IDB fund supports pioneering venture fund in Mexico that targets companies serving the poor

MIF provides equity investment and technical cooperation .

IGNIA Social Investment Fund, a venture fund for commercial enterprises serving the poorest populations, will receive a US$5 million loan and a US$205,000 technical cooperation grant from the Inter-American Development Bank’s Multilateral Investment Fund (MIF).

IGNIA will invest in 8 to 12 early stage and growth companies in Latin America whose core business is to deliver commercial solutions to unmet needs at the base of the socio-economic pyramid.

The MIF, in partnership with the IDB Opportunities for the Majority Initiative (OM), works to catalyze and leverage resources to expand access to credit for low-income people in Latin America and the Caribbean.

The IGNIA fund, based in Mexico, is the first combined operation in which MIF is an equity investor in a fund leveraged by OM, which previously approved a senior loan of up to US$25 million for IGNIA to increase its investable capital. The fund will seek to raise up to US$75 million in equity commitments from institutional investors and expects to make an exit within 12 years.

“The IGNIA fund tries to connect the dots between people at the base of the economic pyramid and the corporate world,” said MIF team leader Susana García-Robles. “The fund is run by Álvaro Rodríguez Arregui and Michael Chu, who were instrumental in making microfinance successful in Latin America, and also have private equity/venture capital experience.”

“By supporting IGNIA, MIF is not only supporting the creation of a new venture fund dedicated to the base of the pyramid segment, but is also helping create a new segment within the venture capital industry that will focus on fighting poverty, combining the lessons learned from microfinance with the financial tools of venture capital,” explained García-Robles. “The demonstration effect of this fund could lead the way for many more similar initiatives in the region.”

MIF, an autonomous fund administered by the IDB, supports private sector development in Latin America and the Caribbean, focusing on microenterprise and small business.