Forms of financing for socio-environmental undertakings guide discussions on the Rio-São Paulo axis

This week Sitawi promoted, with the support of ICE ? Instituto de Cidadania Empresarial, two events that addressed different financing strategies for socio-environmental enterprises. On September 24, at Casa Sou.l (RJ), the meeting was attended by experts Gilberto Gonçalves, Founder and President of GAG Investimentos, João Pirola, Prospecting Manager at INSEED Investimentos and Rob Packer, Fund Manager at Sitawi. The following day at HUB Impact in São Paulo, it received speakers Débora Basso, Search and Selection Coordinator at Artemísia, Victor Novak, associate at VOX Capital and Leonardo Letelier, CEO and founder of Sitawi ? Good Finance.

The events were part of the Call for Socio-environmental Enterprises, a call made by Sitawi that aims to present forms of financial solutions for organizations and social businesses with and non-profit. Among the possibilities is Sitawi's Socio-Environmental Loan, which intends to disburse R1TP4Q1 million at rates well below market rates. Although the main mechanism of the Call is the Socio-Environmental Loan, other means of financing will be made possible through the network of SITAWI partners.

To open the lectures, the CEO of Sitawi, Leonardo Letelier, made some considerations about the maturity stages of an enterprise (profit and non-profit) and the viable forms of financing at each stage of this maturity curve. To understand the type of capital required, it is necessary to know the organization's challenge, and, since there is no single model, the most recommended are different resources. In this sense, each case must be analyzed by specialists in order to arrive at the type of financing that is most appropriate to the specificity of the organization at the moment in which it finds itself.

Whether in Venture Capital, Private Equity, Convertible Debt or Social Loans, a common point exposed by all speakers was the importance of a good partnership relationship between the investor and the entrepreneur. The relationship must be based on transparency and mutual trust so that the relationship is healthy and bears fruit for both parties.

For 'early stage' venture funding, Venture Capital investors focus on businesses that believe in the cause and need financial and emotional support. This is because project leaders are the soul of the business and, as human beings, they also need to receive investments. The most important thing, in addition to the impact and sustainability of the business, is to invest in entrepreneurial individuals who will sustain a fertile and perennial relationship with the investor, providing developments for the partnership. Just putting money into an organization does not spontaneously generate positive social impact. It takes a qualified person supporting the project.

In Private Equity, financial return is fundamental for the sustainability of the partnership between investor and entrepreneur. Therefore, investment is generally made in companies with proven business models and, therefore, in a growth phase. Despite the concern with the socio-environmental impact, the focus is on the creation of economic value and growth potential, since the shareholding encompasses the shared risk.

In order to clarify the concepts of finance for the approximately 50 entrepreneurs present in Rio and São Paulo, the difference between donation, loan and investment was also analyzed. In order for the organization to choose the best financial means, it is necessary to know what it needs at the moment, since there are different forms of capital and each one has advantages and disadvantages. If, on the one hand, donation and investment presuppose an injection of new capital, on the other hand, it generates expectations of use and reports on the use of that capital. The loan, on the other hand, is a bridge of time, as it brings capital from the future to the present, generating, however, financial expense? the interest.

There is no ready and standardized recipe capable of understanding the variety of socio-environmental organizations and businesses in Brazil. Financial solutions must be customized and planned according to the phase and aspiration of the organization. For this, having the evaluation of specialists is essential. Inspired or want to know more about the forms of capital for your project? Sign up for the Call for Socio-environmental Enterprises at the link:


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