Mexican venture capital firm IGNIA puts returns front and centre in its mission to fight poverty in Latin America, according to co-founder and managing director Álvaro Rodríguez.
His comments are part of a full profile on IGNIA in the September issue of sister magazine Private Equity International.
“The logic is the following: the problem of poverty is very large, in order to fight poverty you need scale, the only way to reach is scale is by attracting commercial funds and the only way to attract commercial funds is by developing viable and profitable businesses,” said Rodríguez.
IGNIA, founded by Rodríguez and Kohlberg Kravis Veteran veteran Michael Chu, is a socially conscious venture capital investment firm based in Monterrey, Mexico. The firm this summer held a first close on $20.6 million (€13.3 million) for its first venture fund targeting $50 million to $75 million.
Fund I will focus on serving the needs of the “base of the pyramid” in Latin America, those earning less than $3,500 per year, by developing commercially viable, entrepreneurial businesses in the healthcare, education, housing, nutrition and basic utilities sectors.
“The only way that commercial funds are going to be willing to invest in this sector is if they achieve an attractive return based on the risk that is assumed,” said Rodríguez.
The firm’s return targets are equal to those of traditional private equity funds, not only because it is necessary for attracting investors with deep pockets but because IGNIA believes that the returns are very achievable. This assertion is based on the fact that the base of the pyramid is an enormous and underserved market.
An interview with IGNIA’s Álvaro Rodríguez can be found in the next issue of Private Equity International.