Positive Ventures will reach a USD25 final close for its second flagship fund to invest in early stage startups with a social and environmental impact in Latin America. Positive Ventures reached USD10m final close for Fund I in 2020. Individual LPs committing to Fund II include Fábio Barbosa of Natura&Co and Candido Bracher of Itaú Unibanco.
LAVCA sat down with Founding Partner Bruna Constantino to learn more about the fund’s impact investing lens, its journey as one of the first B-Certified VC funds in the region, and key investment sectors that are keeping the team busy.
LAVCA: How has your experience been raising a women-led fund during a market downturn?
Bruna Constantino: Female leadership brings valuable benefits, including diverse perspectives and a deeper understanding of the needs of female entrepreneurs. However, gender inequality persists in the investment industry, with gender stereotypes and limited access to networks as significant obstacles. To position ourselves effectively, we highlight our team’s overall strengths, investment strategy, and approach to addressing industry-specific challenges. We emphasize the importance of leadership diversity as a positive differentiator, demonstrating our commitment to driving change and promoting gender equality.
Today, over 40% of our investors are women or female-led institutions, which may have been driven by the fact that we have 66% female co-founders, 50% of the investment committee made up of women, and 53% of the portfolio is composed of at least one female co-founder.
LAVCA: Positive Ventures’ recently launched impact report states that 75% of the firm’s LP base did not have exposure to an impact fund before committing to Fund II. What was the biggest challenge in selling them on the opportunity?
Bruna Constantino: One of the main obstacles we faced was the deeply ingrained belief in a trade-off between financial returns and social and environmental impact.
Our mission was to encourage LPs to understand that our endeavor sought to support visionary founders who aimed to create solutions with both substantial impact and commercial success. We sought to divert investments from fleeting trends or mere luxuries and instead focus on ventures with the potential to generate outsized impact and financial returns.
Fortunately, there has been a noticeable increase in LPs’ interest in comprehending the utilization and impact of their capital. This shift has prompted them to reevaluate their investment portfolios and seek opportunities where profitability aligns with meaningful impact.
LAVCA: Most of your investments have been focused in the Brazilian market, but you have also invested in Ruuf (Chile), Favo (Peru) and Slang (US). Will your investment thesis for Fund II change compared to your first vehicle?
Bruna Constantino: Positive Ventures was born as cross-border early-stage impact investing venture capital. Since the beginning, we have been teaming up with the best-of-breed founders and co-investors, focusing on generating a positive impact in Latin America. We have ventures such as Pachama, OccamzRazor, Slang, Ruuf, and Favo operating around our region, but some are located in the US.
Our overall thesis is maintained from Fund I to Fund II: investing in early-stage companies building scalable solutions to Latin America’s most vexing challenges with an entrepreneurial and technology-first approach. However, we’ve designed the new fund to double down on early-stage (Pre-seed and Seed) impact investing and build a strong and diversified portfolio of breakthrough tech companies operating at the forefront of climate and social innovation in the region (or planning to land here).
LAVCA: What do you define as “impact” in your investment approach, and how do you prevent impact-washing at the earliest stage of investment?
Bruna Constantino: The core of our investment thesis is to invest in emerging technologies that solve real and urgent challenges at the intersection between the disruptive forces of technology, economic development, and the imperative of ethics toward people and the planet. As the impact is directly related to the company’s financial performance, our investment conduct diminishes the possibility of greenwashing or any similar practices.
Out of the total investment leads we identified in 2022, around 12.7% progressed to a stage where they met our criteria for further evaluation and due diligence. A subset of those qualified leads eventually translated into the 1.75% of companies that received a check from the fund.
LAVCA: What are some non-obvious sectors you’re starting to track in your pipeline?
Bruna Constantino: We address two main impact themes: Social Resilience & Planet Prosperity. In our social resilience vertical, we have been recognizing the immense value of vocational education in equipping individuals with practical skills and preparing them for meaningful careers, especially in this fast-changing job market.
Within the Planet Prosperity segment, we are also actively looking into the water sector and identifying companies that tackle water scarcity and pollution as major global issues.
LAVCA: It is not common for GPs or startups to be certified through Sistema B. Founding Partner Andrea Kestenbaum happens to be a board member of the organization. Can you walk us through the implications of being a B-Certified firm?
Bruna Constantino: We have been certified as B Corp since our foundation. We made a commitment to uphold our certification in order to be entitled to our carry. The certification process played a crucial role in helping us assess our standing in terms of ESG factors and identifying areas where we could enhance our impact to become a company that strives to be the best for the world and society. We actively encourage all our portfolio companies to pursue B Corp certification, recognizing the value it brings in aligning business practices with social and environmental goals.
The scarcity of B-Corps funds in Latin America suggests ample opportunities. These include raising awareness about B-Corps, advocating for policy changes to create a supportive infrastructure for them, and following Positive Ventures’ example to encourage more B-Corp funds focused on impact investing.