By continuing to browse this website, you consent to our use of cookies, as well as to our Terms of Use and Privacy Policy which provide additional information about how we process your data. This website uses cookies to enhance your user experience. Please read our Cookies Policy for more information on how we use cookies, as well as instructions on how to disable cookies. You may disable cookies through your internet browser settings, however this may result in some parts of the website not working properly for you.

© CompassList

INSIGHTS / THE BIG PICTURE

Impact investing: Spanish startups with a cause and the ecosystem backing them

Spain · Jul 05, 2019 · By Emanuela Ferraro

As more thought and money go into socially and environmentally responsible projects, Spanish entrepreneurs, investors and big businesses are following suit

Spanish consumers are increasingly conscious about the social and environmental impact of their spending choices and lifestyles  and local investors and businesses have taken note. As a result, socially responsible investing (SRI) has become not just a buzzword, but a major force backed by numbers.

In 2017, investments managed using SRI strategies in Spain amounted to €185.6bn. Of these, impact investments, which actively seek to produce positive, measurable social and environmental impact alongside financial returns, amounted to €311m, more than tripling from €87m in 2014.

Spanish Sustainable Investment Forum, or Spainsif, which published these latest figures in 2018, found that 81% of surveyed investors placed greater weight on sustainable and responsible investments than five years ago. Of those, "61% said that they had increased their investments in sustainable funds and 35% said that they often invested in these types of products," it said.

Impact investors mostly focus on sustainable agriculture, renewable energy, conservation, microfinance, and affordable and accessible basic services including housing, healthcare, and education. 

The Spanish Socialist government has also been active in supporting and driving social impact investment. It has a dedicated unit for social economy within the Ministry of Labor and Social Security, as well as departments focused on social entrepreneurship across the country's 17 autonomous regions and communities. In response, big private-sector players like banks and investment funds have introduced their own initiatives to support startups and growth in related sectors.

Spain also recently became a member of the Global Steering Group, joining 21 other countries pushing for impact investing and entrepreneurship.

A responsible ecosystem

For example, BBVA, Spain's second-largest bank, has Momentum, a five-month program with dedicated funding offered to startups developing sustainable solutions with proven social impact. From 2011 to 2017, the program supported 515 entrepreneurs across six European and Latin American countries, with 319 BBVA staff volunteering in the program, providing training and strategic support. The bank also has a microfinance program that has made out nearly €12m worth of loans since 2007.

Another pioneering social investment fund in Spain is Crea. Formed by a team of entrepreneurs with experience in both investment and social fields, Crea has become a leading partner in the co-creation of startups with social impact. Through Crea Inicia, Crea Desarollo and Crea Impacto, Crea supports startups and their social goals through their seed to scale up phases. Successful startups Crea has exited include the car-sharing service company, Bluemove (now called Ubeeqo), the Impact Hub Madrid (part of the UK Impact Hub group) and Disjob, a recruiting platform for people with disabilities.

Xavier Pont, founder of Ship2B, a Catalonia-based foundation that promotes technological projects with high social impact, sees in the UK a model that should be followed: “They are 15 years ahead of us… The historic decision to allocate part of the money from the lottery to foment social entrepreneurship led to a real revolution in this type of investments.” 

Social entrepreneurship in Spain is indeed on the rise, too. Here's a look at some of the leading startups in this field.

 

Democratizing impact investing – La Bolsa Social

 

La Bolsa Social is the first equity-based impact crowdfunding platform in Spain, merging collaborative investing with the positive social and environmental goals of impact investing.

According to its CEO and founder, José Moncada, “the best way to connect social entrepreneurs with impact investors is through an equity crowdfunding platform where everyone can invest.”

Moncada developed his career in the financial policy sector, working for the Public Treasury in Madrid, the European Commission in Brussels and the European Securities and Markets Authority in Paris.

Everyone can invest using La Bolsa Social. Accredited investors can put up unlimited capital, while private individual investors can invest up to €3,000 per startup. La Bolsa Social rigorously selects each project. Potential investors are given detailed information about the team, business plan, financial projections and social impact goals based on the European Union Sustainable Development Goals matrix.

To date, the platform has financed €3m worth of entrepreneurial projects and is the first collaborative financing platform authorized by the National Securities Market Commission (CNMV).

 

Optimizing impact investing – Clarity

 

© Clarity

A less explored niche of impact investing is the quantification of environmental, social and governance (ESG) impact data used to assess SRI results. Clarity is a Spanish startup that has created a SaaS to maximize the impact of SRI, using AI and big data and analytics to classify companies and businesses based on their ESG footprint.

The SaaS estimates needs across society and the environment, as well as identifies companies that are providing solutions to solve such issuedata that go into assessing their ESG performance. Based on that, the software gauges the impact of a client's investments. Having access to such information helps investors make better decisions and optimizes their impact investing.

"We not only rely on [companies'] sales and profits; we look for consumption patterns, we analyze [their] reputation in social networks... So we do not depend so much on the information provided by the company," said Clarity’s founder and CEO Rebeca Minguela, the only Spaniard named a Young Global Leader by the World Economic Forum in 2017 and winner of the “Women in Fintech” prize of the BBVA Open Talent competition.

Beside serving as a mentor in several tech startups, Minguela also founded Blink, a hotel discounts marketplace acquired by Groupon in 2016, a year and half after its launch. In 2017 she led the digital transformation of Santander Bank, before founding Clarity.

 

Micro-impact funding – Worldcoo

 

NGO veterans Sergi Figueres and Aureli Bou estimated that with €1.46bn, it would be possible to improve the livelihood of low-income families in Spain in just five years, and that amount of money can be raised annually if about 20m people donated 10 cents per purchase twice a day. This led Figueres and Bou to start Worldcoo, to facilitate more efficient and sustainable fundraising for social causes.

Worldcoo created a widget in the e-commerce payment gateway that, at the point of check-out, lets e-commerce shoppers have the chance to donate €1 to finance an NGO project. Launched in Barcelona in 2012, Worldcoo won the first edition of Bstartup acceleration program by Sabadell Bank and in 2017 received €2.3m funding from CaixaCapital, Meridia Capital and the European Union. The company monetizes by receiving 8% of the funds raised.

"Not a single client left us, which proves that our tool improves brand image, corporate social responsibility and marks a differentiation," said Figueres. Worldcoo’s widget is free to use and is currently in place across online marketplaces in Spain and France. It is also being used by banks and corporations such as Telefónica and the Valencia football club. UNICEF, Oxfam, the United Nations High Commissioner for Refugees and Save the Children are just a few of the big NGOs that benefit from such donations collected by Worldcoo.

 

Tokenized impact lending – Ethic Hub

 

© Ethic Hub

Founded in Spain in 2017, Ethic Hub develops a blockchain-powered platform that connects lenders with Mexican farming communities. Through distributed ledger technologies, Ethic Hub facilitates the sustainable financing of small farmers, who used to pay local moneylenders up to 100% interest rates. The company guarantees investors returns of between 10% and 15%.

“We don’t receive any sort of money, we are not financial intermediaries. We save costs eliminating intermediaries that don’t add any value to the chain,” said Íñigo Molero, co-founder and Communication and Blockchain Advisor, of Ethic Hub.

"With blockchain, you can send 20 cents to the other side of the world without commission and in a matter of minutes," he added.

Most projects are focused on coffee plantations and the funds collected are invested to mainly increase the labor force and to acquire new tools and materials.

Ethic Hub currently operates only in Mexico, taking advantage of an extensive and established network of contact with local coffee producers. The company plans to expand to other farming communities across the globe. 

Edited by Bernice Tang and S. Mani

Tags