Social Enterprise in Latin America - A frontier market on the cusp of going mainstream
Last week I had the pleasure of attending New Ventures’ Foro Latinoamericano de Inversion Impacto in Merida, Mexico. It was an inspiring few days unpicking the latest developments in social entrepreneurship in the region and proved an interesting opportunity to compare to recent developments in Africa where I attended SEED’s African Symposium just a few months ago.
What struck me most forcefully is that the social enterprise sector in Latin America is rapidly scaling up after years of finding its feet. It was clear over three days that the role of SMEs to the region is well recognised and mainstream investors are starting to seriously look at the sector as an impact opportunity. It was equally interesting to see that large companies in the region were also keen to get on board with many looking to integrate SMEs into their supply chain or focusing their CSR efforts on the topic. 
The range of types of entrepreneurs was equally interesting with everything from agricultural cooperatives looking at environmentally sustainable cocoa production to energy cooperatives and some interesting examples of companies looking to harness new developments in ICT to bring services to the BOP.
Our ED @allison_ar speaking @ #FLII2016 on the roles of #accelerators & #impactinvestors in #socent pic.twitter.com/hMbOBIT4jF— SEED (@SEED_SustDev) February 18, 2016
A key discussion that emerged both in the networking, as well as the very amusing panel session I had the pleasure of participating in, was in the role of accelerators vs the role of funds in growing the sector. In the rush to focus on scaling up SMEs in developing countries, the actual needs of the enterprises are often missed. Investors are focused on finding companies where investment can lead to not only scale but profits but are limited in their ability to reach out to the full pipeline of ideas often due to something as simple as geography. Accelerators (and by extension other intermediaries) offer support to a wide range of enterprises, helping to grow the ecosystem, but often push enterprises to focus on chasing after investment, whether or not it’s the appropriate growth model. What became quite clear is that all of us need to be much savvier in identifying what an individual enterprise really needs to scale—sometimes it is an investment, sometimes it’s a loan from a bank and sometimes it may be something as simple as an introduction to a potential customer who could transform their business. It’s something that we’ll take back with us to SEED and ensure that we don’t focus on preparing our winners on creating the perfect “pitch” to investors but rather focus on them identifying and asking for what they really need to grow their businesses.
Another interesting discussion emerged around the issue of investment, namely that of how do we measure impact, particularly in SMEs? Impact investors rightly want to know that their investment is having a positive impact on the social and environmental well-being of the communities they work in.
However, it is a rare investor or grant giver who is willing to pay for the work needed to prove that impact and startup entrepreneurs are often stretched between building up a profitable business and at the same time diverting precious resources to try and measure impact through a variety of different metrics and platforms. One innovative idea that is beginning to emerge is that of the B Corp. A new way of defining businesses that focuses just as much on a company’s social and environmental impacts and metrics as its profitability it is being increasingly adopted by large mainstream companies. Their approach offers a unique way to define the essential role of a business today and their various levels of complexity offer an interesting possibility for SMEs to start thinking about their impact and their operations putting social and environmental concerns just as much at the heart of the matter as their profitability. It’s an idea that we’ll be looking to explore over the coming months as a possible approach for the SEED winners which can help them both understand their businesses better and attract partners, investors and customers.
Finally, one of the things that struck me most forcefully was a comment made by a private equity investor who is starting to look at this market. He remarked that unlike the other conferences that he went to, this one was filled with far more energy, collaboration, women and younger people than the usual middle-aged white men in suits. 
Clearly, the social enterprise space is attracting the next generation of talent (both male and female) because it taps into today’s key desires for most job seekers—the ability to have a job that not only pays the bills but creates a positive impact on society. I walked away from the conference hopeful that Latin America’s impact investment sector is in rude health—and with a luchador mask – what more can you ask for from a conference?
