THE SITAWI Finance for Good opened today, July 13, a new round of SITAWI Collective Loan Platform, focusing on the development of businesses with a positive social and environmental impact in the Amazon Forest. This will be the fifth capture carried out on the Platform, which successfully completed its first round in 2019.
The round will take place through the MOVA platform, the 1st organization in Brazil, approved by the Central Bank, to be recognized as a Loan Society between People (SEP) — four businesses were selected to participate in the round: Luisa Abram Chocolates (2014, São Paulo), which produces fine chocolates from wild Amazon cacao — not planted and found in the forest in its natural form — using the process bean-to-bar (from the grain to the bar); The 100% Amazon (2009, Belém do Pará), a commercial exporter of more than 50 non-wood renewable forest products, such as oils, butters, pulps and powders —, 90% of its production comes from native forest; Comaru (1992, Laranjal do Jarí), chestnut cooperative from the Amazon, with more than 50 years of experience in sustainable extractivism; The Tobasa Bioindustrial (1968, Tocantinópolis), pioneer bioindustry, with technological innovation, focused on eliminating waste and making full use of the babassu coconut. Together, the four businesses contribute to eight of the 17 UN Sustainable Development Goals (SDGs).
The Collective Lending Platform is an initiative of SITAWI It's from Sabin Institute. The Amazon Round is an initiative of the PPA (Partners for the Amazon platform) and has as strategic partners and funders the USAID (United States Agency for International Development), the CIAT (International Center for Tropical Agriculture) and the Humanize Institute.
Opportunities for the investor and for the entrepreneur
Through the SITAWI Collective Loan Platform, anyone can invest in businesses with a positive impact in the Amazon that participate in the round. The platform acts on the model peer-to-peer lending, a category that allows, digitally, the transfer of financial resources from one person directly to another person or company — a category increasingly sought after by investors interested in monitoring their investments and generating a positive impact.
The loan provides — in addition to the positive impact, in line with the cause of forest conservation and investors' values — a return equivalent to 6.5% per year, or 191% of the CDI (considering the CDI of June 1, 2021).
The Platform has advantages in a two-way approach, since it offers the financed entrepreneur better interest conditions in relation to the traditional loan model available in the market. Entrepreneurs also receive technical support and consultancy from SITAWI and partners throughout the loan period. Before being selected, entrepreneurs registered to apply for financing through the SITAWI platform undergo a careful due diligence process in order to measure their indebtedness capacity, liquidity projection and validation of the positive socio-environmental impact. This advice is maintained throughout the loan contracting period, with SITAWI's technical staff focused on business development, as well as attention to the proposed impact at the time of contracting the funds.
According to Pipe Social, in its 2021 Impact Map study, 49% of businesses with a positive social and environmental impact in Brazil are raising funds. Of these, almost half (48%) are raising contributions between R$ 100 thousand and R$ 1 million, the scarcest financing range in the market. "The financing opportunity brought by the platform serves the entrepreneur who created a business that generates impact, but who does not have access to investment funds, accessible bank credit", explain Leonardo Letelier, CEO of SITAWI.
How to invest
The platform is available at sitawi.mova.vc/amazonia, in which interested parties can view the profile, impact and financial projections of the businesses. To participate, the investor must perform a digital registration and provide information typically requested by investment platforms, as well as respond to a questionnaire about your investor profile. After choosing the supported businesses, the person makes the investment reservation and, to confirm, must perform a TED. Upon completion of the funding, loan contracts are issued between the parties and the investor receives the CDBV (Banking Deposit Certificate) bonds, which are issued to prove the investment.
After an initial 3-month grace period, investors receive the investment value for 33 months, with the payment of monthly installments referring to principal plus interest. The entire operation is carried out in partnership with MOVA, the first fintech in Peer-to-Peer Lending approved and supervised by the Central Bank in the form of a Loan Society between Persons (SEP). SEP creates a direct bridge between investors and those seeking financing, eliminating the need for a bank and cutting costs. THE Impact Workshop is the consultancy and communication agency for businesses with social impact and the Tozzini Freire is the official legal support provider for the round. Throughout the contract, investors receive updated information, such as monitoring and a report on the socio-environmental impact of the invested businesses, their finances and businesses.
Amazon Forest Conservation
The Amazon is the biggest rainforest on the planet, and is also a repository of biodiversity for indigenous peoples, communities and the world. She has a fundamental role in global climate regulation, and works as a carbon store. The transpiration of tree leaves to release excess water captured by the roots is fundamental to the rainfall regime in the Midwest, South and Southeast of Brazil, in a phenomenon known as 'flying rivers'.
However, in November, the National Institute for Space Research (Inpe) released data from the Prodes system, which works with high-resolution images and is updated annually, for the period between August 2019 and August 2020. In this interval, deforestation was 11,088km², equivalent to nine times the municipality of Rio and the highest level in the history of Prodes since 2008. This devastation reduces biodiversity, and burning trees releases carbon into the atmosphere, furthering global warming. And all of this directly affects the Amazon peoples, who survive from the sustainable use of natural resources.
Invest in businesses that value the economy of the forest — generating biodiversity conservation, income for their communities and preserving local culture — is a way of contributing to the conservation of the Amazon Forest and to a change in the region's development model. The four impact businesses participating in the SITAWI Amazon Round are heading in this direction. They are part of a network of socio-environmental entrepreneurship that is already a reality in the Amazon, and that is seeking new investments and support to consolidate its operations.
“SITAWI supports organizations with a positive impact in the Amazon, allowing more people to participate in the construction of solid and robust entities in that Region — the Collective Lending Platform represents access to this universe of preservation of the forest and its peoples”, complete Leonardo.
SITAWI and impact investing in the Amazon
This fundraising round focused on Amazonian business is the result of SITAWI's experience with the implementation of financial solutions for businesses with impact throughout Brazil and social, environmental and economic development projects in the Amazon.
Since 2017, SITAWI has been coordinating the Middle Juruá Territory Program, which is being carried out in the municipality of Carauari, in the state of Amazonas, with 64 communities distributed along the Juruá River and in the Middle Juruá Extractive Reserve and Uacari Sustainable Development Reserve. With the participation of local companies, NGOs and corporations gathered in the Middle Juruá Territory Forum, the Program aims to biodiversity conservation, through the implementation of a territorial development plan for the region.
SITAWI is also responsible for the study Impact Investment in Amazon: paths to sustainable development, launched in 2018 at the 1st Sustainable Business and Impact Investment Forum in the Amazon (FIINSA). The material points out the need to create and introduce new solutions based on innovative business models in the Amazon, highlighting challenges and opportunities for investing in purposeful businesses in the region.
In 2019, SITAWI became part of the Partners for the Amazon Platform (PPA), a platform for collective action, led by the private sector, which seeks to build innovative, tangible and practical solutions for sustainable development, conservation of biodiversity, forests and natural resources in the Amazon. One of its initiatives is the PPA Acceleration Program, which selects organizations through annual calls. The last call received 201 entries and selected 15 businesses to be accelerated in 2020.
In December 2019, the Program raised R$ 4.8 million in investments in a business round between investors and startups. Of the 15 selected by the Program, five are part of the second round of SITAWI collective loan.
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