Recently, the Opportunities for the Majority (OMJ) Initiative of the Inter-American Development Bank hosted Daniel Izzo, co-founder and partner of Vox Capital, Brazil?s first impact investing venture capital firm, which focuses on high potential businesses that serve the Brazilian low income population through products and services with the potential to improve their lives. In addition, Vox Capital is the first Brazilian fund OMJ is investing in.
In this wide-ranging interview, I spoke to Daniel about his motivations, the portfolio of companies currently under Vox Capital?s belt, the social entrepreneurship sector in Brazil and Latin America more broadly, leadership lessons he?s acquired throughout his career, and much more.
Before Vox Capital, Daniel worked for 12 years in marketing and business development positions at Johnson Johnson Brazil and Submarino, during its start-up phase.?Daniel has been working with the Brazilian bottom of the pyramid populations since 2007 when, still at JJ, developed a project in low income communities in Rio de Janeiro, selling products, generating income to community members and educating the population on health issues.
Opportunities for the Majority (OMJ) is an Inter-American Development Bank presidential initiative launched in 2007. OMJ works with private sector partners to identify business models that are scalable and have the potential to be replicated. Through loans, guarantees, and grants OMJ seeks to increase productivity, bring the poor into the formal economy, create jobs, address market failures that raise costs for those least able to afford them, and bring quality goods and services to the 360 million people in Latin America and the Caribbean who are at the base of the socio-economic pyramid. OMJ?s portfolio reached over $200m in authorizations at the end of 2011.
Rahim Kanani: What motivated you to launch Brazil?s first impact investing venture capital fund, Vox Capital?
Daniel Izzo: On one hand, the daily observation of the huge income inequalities we face in Brazil, placing us constantly between the bottom ten countries on the Gini Index. It is impossible to walk on the streets of the largest Brazilian cities without noticing this. Poverty walks side by side with extreme wealth, generating all sorts of social tensions and problems. On the other hand, we are living in unrivalled times when it comes to the business potential and opportunities that are ahead of us due to the positive period the Brazilian economy is going through. The lower social classes are the next frontier on the economic field and must be considered in any serious business plan if it is to reach scale in the short to mid term future.
The mix of these two contrasting realities, made it clear that there was not only the opportunity, but most of all, there was a need for the creation of an impact investing fund, with the clear to goal to help improve the living conditions of the low income population while delivering financial return to the investors. This is a purpose shared by all the three founding partners at Vox Capital, Kelly, Antonio and I, who came to this same conclusion independently based on our life and work experiences and met due to our common business networks.
Rahim Kanani: What is the current portfolio of Vox Capital ventures, and what kind of impact are you having?
Daniel Izzo: Vox Capital?s current portfolio has 6 companies. Three of them received equity investments and three other, which are earlier stage ventures, received investments as convertible debt. The impact we, as a fund, have is completely related and dependent on the impact our portfolio companies deliver through their products and services. For example, one of our equity investments is in a company called Balc?o de Empregos, a job placement company focused on technical and operational job opportunities, giving access to information on opportunities and, ultimately, to better quality jobs to tens of thousands of low income people in Brazil. It currently offers over 60,000 job opportunities.
Another investment is in a housing project that aims to produce 1,300 houses to low income families in the next 2.5 years. We also have investments in a company that provides extremely useful information to help people get access to local public health services and products, called Sautil, which has already been visited and utilized by over 150,000 people. Other investments include a microfinance institution, a market intelligence company focused on the Brazilian BOP population and a company that is developing a distribution network using more than 5,000 internet cafes across the country.
We are measuring the impact of our portfolio companies through IRIS (Impact Reporting and Investment Standards) and GIIRS (Global Impact Investing Rating System), from which we are a pioneer fund on testing and applying their methodology.
Rahim Kanani: As someone who spent 12 years in the marketing and business development areas at Johnson Johnson Brazil and Submarino, during its start-up phase, what did you take away from those experiences that you bring to Vox Capital?
Article source: http://www.forbes.com/sites/rahimkanani/2012/04/07/daniel-izzo-on-brazils-first-impact-investing-venture-capital-firm/
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