Colombian Venture Fund Launches with Social Agenda

New Colombian investment firm Corporacion Inversor plans to raise a $20 million venture fund by late 2012 that will target fast-growing enterprises that can make a significant social and environmental contribution to the South American country.

Fund manager Alberto Riano told VCJ that the fund has a triple mission: to invest in small and mid-sized Colombian companies that can generate employment for low-income classes, are involved in sustainable or renewable energy projects and are highly profitable.

The fund, dubbed Fondo Inversor, has so far raised $3 million from the Multilateral Investment Fund (MIF) and another $2 million from some of the organization’s 14 founding institutions.

Among the 14 founders of MIF are Colombia´s Ministry of Commerce, the Colombian Stock Exchange, Latam development body Fundacion Avina and Fundacion Bavaria, part of Colombian brewing giant Grupo Bavaria.

Other founders include the investment bank Estrategias Corporativas and Miami-based Latin American Enterprise Funding Managers, whose founding Partner Eduardo Elejalde, is chairman of the Latin American Venture Capital Association.

Riano said his firm is talking to several other potential investors in Colombia, the United States and Europe to raise the additional $15 million. When the process ends, he expects the fund will be 50/50 Colombia and international investors.

Riano says that the firm has already made a $1.5 million investment in an unnamed Colombian ecotourism company.

The fund´s launch comes at a time when VC is gaining popularity in Colombia, a fast-growing economy that Riano says has fixed much of its drug-related crime problems. Riano expects VC interest in the region to grow strongly in the near to medium term.

So far, at least two other VC funds are operating in the region, including the Small Enterprise Assistance Fund and Progresa, which together manage nearly $100 million in assets, according to Riano.

“VC is a lot more attractive in Colombia now,” he adds. “There are many prosperous industrial sectors and companies that need expansion funds and the country’s [safer] status is becoming very appealing.”

Riano says that new regulations that protect international investors´ funds and add transparency into how local funds are set up and managed will help develop venture capital activity in the region.

Ivan Castano is a Mexico-based contributor. He can be reached at reporter360@yahoo.com.