of the Runa tea product while the Runa Foundation is in charge of managing the social and environmental impact of the company in the Amazonian communities in Ecuador. The Runa Foundation manages a variety of community development projects such as research into Amazonian medicinal plants, capacity and leadership development for local cooperatives that provide the guayusa, and planting trees. 19

21 Impact Summary The majority of the social impact created and measured by Runa is done through their NGO counterpart, Runa Foundation. The mission of the Runa Foundation is to not only provide sustainable livelihoods for rural residents in the Amazon but also to preserve the natural environment and local practices and knowledge. To this end, they have several initiatives that they have been implementing: creating access to finance for guayusa farmers, providing assistance in the creation of cooperatives, increasing w developing government policies to support the growing and export of guayusa training in sustainable agricultural practices for guayusa farmers planting of native tree species researching native plants and their uses in the Amazon and creating a research facility for medicinal plants. Beyond their initiatives, the Runa Foundation also tries to ensure that guayusa farmers and their communities stay informed by hosting regular meetings between farmers, nonprofits, companies, and governments about guayusa. Between Pomona Impact and Runa, we have reviewed the multiple metrics that Runa is already collecting and selecting a few to track and compare with other companies that we have in the agriculture sector in our portfolio: Agriculture Sector Metrics: # of Jobs Created: (IRIS OI8869) Number of people employed by the organization as of the end of the reporting period. This is the sum of all paid full-time and part-time employees. # of Indirect Beneficiaries: Number of people who indirectly benefit from the services or product provided by the organization. *Note: for Uncommon, this is calculated using a multiplier of 3 for Belize and 2 for Guatemala based on average family sizes. They have then shifted to calculating both numbers with a multiplier of 5 for # of Permanent Employees: Female: (IRIS OI2444) Number of females employed by the 20

22 organization as of the end of the reporting period. This is the sum of all paid full-time and part-time female employees. Land Indirectly Controlled: Sustainably managed: (IRIS PI6796) Area of land, in hectares, indirectly controlled by the organization and under sustainable cultivation or sustainable stewardship. Report indirectly-controlled hectares sustainably managed at any point during the reporting period. clients Income increase: Wage premium: (IRIS PI1568) Price of product sold to organization from Runa Highlight Metrics % of Women in Active Decision-Making Roles: Percentage of women in active decision-making roles in the guayusa cooperatives and associations # of New Partnerships for Market Access for Farmers: Create 2 new partnerships (public-private or private-private) for supply chain strengthening and market-access.. Fair Trade Social Premium Payments: # of payments made by Runa towards their fund to support farmers in the Ecuadorian Amazon # of Trees Planted: Native Species: # of trees planted by Runa 21

23 Impact Metrics ( ) 22

24 Appendix: Impact Profiles With this section we want to showcase the work being done by our other companies to have them report on their social impact on an annual basis. Below we have provided information on each company as well as to outline their social impact since initial point of investment*. Each company states the sector in which they have been places, their geographic location, and their investment relationship with Pomona to date. 23

25 *The data presented in the following sections are just a glimpse at the data we collect from all of our companies. At the time of the writing of this report, we had yet to receive data from some of our impact companies but still wanted to showcase them in the report. ARTISAN GOODS ARTISAN GOODS GUATEMALA POMONA INVESTMENT SINCE 2014 employs 95 women in rural areas where there are very few options for employment and has trained over 400 women. The women get the necessary training to produce the artisan goods, in addition to some basic training on design, quality control, self-esteem, and ir homes, giving them a source of employment that allows them to be able to take care of their families while also earning additional income. Oscaritex ARTISAN GOODS NICARAGUA POMONA INVESTMENT (EXITED) Agora Partnerships back in 2011 before Pomona Impact was officially founded. Oscaritex focuses on providing secure, well-paying jobs for single-mothers in the textile industry in Nicaragua providing a integral source of income for these women and their families. 24

26 EDUCATION EDUCATION GUATEMALA POMONA INVESTMENT SINCE 2015 textbooks that HCG creates are aimed at providing higher quality, lower cost social studies textbooks to increase the awareness of students about their cultural history. Many school curriculae in Guatemala ignore or gloss over the social studies component of the and culture. In 2015, HCG sold 3,027 textbooks to private schools in Guatemala reaching over 2,877 students. ENERGY GenteGas ENERGY GUATEMALA POMONA INVESTMENT SINCE 2014 GenteGas was founded by entrepreneur Christina Espinosa, with the goal of improving ve source of income and fuel. Although the benefits of the gas stoves go beyond women to benefit the overall health of their families, women benefit exponentially more from using gas stoves over traditional methods as they are the ones who are in charge of cooking all meals for 25

27 their families and therefore suffer the most from the negative consequences of pollution from traditional wood cooking stoves. FINANCIAL SERVICES Credilikeme FINANCIAL SERVICES MEXICO POMONA INVESTMENT SINCE 2015 Credilikeme provides customers access to short-term loans and gives them opportunities to earn their way to lower interest rates and larger loan amounts. Credilikeme is invested in creating community and networks of responsible Millennials that use their services to improve their credit and ultimately improve their quality of life. Venture South International (VSI) FINANCIAL SERVICES COLOMBIA POMONA INVESTMENT (EXITED) Founded in 2008 by microfinance experts, VSI was built to design loan products specifically helped to create 761 new jobs. The jobs created by these businesses can be the gateway out of poverty and towards the expansion of the middle class. VSI lends today to financially 26

28 sustainable enterprises in Colombia and the Philippines, and is now expanding to Kenya and Uganda. WISE Oxfam International FINANCIAL SERVICES GUATEMALA POMONA INVESTMENT SINCE 2014 The partnership between Pomona Impact and the Oxfam International project WISE (Women In Small Enterprise) started as an investment by Pomona to help spur economic development in Guatemala to level the entrepreneurial playing field by giving women the chance and resources, through small loans, to start their own businesses. In 2014 the program helped to create 30 new businesses and between 2014 and 2015 their enterprises generated an average of 98 jobs. Through their program, Oxfam identifies and supports women entrepreneurs through capacity building trainings businesses management, which then helps to increase their income and the standard of living for their families as a whole. 27