Do you know what impact businesses are? At Sitawi Finanças do Bem, we understand these organizations as enterprises that have the clear intention of addressing a socio-environmental problem through their main activity, which could be a product, service or form of operation. This definition was constructed by several third sector institutions in the Alliance for Impact Investments and Businesses.
Impact businesses aim for financial returns, but have positive socio-environmental impact as a priority. This means that, despite having revenue, these ventures care more about the good they cause than the profit they make. For this reason, this type of organization is committed to measuring the impact it generates.
Do you want to know how a business can be considered “impactful”? See some criteria:
- Have the intention to solve a social or environmental problem
- Positive impact is the main activity of the business
- Operate according to market logic and seek financial return
- Commit to monitoring the impact generated
Source: Alliance for Impact Investments and Businesses
Although everyone must necessarily follow these criteria, impact businesses can operate in different legal formats. They are: Association, Foundation, Cooperative and Company. They can also work in different areas, such as education, health, financial services, green technologies, etc.
Driving impact business
On Sitawi's Crowd Lending Platform, impact businesses can obtain financing to invest in improving their operations, such as purchasing machinery. This service is provided with our expertise and the financial resources of several people who invest in the Platform.
The Sitawi Platform uses Blended Finance to finance organizations, that is, investors are different people and invest amounts from R$10.00 in impact businesses. The criteria used by investors are generally associated with the SDGs of each business, which indicate which socio-environmental problems are the focus of that enterprise.
It is worth remembering that, regardless of the focus of activity, all of the Platform's investments are patient capital. This means that the financial return comes in the long term. In the case of the Platform, income generally starts to be paid after 6 months and all installments are received after more than 1 year.
This front of action seeks and selects validated organizations for investment that are in the preparation phase to use the investment to gain traction and establish themselves in the market. Thus, we promote the market with positive socio-environmental impact. Some of our results are: more than 700 investors and R$ 30 million reais invested.
Results in practice
For Filipe Aguiar, entrepreneur at Orgânicos In Box, who participated in Sitawi's 1st Collective Loan Round raising R$ 645,000.00 through 84 investors:
?Considering the difficulties in accessing credit for small and medium-sized companies in the Brazilian market, having this support from Sitawi for entrepreneurs who focus on impact is very good because in addition to having access to credit that does not exist in the traditional market, it is also a credit with a view that values you for the impact that you as an entrepreneur are bringing to the world and that is an incredible recognition.?
He adds, highlighting the social value of Impact Investment: “This is combined with the investor's awareness of the potential to impact lives of this capital. Interest rates are affordable and below market, but on the other hand, it is a resource for growth, ideal for a medium-term plan, as the analysis and disbursement process requires good financial planning.?
Are you interested in impact businesses and want to support these projects? Discover Sitawi's Collective Lending Platform and invest in positive impact with financial return. Click here to learn more.