In a constantly changing world, where economic markets are also evolving, more and more companies and startups are launching projects that have a significant degree of social and/or environmental impact.

Today, both new and traditional companies are seeking to incorporate impact-related concepts into their business models. Governments, well aware of these changes, have begun to enact or amend laws in an effort to promote, accelerate, and regulate impact investments.

We are also seeing that more and more investors—from institutional investors to individual investors—are seeking to invest in companies or investment instruments with a clear social and/or environmental impact strategy, breaking away from the paradigm of two dimensions—return and risk—and embracing a three dimensions, adding the variable of Impact.

What is Impact Investing?

Impact investing, according to the Global Impact Investing Network (GIIN), is defined as an iinvestment made with the intention of generating social and environmental impact while also generating a financial return. This type of investment is considered one of the most advanced asset classes, as it seeks to generate economic, social, or environmental returns simultaneously.

The 4 key factors for an investment to be considered an impact investment: 

• They have a social and/or environmental impact: They support projects that have a positive effect on people and/or the planet.

• They generate a financial return: The range of returns can vary from a return of principal—a below-market rate—to a market-adjusted rate.

• Intent: Their intention and goal are to achieve social and/or environmental impact.

• Measurable: There must be measurable evidence that value or impact has been created. Without measurement, it would not be an impact investment.

Impact Investing in Chile

It is estimated that impact investment funds currently manage assets totaling more than US$138.2 million (source: ACAFI), generating returns for investors while simultaneously addressing social and environmental challenges.

Impact funds in Chile often follow the venture capital model, but they include instruments that go beyond equity, such as debt-type loans or convertible debt. Like venture capital funds, they diversify the risk and return on investments. 

They may be independent or affiliated with banks or economic development institutions. However, there are also funds that finance other funds with the goal of offer scale and greater diversification to high-net-worth investors.

At FYNSA, our FYNSA Migrante Investment Fundhas a strong focus on social impact on a community lacking adequate access to financing. It indirectly supports and contributes to financial inclusion, which in turn helps reduce income inequality, significantly improving people’s quality of life, generating greater economic growth and reducing the poverty rate, in addition to providing a financial return to the Fund’s investors.

Cristian Rodríguez P.

Private Debt Manager

Fynsa AGF